The Chancellor has today announced his Winter Economy Plan. This consists of a series of measures designed to combat the damage caused to the economy by the pandemic and replaces his usual winter budget.
Coronavirus Job Retention Scheme (“CJRS”)
The Coronavirus Job Retention Scheme will end as planned on 31 October 2020.
Job Support Scheme (“JSS”)
From 1 November 2010, the new JSS will be launched which will provide a government contribution towards wages costs. Key elements of the scheme are as follows:
Self-Employed Income Support Scheme (“SEISS”)
The SEISS is being extended to provide up to two additional taxable grants to the self-employed who have been negatively affected by the pandemic. Similar to the new JSS, it aims to provide support over the six month winter period.
Self-Assessment Time To Pay Scheme
The government has previously deferred self-assessment payments due on 31 July 2020 to 21 January 20212. There have now gone one step further to allow the self-employed and other tax payers the option to defer payment for a further 12 months. The new self-service 'Time To Pay' scheme will apply to self-assessment tax payers who owe less than £30,000 and can be accessed online in due course.
VAT reduction extended for Hospitality and Tourism
The VAT reduction from 20% to 5% for the hospitality and tourism sectors was due to end on 12 January 2021 and has now been extended to 31 March 2021.
This VAT reduction will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions across the UK.
New Payment Scheme - VAT Deferral
Previously the government had given VAT registered businesses the option to delay payment for the March and June 2020 VAT quarters, on the basis that the debt was paid in full by 31 March 2021. This has now been amended further and the New Payment Scheme launched. This enables payment to be spread across the 2021/22 financial year in equal instalments. Businesses that took advantage of the VAT deferral are eligible to “opt-in” to the New Payment Scheme.
Extension of Deadline for Loans
The government has previously introduced four separate loan schemes to support businesses. The application deadline for this support has now been extended to 30 November. A recap of the available schemes are as follows:
Pay as you Grow Scheme for BBLS
A new repayment plan has been launched for borrowers under the BBLS, the key points are as follows:
These measures are clearly designed to ease the burden on business cashflow as needed, and also perhaps improve the odds of the loans being repaid.
Loan Extension for CBILS Lenders
The government will allow flexibility to CBILS lenders to extend the term of the loan by up to 10 years. This will in turn encourage support from lenders to SMEs who may be struggling with repayments.
The overall message from the plan is that these measures will help businesses survive the winter period and in turn provide job security for employees. But is it a case of too little too late? Many people have already been made redundant and are facing the bleakest job market of their lifetime. They are benefiting from £10 a day in jobseekers’ allowance, for only a maximum period of 6 months, and wrestling with Universal Credit applications. Their income is substantially reduced and nothing seems to be being done to help these individuals?
Despite the government support, businesses are being asked to contribute significantly to employee costs, at a time when many industries face an uncertain future. The future of many businesses such as Aviation, Retail, Hospitability, Travel and Events rely upon government lockdown restrictions being lifted, which looks very unlikely to happen in the near future.
Are these measures therefore just delaying the inevitable?