Winter Economy Plan 2020 announcements made on 24 September 2020
Chancellor Rishi Sunak has unveiled his Winter Economy Plan, which entails a multibillion-pound package of financial support to help protect jobs and the economy from the impact of Covid-related restrictions.
This new plan will help the country to get through the winter, in advance of a likely March 2021 Budget and the availability of a Covid vaccine.
Although the Chancellor has postponed his November Budget, and possible tax rises, he is still expected to announce the outcome of a Spending Review later this year.
The Winter Economy Plan includes the next version of the furlough scheme - the Jobs Support Scheme, as saving jobs and businesses remains a key priority.
The self employed income scheme will also continue.
The Winter Economy Plan documents can be downloaded from the Treasury website.
A new Job Support Scheme will be introduced from 1 November for six months to protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus.
Further information can be found in our separate article.
Employers will continue to pay the wages of staff for the hours they work - but for the hours not worked, the government and the employer will each pay one third of their equivalent salary.
This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work.
In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course.
It is designed to sit alongside the Jobs Retention Bonus and could be worth over 60% of average wages of workers who have been furloughed – and are kept on until the start of February 2021. Businesses can benefit from both schemes in order to help protect jobs.
The Treasury has confirmed that the Job Support Scheme will not cover pension or National Insurance for workers.
In addition, the Government is continuing its support for millions of self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus.
The first grant will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.
An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April - ensuring support continues right through to next year.
Further information is provided in a separate article.
The government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year.
In addition, up to half a million business who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
On top of this, around 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
The burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan.
This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.
The government also intend to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November. As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund.
This change aligns all the end dates of these schemes, ensuring that there is further support in place for those firms who need it.
Brief recap – key changes previously announced this year:
Bounce Back Loans have given over a million small businesses a £38 billion boost to survive this pandemic. To give those businesses more time and greater flexibility to repay their loans, the government is introducing 𝐏𝐚𝐲 𝐀𝐬 𝐘𝐨𝐮 𝐆𝐫𝐨𝐰.
This means: Loans can be extended from six to ten years – nearly halving the average monthly repayment. Businesses who are struggling can now choose to make interest-only payments. Anyone in trouble can apply to suspend repayments altogether for up to six months.
To give businesses longer to apply for all of the government's loan schemes, it is extending all the deadlines to the end of the year. The Treasury is starting work on a new, successor loan programme, set to begin in January.
Outstanding tax bills can be paid over 12 months from January 2021
5% VAT rate - extended to 31 March 2021.
Nearly half a million businesses deferred more than £30 billion of VAT this year. Those payments are all due in one lump sum in March. Instead, the Chancellor is allowing businesses to 𝐬𝐩𝐫𝐞𝐚𝐝 𝐭𝐡𝐞𝐢𝐫 𝐕𝐀𝐓 𝐛𝐢𝐥𝐥 𝐨𝐯𝐞𝐫 𝟏𝟏 𝐫𝐞𝐩𝐚𝐲𝐦𝐞𝐧𝐭𝐬, with no interest to pay.
For more guidance on getting businesses working again after the Coronavirus, check out our Business After-COVID Knowledge Hub.