With the furlough scheme winding down and local lockdowns on the increase to try and curb the rising tide of coronavirus, it was almost inevitable the Chancellor would have to step in again. On 24 September 2020, Rishi Sunak did just that by announcing his unscheduled ‘winter economy plan’.
Job Support Scheme
- Sunak announced that the Government will subsidise wages for employees who can work at least 33% of their contracted hours.
- For every hour not worked, the employer and the Government will cover at least a third of the employee’s pay, meaning employees on the scheme receive at least 77% of their pay.
- This new scheme, which will launch in November, will run for the next six months, after the furlough scheme expires this month.
- Sunak also revealed all SMEs will be eligible for the new scheme, regardless of whether or not they have already used the furlough scheme.
- Chancellor revealed plans for a ‘pay as you grow’ scheme, giving businesses who have borrowed under the bounceback loan scheme up to ten years to repay their loan, and the option to make interest-only payments or suspend payments for a six-month period.
- The payment term for the coronavirus business interruption loan scheme has also been extended from six to ten years.
- Businesses that deferred their VAT payments between March and June will now have the choice to make 11 small payments with no interest, rather than one lump sum by 31 March 2021.
- The reduced 5% rate of VAT for hospitality and tourism businesses will remain in place until 31 March 2021, instead of reverting to 20% after 12 January 2021.
- The cut had originally been made at the chancellor’s summer economic update.
If you’d like to find out more, check out our latest Economic Update for more details on the new measures.