The September 2020 United Kingdom Winter Economy Plan is a statement from the British Government, or mini-budget statement, which was delivered to the public by Rishi Sunak, the Chancellor of the Exchequer. Below you will find an overview of the key points to understand.
The furlough scheme ended on 31st October and was replaced by the Job Support Scheme, which will last for 6 months.
The new Job Support Scheme is primarily targeted at small and medium sized businesses (large businesses will have to demonstrate that their turnover is lower due to difficulties from Covid-19).
Under this scheme, an employee needs to work at least 33% of normal hours. The employer pays for these hours.
Of the remaining 67% of normal pay, the employer pays 33% and the government pays 33%.
The subsidies (from employer and government) towards pay for hours not worked are 33% of 67% each - which is equivalent to 22% of 100% each.
So, where an employee works 33% of normal hours, the employer funds 55% of normal pay and the government funds 22%. The employee will receive 77% of normal pay, and forego 23%.
If an employee works more than 33% of normal hours, the above figures change proportionately (see the examples at the end of this link).
The level of government subsidy is capped at £697.92 per month.
The scheme is open to businesses even if they didn’t previously use the furlough scheme.
The Self Employment Income Support Scheme was extended on the 1st November 2020. This extension will last for three months, ending on 31st January 2021.
To be eligible you have to have been eligible for the previous (second phase) of the SEISS grant.
The claimant must be actively trading but experiencing continuing reduced demand due to coronavirus.
The grant will be worth 20% of average monthly profits, up to a total of £1,875 (presumably £625 a month). Presumably the calculation is based on historic profits as previously.
It is very possible that this will be extended again for a further three months, with the specific calculations dependent on changes to the economic climate over the course of the current extension.
The current VAT reduction from 20% to 5% is being extended until the end of March 2021. Previously it was due to finish mid- January 2021.
Businesses who deferred the VAT payment due for the quarter ended February/March/April 2020 and who are due to pay the deferred amount in March 2021 will be able to apply under the New Payment Scheme to pay the amount due by 11 interest free monthly instalments.
The self-employed, and other self-assessment income tax payers, will be given more time to pay the tax due in January 2021.
As long the total figure due is under £30,000, taxpayers will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months.
The Bounce Back Loan (BBS) and Coronavirus Business Interruption Loan Scheme (CBILS) were initially set with a payback period of six years. This is being extended to ten years.
As a result, the monthly payments required will decrease to help businesses stay afloat amid current hardships.
If you have any uncertainties or general queries regarding the contents of this plan, then do not hesitate to contact our dedicated team of accountants on 01254 589799.