The chancellor announced last week the ruling out of an Autumn budget and instead launching a “Winter Economy Plan” after facing warning of the risk of a ‘deluge’ of job losses.
What we have learnt so far:
The Chancellor is unveiling an emergency COVID rescue plan in order to protect jobs. It is expected to include subsidies for wages, VAT cuts and more cheap loans for struggling businesses.
The new ‘Jobs Support Scheme’ will see the Government directly support the wages of those in part time work. The scheme is to subsidise the wages of workers returning to work on a part time basis after being furloughed. It is expected to run for six months, starting this November. The measure by the Government is attempted to preserve “viable” jobs through subsidies, relating to the pay of employees who work a minimum of a third of their normal hours in order to be eligible for the scheme. For the remaining hours not worked, the Government and the firm will pay a third of the wages each.
This means that employees will receive a minimum of 77% of their wage under the new scheme.
Here is a simple example of our understanding of how the new system will work:
Employee – Joe Bloggs (normal monthly wage – £999)
Joe from November works part times, at a third of his normal hours therefore receiving £333 – losing £666
A third of the lost hours is £222
Joe should receive a third (£222) from the Government and a further third (£222) from his employer, therefore receiving £333 (for the hours worked) + £222 + £222 (for the hours lost being the Governments & Employers contribution) = £777 (equal to rounded 77.8%).
Further measures that we understand, will include new grants being made available for workers who are self employed until 30 April next year, but covering only 20% of average monthly trading profits for those facing reduced demand over the Winter.
The Chancellor also announced for the hospitality and tourism sector that the 5% VAT rate would now remain in place until 31 March 2021 to support both industries going forward.
‘Pay as You Grow’ loans, this will see bounce back loans extended from six to ten years. Businesses will be able to make interest only repayments, while their credit rating remains unaffected. An extension to Business interruption loans for up to ten years will also be part of the new measures.
The new measures include allowing businesses who have taken advantage of the VAT deferral incentive from earlier in 2020, would now no longer be required to pay the deferred amount back in full by 31 March 2021. Allowing instead, an interest free instalment option to permit payments to be spread over eleven months. The VAT deferral scheme affected payments due between 20 March 2020 and 30 June 2020 (originally the deferred amount was required to be paid to HMRC by 31 March 2021) – If your business took advantage of this, do consider whether you would benefit from the new instalment option.
There is also an extension of the deadline for tax payments for the self employed, and others who use income tax self assessment, and who “need extra help” over 12 months from next January.
All of the above is a summary of what has broadly been announced thus far. Whether it changes or to who and how it applies we shall have to see.
If you are at all worried about your business, please call us for an empathetic chat and assistance in understanding in what is available and how to gain access. (We have no details of the mechanisms or procedures as yet, but rest assured we are monitoring the situation to keep our clients fully informed and up to date, as and when the detail is available from the Government).
Contact us on 0121 550 8509 or firstname.lastname@example.org… we’re here to help!