Breaking down the winter economic plan

Chancellor Rishi Sunak’s winter economic plan contained new measures to support businesses and the self-employed through the winter.

In June, we wrote about the furlough scheme coming to an end this month and the “second and final” self-employed income support grants.

While the furlough scheme will end on 31 October 2020, Sunak revealed a new job support scheme to start the very next day.

The Chancellor also went back on plans to curtail self-employed grants, extending the support until the spring of 2021.

Loan schemes available to businesses have also been extended to prevent the UK economy from collapsing under the weight of COVID-19.

More VAT relief was announced for firms in the hard-hit hospitality and tourism sectors, and in the form of deferred repayments.

Let’s take a look at the main points from the Chancellor’s speech and dig into the finer details to see what it might mean for you.

Job support scheme

At the time of writing, details on the job support scheme are thin on the ground.

What we know is the scheme will kick in from 1 November 2020 and the Government will subsidise some of the pay of employees who are working fewer hours than usual due to the pandemic.

All small and medium-sized employers are eligible to use the scheme, as are larger employers that have seen turnover drop during the crisis.

The job support scheme is initially open for six months, until 30 April 2021, although this might extend beyond this date.

We will, of course, share more details of the scheme’s eligibility criteria when we know them.

Self-employed support

Two taxable grants have been available through the self-employed income support scheme (SEISS) since March 2020.

The SEISS was due to close for good this month, on 19 October 2020. Instead it will remain open until 30 April 2021.

The next taxable grant available through the SEISS will be available from 1 November 2020 until 31 January 2021.

It is set to be paid in a single instalment, based on 20% of your average monthly trading profits, and capped at £1,875.

All we know about the fourth taxable grant is that it will cover the period from 1 February to 30 April 2021. The level will be “set in due course”.

Also, if you deferred your July 2020 payment on account, you now have until 31 January 2022 to settle your liability.

Business loan repayments

Businesses that borrowed money through a Government loan scheme have more time to repay the money.

Small firms that took out bounce-back loans can use a new flexible repayment plan spread over ten years, rather than six.

The longer repayment time also applies to SMEs that borrowed under the coronavirus business interruption loan scheme.

Firms also have more time to apply for these loans, plus the coronavirus large business interruption loan scheme and the future fund.

Application dates for the various schemes had been due to end on 30 September 2020. They now close a month later, on 30 November 2020.

VAT boosts

A reduction in VAT for the hospitality and tourism sectors – some of the worst-hit by the pandemic – will remain in place until 31 March 2021.

The temporary cut from 20% to 5% VAT, which came into force on 15 July 2020, had been due to expire on 12 January 2021.

In addition, VAT-registered firms which deferred any payments due between 20 March and 30 June 2020 can spread their repayments.

A lump sum is no longer due on or before 31 March 2021. Instead, it can be split into 11 smaller, interest-free payments.

We understand this is a lot to take in and, of course, we are here to help if you wish to talk through any of these new measures. Contact us on info@stapletonsaccountants.co.uk or call 01363 773191.