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Winter Economy Plan

24th September 2020 | Written by In Accountancy | Categories : CoronaVirus, Limited Companies, News, Personal Tax, Small Business Advice, Sole Traders, Tax Advice
Winter Economy Plan

Rishi Sunak outlined his Winter Economy Plan this afternoon – below I have summarised what we know so far and what exactly that means for our small business clients.

Winter economy plan – As not everything will apply to everyone, I’ve split it down as outlined below – please scroll down to the areas that interest you 😊

Winter Economy Plan

  • Job Support Scheme
    • From November 2020
  • SEISS Extension
    • And deadline approaching for round two of phase one
  • Tax Cuts and Deferrals
    • For both self-assessment and VAT
  • Pay as You Grow
    • Extensions to BBLS and CIBLS and plan for January

Job Support Scheme

The chancellor made it clear that his purpose now was to support VIABLE jobs, as opposed to keeping people hanging in limbo for an unknown period of time.

So, what are the rules of the scheme?
  • The new scheme will start on 1 November 2020 and run for six months
  • ALL SME businesses, with a UK bank account and PAYE scheme are eligible, and the scheme will be open to businesses who have NOT previously used the scheme, and for employees who have NOT previously been furloughed
  • Employees must work a minimum of 1/3 of their ‘usual’ hours
  • The employer must pay them 100% of their usual salary for the hours worked
  • For the hours not worked the employer and the government must each pay 1/3 of their usual salary
    • This means that the employee will receive 100% or hours worked and for two thirds of the hours not worked
    • The level of grant will be capped at £697.92 per month, which is substantially lower than the current percentage of £2500 max
  • Employers can still claim the Job Retention Bonus of £1,000 while taking advantage of this new scheme 😊

SEISS Extension

Rishi also announced an extension to the Self Employed Income Support Scheme, with another two rounds of lump sum taxable grants becoming available.

What do we know?
  • This will be available for those who are currently eligible for SEISS
  • You MAY STILL continue to actively trade, but may be facing reduced demand
  • Initial lump sum to cover period from November 2020 to January 2021
    • To the value of 20% of average monthly profit for three months
    • Capped at a total of £1875
  • A second grant will be available for the three month period from February to April 2021
    • Details are to be determined based on the circumstances at the time

Please note the second round of original funding is still open for applications, but will close on October 19 2020 – if you haven’t yet applied for your grant do so before it’s too late!

Tax Cuts and Deferrals

This is great – we’ve already had some good support with July 2020 payments on account automatically deferred until January 2021, payment of VAT liabilities during the height of lockdown was deferred until 31 March 2021, and VAT for the hospitality and tourism sectors was reduced to 5% from 15 July until 12 February, and this announcement gives us more!

So what exactly is changing?
VAT
  • VAT reduction to 5% for the hospitality and tourism sector has been extended from 12 January to 31 March
  • If you deferred your VAT earlier in the year until 31 March 2021, well you may now pay that off via 11 interest free payments during the 2021-22 year!
Self Assessment
  • For ANY self assessment tax payments due by 31 January 2021, you have been given a 12 month extension!!
  • This includes any payments on account for July 2020 as well as any other liabilities due to be paid by 31 January 2021
  • Meaning that these liabilities do not now need to be paid in full until January 2022!
  • ‘Time to Pay’ arrangements will carry no interest, nor penalties
  • But PLEASE do file your returns on time

And that’s not all… As Frank Carson might have said… “there’s more”…

For those of you either too young, or not Northern Irish enough to have any idea who Frank Carson is… here’s…

Actually, I’ve just whiled away 20 minutes trying to find a short YouTube clip I could share here for you, but wow, how politically incorrect was the humour of the 1970s??!

I’ll let you search for yourselves!

Pay as You Grow

Just a clever play on words? Well no, not this time. The already generous loan schemes are set to become more generous, and we would urge anyone who think they might benefit from some additional cashflow in their business at the moment.

So what has changed?
Bounce Back Loan Scheme – BBLS

Those who have taken advantage of the BBL will see the following changes and additional benefits:

  • Loan repayment terms can now be extended from 6 to 10 years, effectively halving the repayment amounts
  • Interest only repayment options will be offered
  • Repayment ‘holidays’ will be possible, for up to six months
Coronavirus Business Interruption Loan Scheme – CBILS
  • The Government Guarantee on loans taken out on this scheme has been extended to six years!

Additionally:

  • The deadline for applying for each scheme has now been extended until the end of the year.
  • There is a new scheme set to be announced which will be available once the BBLS and CBILS close, and will be available from 1 January 2021

As the Chancellor said already, he can’t save every job, but I for one continue to be impressed by the economic support that the government is providing.

I know of many of you who will be relieved to hear of this support, and for some this gives confidence that you will survive through the crisis.

I feel for the travel and tourism, and the events industries, as I’m sure we all do. Let’s hope that these businesses can survive and find a way through.

I had hoped to see more support and encouragement for entrepreneurship outlined today, but perhaps that’s for later. And a true entrepreneur doesn’t wait for a helping hand…

As always, please do contact us if you need any support or just want to chat things through.

You can read the full report on Rishi’s Winter Economy Plan and today’s speech here, and of course as soon as we have more details we will post further info.

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Please remember that the information outlined above is my interpretation of the announcements as of 24 September 2020 – there will I am sure be more updates, finer details and amendments to follow.

Take care and stay safe x