Chancellor’s ‘Winter Economy Plan’ unveiled

Chancellor Rishi Sunak has revealed his replacement to the current Furlough scheme when it ends on 31 October. A new Jobs Support Scheme is being introduced on 1 November, and will run for six months. To be eligible employees would have to work a minimum of 33% of their hours. For the remaining hours not worked, the government and employer pay one-third wages each. So, employees working 33% of their hours will receive at least 77% of their pay. The chancellor explained that all small and medium-sized businesses will be eligible for the scheme, but note the government grant has been capped at £697.92 per month.

The Self-Employment Income Support scheme has also been extended, to support viable traders who face reduced demand over the winter months, covering 20% of average monthly trading profits via a government grant. The grant covers three months’ worth of profits covering the period from November 2020 to the end of January 2021, with a limit of £1,875. Another grant will be available to the self-employed to cover February 2021 to the end of April 2021.

The chancellor said businesses that have borrowed money through the government’s loan schemes have been given more time to repay the money. Time to pay has been extended from 6 to 10 years. This, stressed the chancellor, will cut monthly payment nearly in half.

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

Any businesses struggling in the current climate can opt to make interest only repayments on theses loans for six months, or if they are really struggling can suspend payments for six months. Neither of these options will affect the businesses credit rating.

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 – this should benefit up to 500,000 businesses.

Self-assessment income taxpayers who need extra help can also extend their outstanding tax bill over 12 months from January, meaning they can defer their tax payments to January 2022.

The VAT cut for hospitality and tourism companies has been extended to March next year. The cut of 20% to 5% VAT was due to end on 12 January 2021.

  • The Treasury has also announced the Autumn Budget has been scrapped altogether. There will, however, be a spending review to set out the overall shape of government spending. The Budget will now not take place until early 2021 at the earliest.