The Chancellor announces ‘Winter Economy Plan’
This afternoon the Chancellor Rishi Sunak has announced plans to protect jobs and the economy over the winter period, in his words: “to manage the virus and protect jobs and livelihoods”.
His ‘Winter Economy Plan’ is a package of support which has been described as being “fundamentally different” to the previous support launched in March.
The UK’s output remains below what it was in February, but more recently there has been three months of consecutive growth and millions of people are no longer on furlough. However, the resurgence of the virus poses a threat to the economic recovery.
The primary goal of the support remains unchanged, to protect jobs and assist businesses to operate safely within the new restrictions, during what is anticipated reduced demand over the winter months.
The Chancellor says the furlough scheme will end because the support must “adapt and evolve”. He said no decision was harder, but it is “fundamentally wrong” to keep people in unviable jobs. However new measures have been introduced to support businesses, the details of which are as follows: –
What is the new package of support?
New Jobs Support Scheme
- The scheme will support the wages of those in viable jobs subsidising in part, the wages of some employees.
- To be eligible employees must work a minimum of 33% their hours.
- For the remaining hours not worked, the Government and employer pay 1/3 of their wages each.
- Therefore, an employee working 33% of their hours will receive at least 77% of their pay.
- This is targeted support for the firms that need it the most.
- All SME businesses will eligible
- Larger businesses will be able to apply, but only if their profit has dropped.
- The scheme will run for six months starting in November.
Self-Employment Income Support Scheme
- The Self-Employment Income Support Scheme extension will support viable traders who are facing reduced demand over the winter months, covering 20% of average monthly trading profits via a Government grant.
Pay as you grow
- The Chancellor has also announced a “pay as you grow” scheme for businesses which took Government guaranteed loans during the crisis.
- Loans can now be extended from six to 10 years nearly halving the average monthly repayment.
- Businesses can also move to interest only payments or suspend payments if they are “in real trouble” for up to six months.
- He said no credit rating will be affected.
Coronavirus Business Interruption Loans (CBILS)
- Business will now be given up to 10 years to pay off Coronavirus Business Interruption Loans up to £50,000, an increase from the former six year repayment terms.
- There will also be a new loan scheme announced in January.
- Businesses who deferred their VAT will no longer have to pay a lump sum at the end of March 2021.
- They will have the option of splitting it into smaller, interest free payments over the course of 11 months – benefitting up to half a million businesses.
- Self-assessed income taxpayers who need extra help, can also now extend their outstanding tax bill over 12 months from January.
15% VAT Cut for Tourism and Hospitality
- Further assistance for the two most affected sectors hospitality and travel.
- To support over 150,000 businesses and protect 2.4 million jobs, the Government has extended the 15% VAT cut for the tourism and hospitality sectors to the end of March next year.
Our head office is based in Bolton where currently all hospitality venues are closed (or operating takeaway only). The feedback suggests that these measures for the hospitality industry are inadequate, and there is a hope that further announcements to assist businesses who are experiencing greater lockdown restrictions are introduced. Cowgills continue to work with our clients in this industry to support and provide guidance.
If you have any queries on any of these measures, or you would like to speak to one of our advisors we are always here to provide support.
Please contact your relationship partner directly, if you don’t have one please email us below and we will direct your enquiry to someone who can assist.
The information was correct at time of publishing but may now be out of date.