Chancellor Rishi Sunak has unveiled a new Winter Economy Plan, announcing a raft of new packages to support businesses and employees as the existing furlough and self-employed income support schemes come to an end.
The plan aims to both individual workers and UK businesses of various sizes, and runs alongside existing initiatives like the Kickstart scheme for younger workers and the job retention bonus for employers that keep on staff who had been on furlough into the new year, which were announced in July’s Summer Statement.
Here, we explain how the Winter Economy Plan will work, and what schemes and initiatives will be available.
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What is the Winter Economy Plan?
The Winter Economy Plan is the overarching name for a collection of schemes, initiatives and tax deferrals that collectively form the government’s plan to help safeguard as many jobs as possible over the winter months.
This follows a fresh set of measures for the next six months – such as once again encouraging people to work from home, increased use of face masks, and 10pm curfews for pubs and restaurants – brought in as a result of the second wave of coronavirus cases across the UK.
It’s expected that many businesses will suffer as a result of these measures, but the Chancellor said that the existing schemes – Coronavirus Job Retention Scheme (CJRS) and the Self-employed Income Support Scheme (SEISS) – could not continue in their current form, and that it would be ‘fundamentally wrong to hold people in jobs that only exist inside the furlough’.
- Find out more: nine things you need to know if you’re at risk of redundancy
Job support scheme replaces furlough
Unlike the furlough scheme, which helped pay the wages of employees that were unable to work, the job support scheme will only pay towards ‘viable jobs’ – jobs where people can still go to work but may need to have their hours decreased as a result of the coronavirus measures.
The job support scheme is claimed by employers, for employees who are in work for at least a third of their normal hours.
The employer must pay the employee for the work they carry out, and the government will top-up the remaining two-thirds of the employees’ normal salary – before their hours were reduced.
This aims to stop employees from having to take pay cuts and hopefully means employers can keep more staff.
Employers across the UK can claim, but it will only be open to large businesses if their turnover has fallen as a result of COVID-19. It’s open to employers who haven’t used the furlough scheme and can be claimed at the same time as the job retention bonus.
- Find out more: furlough explained
Help for self-employed workers
Self-employed workers will see an extension to the grants they are able to claim under SEISS. From November, they will have ‘similar terms and conditions’ to the job support scheme.
While precise details have not yet been released, this presumably means self-employed traders will be able to claim grants for two-thirds of their ‘normal’ income as long as they work at least a third of their usual hours.
Self-assessment tax deferral
As part of SEISS, those who pay tax by payment on account were allowed to defer their July 2020 payment to 31 January 2021 – when they would have to pay the whole of the tax owing in one go.
Under the Winter Economy Plan, those who pay tax by self-assessment can defer the payment due on their 2019-20 tax return for 12 months from January 2021. Under normal circumstances, tax would have to be paid by midnight on 31 January 2021.
- Find out more: Self-employed income support scheme
New VAT deferral scheme
Businesses that deferred their VAT payments due to coronavirus were going to face a lump-sum bill in March 2021.
However, the Chancellor announced that this deferred bill can now be spread over 11 smaller repayments – and no interest will be added.
There were reportedly almost half a million businesses that deferred more than £30bn of VAT this year.
Pay as you grow for Bounceback loans
Many small businesses were given government-backed loans earlier this year to help with costs and cashflow during lockdown.
These were originally due to be repaid over the next six years – but this has now been increased to 10 years, reducing many businesses’ monthly repayments.
Businesses that are struggling can also make interest-only repayments, or apply to suspend repayments altogether for up to six months.
More time for government loans
Other government loan schemes for businesses are having their application deadlines extended to the end of 2020, and the Chancellor hinted at a new ‘successor loan programme’, set to launch in January.
source https://www.which.co.uk/news/2020/09/winter-economy-plan-explained-what-it-means-for-furloughed-and-self-employed-workers/