COVID-19: The ‘Winter Economy Plan’
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After considerable pressure to extend the Coronavirus Job Retention Scheme, the government has unveiled a new flagship ‘Job Support Scheme’ that it hopes will stave off redundancies in the short term. Following the announcement earlier this week that there will be no Autumn Budget, we can perhaps anticipate further announcements to support businesses and employees in the coming weeks.
As has become customary with these sorts of announcements, much of the detail is still lacking. However, we suspect that many business owners and their staff will be relieved simply to know that the government is willing to provide additional support for the foreseeable future. Given the considerable uncertainty that we all face, any attempt to bolster confidence has to be seen as a good thing.
New Job Support Scheme announcedThe Job Support Scheme (JSS) is in many ways the successor to the Coronavirus Job Retention Scheme (the so-called ‘furlough scheme’), which expires on 31 October. This is what we know so far:
There will be three key principals to the Scheme:
- Support will be given to viable jobs. Employees must work at least one third of their normal hours and be paid as normal for that by their employer. In respect of hours not worked, the employee will receive two thirds of their normal income for those hours, with the employer paying half of this amount, and the government will providing the other half. The level is capped for normal weekly salaries up to £697.92
- It will be targeted at employers that need it the most – all small and medium sized businesses will be eligible, as well as large companies impacted by COVID. Fundamental to this qualifying condition for large businesses will be how, and over what period, ‘impacted by COVID’ is to be determined in the formal regulations.
- All businesses in the UK can qualify to use the scheme, even if they have not previously used the Coronavirus Job Retention Scheme.
The JSS will run for six months from 1 November, coinciding with the end of the current Coronavirus Job Retention Scheme. Both the JSS and the Job Retention Bonus can be claimed.
It was also announced that the Self-Employment Income Support Scheme will be extended under similar terms and conditions, covering the period November 2020 to January 2021, and will be worth up to £1,875 per month. A further grant will arise for the period February to April 2021, although the terms of this will be confirmed later.
Loan schemes extendedIn addition to the main announcement concerning the JSS, the Chancellor announced changes to the loan schemes already in place. The changes give extra flexibility to businesses to delay payments until cash flow supports this.
- The repayment term of all loans will be extended from 6 to 10 years, although this will require lender approval for CBILS loans.
- Struggling businesses will be able to opt to make interest-only payments in respect of Bounceback Loans for six-month periods. They can take this option on up to three occasions, when repayments fall due 12 months after the initial advance. A six-month payment holiday will also be available once six payments have been made, and can only be used once.
- The availability of existing loan schemes (including the Future Fund), which were due to end soon, will now be extended to 30 November 2020. The Chancellor hinted at a new scheme which will take effect in the New Year.
Further deferrals of tax liabilitiesMany businesses and self-employed individuals have already taken advantage of the automatic deferral of VAT payments arising between March and June 2020, and the Income Tax Self Assessment payments due on 31 July 2020. Until today, these payments were due from March 2021 in respect of VAT, and on 31 January 2021 in respect of Income Tax, as single payments.
The changes announced will enable taxpayers to further defer these payments, without interest charges applying, as follows:
- Deferred VAT falling due can now be paid over 11 equal instalments. The deferral is available to all businesses, with no limit to the value of tax deferred, but will need to be applied for.
- Income Tax Self Assessment payments, which will include not only July deferred payments but also payments that would normally arise on 31 January 2021, can now be deferred for a further 12 months, to 31 January 2022. This deferral is capped at £30,000, and will be accessed through a self-serve time to pay facility.