Last week, the Chancellor announced the Government’s Winter Economy Plan, which represented the next phase of the economic response to coronavirus following on from the Prime Minister’s address to the nation. Thanks to the Government’s response in March, the economy has seen three consecutive months of economic growth, consumer spending is returning, and millions have come off furlough and returned to work.
The announcement contains various measures aimed at helping those businesses and jobs that are still viable. These include:
- The ‘Job Support Scheme’ – this will allow businesses to keep staff on reduced hours rather than laying them off, protecting people’s wages. This protects viable jobs in businesses who are facing lower demand over the winter months due to coronavirus. The company will continue to pay its employee for time worked (at least 33%), and the burden of the hours not worked will be shared equally between the employee, employer and the Government. All businesses will be eligible, not just those who used the furlough scheme. Larger businesses will only be able to use the scheme if their revenue has declined, and there will be an expectation that large companies using the scheme will be constrained in their ability to make dividend payments to shareholders, and employees will not be able to be made redundant or given notice while on the scheme.
- SEISS extension – a grant extension for self-employed small business who used the existing SEISS scheme will come in for the months of November to January. This will represent 20% of three months earning, creating parity between the Government’s contribution to employees’ wages and to the SEISS extension. Eligibility criteria will be refined to check whether the trade is still viable and trade, while suffering lower revenues as a result of coronavirus.
- ‘Pay As You Grow Scheme’ – Many of the one million small business who have benefitted from the Government loan schemes will get greater flexibility to repay their loans over longer periods. All borrowers will have the option to repay their Bounce Back Loans over ten years rather than six, which will reduce their monthly payment by almost half. Businesses will also be able to move to interest-only payments for periods of up to six months – or to pause repayments entirely for the same period. This will have no impact on the businesses credit rating if they take up this option. The Government will also allow CBILS lenders to extend their loans to ten years, as well as extending the Government’s guarantee, providing more flexibility to businesses.
- Extending deadlines to access the range of loan schemes – The deadline for applying for the CBILS, CLBILS and Future will be extended to the end of November. Alongside, the Bounce Back Loan scheme, this will mean that all four loan schemes will now expire at the end of November. The Government is also working to introduce a new loan guarantee scheme from January 2021.
- Extending our temporary VAT cut for tourism and hospitality – the 5 per cent rate of VAT will be extended to the end of March 2021, rather than the original planed end date of January 2021.
- Deferring VAT repayments – many businesses have already benefitted from deferring Q2 2020 VAT payments to March 2021. A new scheme will be launched to allow businesses to pay back the VAT they owe in small equal monthly payments (interest free) until the end of March 2022.
- Self-assessment business get more time to pay back – Around 1.5 businesses benefitted from deferring their self-assessment payment, which was due to be paid in July 2020 to the end of January 2021. To help further, the Government will be upgrading the Time to Pay service so that all self-assessment taxpayers will be able to create a 12-month payment arrangement for up to £30,000 each, and extended until the end of January 2022 – creating a 19 month deferral.
These measures will help businesses continue to get back on their feet, while coping with the challenges that Coronavirus will place on businesses during the winter months. This package of measures has my full support and will provide much needed support to viable jobs and the businesses that need it the most.