The Chancellor has announced that there will be no Budget for the time being but has outlined what he has called The Winter Economy Plan to deal with the effects of coronavirus on the economy.
The Plan has six main strands:
Job Support Scheme – essentially an extension of job protection offered by the Job Retention Scheme, it will start from 1 November 2020 and run for six months. Employees will need to work a minimum of 33% of their usual hours and, for every hour not worked, the employer and the Government will each pay one third of the employee’s usual pay. The Government contribution will be capped at £697.92 per month. This will mean that employees using the scheme will receive at least 77% of their pay, where the Government contribution has not been capped. The employer will be reimbursed in arrears for the Government contribution. All SMEs will be eligible but large businesses will be required to demonstrate that their business has been adversely affected by COVID-19 and the Government expects that large employers will not be making capital distributions (such as dividends), while using the scheme.
SEISS Grant Extension – There will be two further grants, made under the same eligibility criteria as previously, but at a lower level. The first grant will cover the start of November until the end of January and will be set at 20% of average monthly trading profits and capped at £1,875 in total. The second grant will cover the start of February until the end of April and the level has yet to be set.
Extending the temporary VAT reduced rate for hospitality and tourism - The government is extending the temporary reduced rate of VAT (5%) from 12 January to 31 March 2021 and this will continue to 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.
Extension of access to finance schemes – The Government is extending four temporary loan schemes to 30 November 2020 for new applications and is making a variety of changes to those schemes, including increased repayment terms.
VAT deferral ‘New Payment Scheme’ – The Government will give businesses which deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021/22 in 11 equal instalments over 2021-22. All businesses which took advantage of the VAT deferral can use the New Payment Scheme but will need to opt in.
Enhanced Time to Pay for Self-Assessment taxpayers – The Government will give the self-employed and other taxpayers more time to pay taxes due in January 2021. Taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months.
More detail is awaited but the plan can be viewed at: https://www.gov.uk/government/publications/winter-economy-plan