On 24 September 2020, Rishi Sunak announced the Winter Support Plan - a series of additional support measures for businesses and individuals impacted by the COVID-19 pandemic.
The main announcement was the replacement of the “Furlough” scheme with the “Job Support Scheme” from 1 November, but there were a number of other announcements that will be welcome by UK businesses.
Job Support Scheme
The Government has announced a new scheme coming into effect from 1 November 2020 to replace the existing “furlough” job retention scheme (which ends on 31 October). What we know so far is:
- The Government will subsidise wages for employees working fewer hours than normal, due to lower demand
- Employees will need to work a minimum of 33% of their usual hours (and be paid as normal for these hours).
- For every hour not worked, the employer and the government will each pay one third of the employee’s normal pay.
- The grant to employers will be capped at £697.92 per month per employee.
- Employees using the scheme will receive at least 77% of their pay, where the government contribution has not been capped.
- It will be open to employers across the UK even if they have not previously used the furlough scheme.
- Large employers will need to meet a financial assessment test, and may not be able to make capital distributions (e.g. dividends) whilst claiming the grant.
- Employers will contribute 55% of wage for someone working the minimum 33% of their usual hours, with the Government contributing up to 22% (compared to up to 60% at the end of the furlough scheme).
Employers will be expected to contribute much more of an employee’s wages under this scheme, compared to the existing furlough scheme, and some employers will ultimately have to make difficult decisions on whether to retain employees part time, or make redundancies. The intention from Government appears to be that this scheme will protect viable jobs that can return in the long run, without prolonging the inevitable for jobs that are no longer viable.
Further details are to be announced, in particular to determine what will constitute “normal hours” and “normal pay”, which are likely to be on a similar basis to under the existing furlough scheme. Once we know more we will post updated guidance on this new grant scheme.
CBILS loans
- CBILS deadline extended ‘until the end of the year’
- CBILS term lengths ‘could’ be up to 10 years (from a previous maximum of 6 years)
- Bounceback Loan repayment terms greatly relaxed and can be repaid on a ‘pay as you grow basis’
Self-employed income support
- Self-employed workers eligible for the Self Employment Income Support Scheme Grant will benefit from a grant to cover lost profits from November to January (with the possibility of an extension to April depending on circumstances in the new year).
- It will cover 20% of average monthly profits up to a total of £1,875 per 3 months
VAT
- The reduction in VAT to 5% in the tourism and hospitality sectors is to be extended to 31 March
- Businesses that deferred VAT payments in the period to 30 June 2020 were due to settle the liabilities by 31 March 2021. However, they will now be able to settle their liabilities in 11 smaller interest-free instalments.
Other
Self-assessment income taxpayers who need to, will be given more time to pay liabilities that are falling due on 31 January 2021.
Please do get in touch with your normal Shorts contact to talk any of the above through in more detail.
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David Robinson
As a Tax Partner, I advise clients on all aspects of UK tax, ranging from business taxes, transactions and private client matters, helping to achieve the objectives and aspirations of businesses and their owners.
View my articlesTags: Business News, Business Taxes, Covid-19
