The Chancellor's Winter Economic Plan
What did he announce?
Posted by Roger Eddowes on 28/09/2020 @ 8:00AM
Last week, the Chancellor announced his Winter Economic Plan designed to support the UK economy and keep the unemployment rate down. He announced a new Job Support Scheme to replace CJRS when it ends in October ...
The Chancellor felt it prudent to announce the Winter Economic Plan last week!
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I've put together a summary of the key points he announced to combat mass unemployment in the face of the pandemic continuing. The Chancellor himself has said that the UK's economy is likely to face "a more permanent adjustment" and he's looking to protect as many 'viable' jobs as he possibly can with his Winter Economic Plan.
The New Job Support Scheme
This starts in November and will cover 22% of pay for workers in viable jobs for a period of six months. This is a short-time working scheme where employees will need to work at least a third of their normal hours to qualify. Employees get paid for the hours they work, but for other times, both the Government and the employer each cover one-third of the last pay. There is a Government cap of £697.92 per month.
Self-employed people will be heartened to hear that SEISS has been extended from November 2020 to April 2021. There will be two further taxable grants, and the first one (the third actual grant), will cover 20% of average monthly trading profits and again, paid out in a single instalment, capped at £1,875.
The details on the fourth grant will be announced later, but it is expected that newly self-employed individuals will be eligible if they have submitted their 2019/20 tax return by the 31st January 2021.
VAT And Self-Assessment Deferrals
Businesses that are struggling with cashflow who have deferred VAT will have the option to spread their payments into 11 equal and interest-free instalments in the 2021/22 tax year. You must opt-in to this scheme. The 5% VAT discount for businesses in the hospitality industry will continue until the end of March 2021.
Self-assessment tax payers with up to £30,000 of liabilities can use the HMRC Time To Pay facility to give themselves an additional 12-months to pay.
An Extension Of Insolvency Measures
Measures to protect businesses from insolvency will also be extended. They should expire on the 30th September, but virtual AGMS can continue to the end of the year and statutory demands/winding up orders will be restricted until then too.
And finally, any business who needs one of the Government's state-backed loan schemes can apply until 30th November 2020 and they will be announcing another guaranteed loan programme which will begin in January 2021. The new Pay As You Grow initiative means any business that borrowed using a Bounce Back Loan can extend their repayment period to 10 years, halving their average monthly repayment.
Some additional (and very welcome) information about the Bounce Back Loans is that businesses can move to interest only payments for 6-months, and they can use that facility up to three times. They can also pause their repayments once after making at least six payments.
So, the November Budget has been shelved for this year in favour of the Winter Economic Plan, but there will be an Autumn Statement and financial forecast.
The Government is expected to revert to the usual March Budget and Financial Bill cycle although this still has to be confirmed and does depend on the COVID-19 pandemic and how the UK economy recovers in the new year.
Until next time ...
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About Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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