Chancellor Rishi Sunak has unveiled a new support package to help businesses get through the pandemic.
His Winter Economy Plan includes a new Job Support Scheme to replace the existing Job Retention Scheme, which ends in October.
He also improved the coronavirus loan schemes and gave businesses longer to apply, extended support for the self-employed, gave businesses more time to repay deferred tax and extended the VAT cut for the hospitality sector.
Here’s a summary of the main points:
The Job Support Scheme runs for six months from November 1. Employers will pay the wages of staff for the hours they work but, for the hours not worked, the Government and the employer will each pay one-third of their equivalent salary. This means employees who can only go back to work on shorter time will still be paid two-thirds of the salary for those hours they can’t work. Employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month. The scheme will be open to all SMEs and to larger businesses that have suffered a drop in turnover.
The Self-Employment Scheme is being extended by providing a further lump sum to cover three months’ profits for the period November to January. This will be worth 20% of average monthly profits, up to £1,875. A second additional grant, which may be adjusted to respond to changing circumstances, will cover the period from February to April 2021.
The deadline for applying for Bounce Back Loans, Coronavirus Business Interruption Loans (CBILS), Coronavirus Large Business Interruption Loans and the Future Fund is extended to November 30. For Bounce Back loans, the maximum repayment period is extended from six years to 10 and businesses can take payment holidays and interest-only periods of up to six months. For CBILS, the guarantee provided by government is extended to 10 years in the hope that lenders will allow borrowers to extend repayments to 10 years.
Business that deferred VAT bills are being given the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March 2021, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year. Likewise, self-assessment taxpayers will be given a 12-month extension to the ‘Time to Pay’ facility, meaning payments deferred from July 2020, and those due in January 2021, will not need to be paid until January 2022.
Rob Johnston, Chief Executive of Cumbria Chamber of Commerce, said: “We were very worried about the end of the furlough scheme. South Lakeland and Eden had the highest proportion of furloughed workers in the country so Cumbria is really exposed.
“A British Chambers’ survey revealed that a third of businesses were planning to shed workers when the scheme ends. Cumbria’s already seen unemployment double since lockdown and it would certainly have gone a lot higher.
“The new scheme isn’t as generous but it’s a lot better than doing nothing and it will reduce job losses. It won’t save businesses beyond the point of no return but it will help those that have a future to make a go of it.”
He added: “There are a lot of self-employed businesspeople in Cumbria so we’re pleased that he’s extended the Self-Employment Income Support Scheme.
“The tweaks to the loan schemes and the extra time to repay deferred tax will help with cashflow, which is probably the number one issue for businesses here.
“And extending the five per cent VAT rate for hospitality will help the sector get through what’s going to be a tough winter.
“Overall, we’re relieved that he’s acted and welcome what he’s done. It works particularly well for Cumbria. However, he will need to do more if the Government tightens lockdown restrictions further.”
We’ll publish detailed guidance on the Chancellor’s measures, as its published, in our Restart Toolkit.
We also have details of changes to the coronavirus loan schemes in this articles comparing the different schemes and outlining their pros and cons.