The Chancellor has outlined his plans to protect the jobs and livelihoods of millions, as the country continues to try and manage the virus.
He suggested that there were reasons for cautious optimism and signs of a fragile economic recovery, but that the previous support schemes were introduced to deal with what was hoped to be a temporary situation. As the virus and restrictions will be with us for at least the next 6 months, the Chancellor recognises that further measures are needed to support people in viable jobs that provide genuine security.
The measures the Chancellor outlined follow:
- Job Support Scheme JSS:
- The JSS will support viable jobs – employees must work at least a third of their normal hours and be paid for that work as normal by their employer. The government, together with their employer will then increase those people wages, covering 2/3 of the pay they have lost as a result of reducing their hours and the employee will keep their job.
- All SMEs are eligible. Larger business will only be eligible when their turnover has fallen as a result of the crisis.
- The JSS will be open to all employers across the UK even if they have not previously used the furlough scheme. The Scheme will run for 6 months from November and employers retaining furloughed staff on shorter hours can claim both the Job Support Scheme and the Job Retention Bonus. Government factsheet available here.
- Self Employed Income Support Scheme (SEISS) will be extended on similar terms to the new Job Support Scheme.
- The extension will provide two grants, from November 2020 to April 2021.
- The first taxable grant will provide 20% of average monthly trading profits, covering three months and capped at £1,875 in total.
- The level of the second grant will be set “in due course”. Government factsheet available here.
- Cashflow support measures
- Pay as you Grow for Bounce Back Loans. Loans can be extended from 6 to 10 years nearly halving the average monthly payment. Struggling businesses can choose to make interest only payments, and apply to suspend payments altogether for up to 6 months, without affecting their credit ratings.
- CBILS – government guarantee extended for up to 10 years making it easier for lenders to give people more time to repay.
- Deadline of all schemes extended to the end of this year and work will begin on a replacement loan guarantee programme in January.
- Deferred VAT payments that were due in March 2021, will be spread over 11 smaller repayments with no interest to pay.
- Self Assessment tax bills, taxpayers who need extra help can extend their outstanding tax bill over 12 months from next January.
- Hospitality & tourism
- Lower 5% VAT rate will not be increased to 20% as planned in January, but will be kept at 5% until 31 March 2021.
Wayne Thomas, partner at Bates Weston comments:
“ We welcome the introduction of further support measures to protect viable jobs and mitigate some of the cashflow pressures SMEs are facing. It is also encouraging that the government is looking at ways to make the repayments due on longer term loans more manageable.”
As we receive more details of the Job Support Scheme and the other measures announced by Rishi Sunak today, we will update our website. In the meantime, here is the Chancellor’s Winter Economic Plan in full.