Chancellor announces Winter Economy Plan
Last week the Chancellor announced his Winter Economy Plan to stop mass job cuts and help the self-employed amidst a rise in coronavirus cases.
As a small business, there are a few options available to support you. So we’ve rounded up some of the key points.
Job Support Scheme
The Job Support Scheme is designed to top-up wages of employees who are working fewer hours and will replace the existing furlough scheme. It will run for six months starting in November.
Under the new scheme, the government will pay up to two-thirds of the pay lost. It’s meant to support people in ‘viable’ jobs working at least a third of their normal hours.
So as an employer, you'll continue to pay your employees for the time they work, but the cost of hours not worked will be split between you, the government and your employee.
To qualify, your employees will need to work at least 33% of their usual hours. The level of support they'll receive is based on their usual salary – capped at £697.92 per month.
All small and medium-sized businesses are eligible for the scheme and it’s open to all employers even if you haven't used the furlough scheme.
Those of you who will use this new Job Support Scheme will still be able to claim the Job Retention Bonus if you meet the required criteria.
Those who work for UK-based firms that are forced to shut because of new restrictions will get two-thirds of their wages paid for.
Self Employed Income Support Scheme (SEISS)
The Chancellor also announced that he was extending help for the self-employed on ‘similar terms’ to the existing Job Support Scheme.
How it works:
If you're eligible, you can apply for a taxable grant that will cover three months' worth of profits for the period of November to the end of January 2021. It's worth 20% of your average monthly profits and is capped at £1,875.
A second grant may be available to cover the period of February 2021 to the end of April 2021.
To qualify, you'll need to be actively trading but face decreased demand due to the Coronavirus.
In addition, the Chancellor announced that he will extend the VAT break for businesses in the hospitality and tourism sectors.
The temporary reduction of VAT from 20% to 5% will remain in place until 31 March 2021, rather than end on 13 January.
Pay as You Grow
To provide more flexibility for businesses that took out a Bounce Back Loan, the 'Pay as You Grow' loan will allow companies more time to repay the debt by extending the repayment period from six to 10 years.
Anyone struggling with repayments can now choose between interest-only repayments and suspending repayments altogether for up to six months.
While using this scheme, you will not see your credit rating affected.
Other measures include a monthly cash grant for businesses forced to close by local restrictions.