Chancellor outlines Winter Economy Plan to protect jobs and support businesses

The Chancellor Rishi Sunak today outlined additional government support to provide certainty to businesses and workers impacted by the coronavirus pandemic.

Delivering a speech in Parliament, the Chancellor announced a package of measures that will continue to protect jobs and help businesses through the uncertain months ahead as we continue to tackle the spread of the virus.

The package includes:

• a new Jobs Support Scheme
• extension of the Self Employment Income Support Scheme
• 15% VAT cut for the hospitality and tourism sectors extended until the end of March 2021
• help for businesses in repaying government-backed loans

Jobs Support Scheme

• Introduced from 1st November 2020 to protect viable jobs in businesses who are facing lower demand over the winter months.
• The scheme will run for 6 months.
• The government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.
• Employers will continue to pay the wages of staff for the hours they work - but for the hours not worked, the government and the employer will each pay one third of their equivalent salary.
• In order to support only viable jobs, employees must be working at least 33% of their usual hours.
• The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
• The scheme is open to businesses across the UK, even if they have not previously used the furlough scheme.
• Further guidance about the scheme will be published in due course.

Self Employment Income Support Scheme Grant 

• The Self Employment Income Support Scheme Grant (SEISS) is being extended.
• An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus.
• The initial lump sum will cover three months’ worth of profits for the period from November 2020 to the end of January 2021.
• An additional second grant will be available for self-employed individuals to cover the period from February 2021 to the end of April 2021.

Tax cuts and deferrals

• The temporary 15% VAT cut for the tourism and hospitality sectors has been extended until the end of March next year.
• The New Payment Scheme gives businesses the option to pay back their deferred VAT bills in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
• Self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility. This means payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

Flexibility for paying back loans

• Businesses who took out a Bounce Back Loan will now will have flexibility to repay the loan through a new Pay as You Grow flexible repayment system. This includes extending the length of the loan from 6 years to 10, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.
• Coronavirus Business Interruption Loan Scheme lenders have also been given the ability to extend the length of loans from a maximum of 6 years to 10 years if it will help businesses to repay the loan.
• Applications for the government’s coronavirus loan schemes has been extended until the end of November. As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund.

The Chancellor's Winter Economy Plan speech to Parliament can be read here.