Winter Economy Plan Summary

Further to today’s announcement by the Chancellor, we are pleased to share a summary of the next phase of Government support as well as the latest updates to guidance to help you run your business.

Today the Chancellor, Rishi Sunak, announced new measures in his Winter Economy plan, the next phase in the Government’s support for businesses and the economy. This included help for the hospitality and tourism sectors, which he described as “two of our most affected sectors”.

Key announcements include a new Jobs Support Scheme, extending the Self Employment Income Support Scheme and 15% VAT cut for the hospitality and tourism sectors until March 2021, and help for businesses in repaying government-backed loans.

Tax cuts and deferrals

• The VAT reduction from 20% to 5% for the hospitality and tourism sectors will be extended until the end of March 2021.
• Businesses who deferred their VAT will no longer have to pay a lump sum at the end of March next year. They will have the option of splitting it into smaller, interest free payments over the course of 11 months next financial year.
• Self-assessed income tax payers who need extra help can now benefit from a 12-month extension on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

New Jobs Support Scheme

The furlough scheme will not be extended. Instead a new six-month Jobs Support Scheme will start in November:

• The Government will directly support the wages of people in viable work. Businesses facing reduced demand can avoid making employees redundant by keeping them on shorter hours.
• The employee will work at least a third of their normal hours paid by the employer
• For the hours not worked, the government and the employer will each pay one third of their equivalent salary.
• The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
• All SMEs are eligible for the scheme, but larger firms can apply too if their turnover is affected by coronavirus.
• Employers that are retaining furlough staff on shorter hours can claim both the Job Support Scheme and the Jobs Retention bonus.

Self Employment Income Support Scheme Grant (SEISS)

• SEISS will be extended on similar terms as the new Job Support Scheme.
• An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus.
• The initial lump sum will cover three months’ worth of profits for the period from November to the end of January 2021, worth 20% of average monthly profits, up to a total of £1,875.
• An additional second grant to cover the period from February 2021 to the end of April – this may be adjusted to respond to changing circumstances.

Government-backed loans

A new Pay as you Grow repayment system will provide flexibility for firms repaying a Bounce Back Loan. This includes:

• Extending repayments from 6 to 10 years.
• Interest-only payments.
• Suspending repayments for up to 6 months if needed.

Credit ratings won’t be affected.

The Government has said it intends to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.

The application deadline for all coronavirus loan schemes – including the future fund - has been extended to 30 November.

See more details on today’s announcements