Overview of the Government’s latest economic support measures

Chancellor Rishi Sunak has today announced a host of new measures to support businesses and employees through the continued coronavirus pandemic. An explanation of these new measures will be detailed below.

Job Support Scheme

With the current Job Retention Scheme coming to an end on the 31st October, the Chancellor has announced this new scheme in order to safeguard viable jobs.

To be eligible, employees must work a minimum of 33% of their hours. Of the remaining two thirds of their hours not worked, the government and their employer pay 1/3 of this amount each.

So if an employee was on a normal gross salary of £24,000 a year and were working 33% of their hours they would still receive £18,666 gross salary, equating to 77% of their normal gross pay.

The employer would fund £13,333 of this amount and the government would provide the balance of £5,333.

It is important to note, that as with the previous scheme, the Government has capped the level of contribution. The level of government grant will be calculated on an employee’s usual salary but will be capped at £697.92 per month.

This scheme will start on the 1st November and will run for 6 months. Employees placed on this scheme are not required to have previously been placed on furlough and employers do not need to have previously made furlough claims.

Businesses can still claim the £1,000 job retention bonus in addition to this scheme.

The scheme will be open to all small and medium sized businesses; large businesses must be able to prove that they have been adversely affected by Covid in the form of a reduction in their Turnover.

Employers will not be able to issue redundancy notices to any employees on the scheme.

Self Employed Scheme & Self-Assessment Liabilities

It has been announced that the Self Employment Support Scheme will be extended on “similar terms” to the Job Support Scheme.

No further detail has been released on this announcement.

With regards to personal tax liabilities, the Chancellor also announced that individuals with a tax debt up to £30,000 falling due on the 31st January 2020 can set up a payment plan to pay this over 12 months to January 2022. This can be arranged by speaking directly to HMRC on the phone.

Pay As you Grow Scheme

The Chancellor has also announced an extension of the repayment period for businesses who borrowed money under the Coronavirus Business Interruption Loan Scheme. The new period will can be extended up to 10 years instead of the initial 6 year period meaning repayments will be almost half of the original amounts.

For those who used the Bounce Back Loan Scheme, repayments can also be extended to 10 years rather than 6. Businesses can also ask to make interest only payments or suspend payment for up to 6 months to help with cash flow.

The deadline for the schemes has also been extended until the end of the year and a new scheme will be announced in January.

Importantly credit ratings will not be affected for businesses taking advantage of the longer term.

VAT Repayments & 5% Rate Extension

Businesses who deferred their VAT liabilities will no longer be required to pay these by 31 March 2021. Instead they can now be spread over 11 months with no extra interest charges.

The Chancellor also announced that the 5% reduced rate for hospitality and tourism will be extended to 31 March 2021 rather than coming to an end in January as first planned.

Detailed guidance on many of these measures is yet to be released. As this information becomes available we will endeavour to provide this to you. If in the meantime you would like to discuss any of these measures, or any other issue, please feel free to contact us.