Winter Economy Plan – Key points for SMEs

Delivering his speech in Parliament today, the Chancellor of the Exchequer, Rishi Sunak, announced a package of measures that will continue to protect jobs and help businesses through the uncertain months ahead as the UK continues to tackle the spread of the virus. The package includes:

  • A new Jobs Support Scheme to protect millions of returning workers
  • Extending the Self Employment Income Support Scheme
  • 15% VAT cut for the hospitality and tourism sectors
  • Help for businesses in repaying government-backed loans

The announcement comes after the Prime Minster set out further measures to combat the spread of the virus over the winter, while preserving the ability to grow the economy.

A summary of the key points for SMEs is as follows:

Replacing the furlough scheme

  • From 1 November, a new Job Support Scheme will be introduced to replace the furlough scheme which closes at the end of October
  • The government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand
  • Employees must work a third of their usual hours and employers must continue to pay their salary for the hours they work
  • For the time they are not working, the government and the employer must each pay one third of their equivalent salary
  • This means workers will receive 77% of their usual pay
  • Starting in November, the scheme will run for six months
  • Businesses can claim both the Job Support Scheme and the Job Retention Bonus

Business loans

  • A new ‘Pay as You Grow’ flexible repayment system for businesses who took out 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
  • Those who took out a Coronavirus Business Interruption Loan Scheme have been given the ability to extend the length of loans from a maximum of six years to ten years, where businesses need help to repay the loan
  • Applications for all of the government backed loan schemes will be extended until the end of 2020, giving more businesses access to the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund.

Tax cuts and deferrals

  • The temporary 15% VAT cut for the tourism and hospitality sectors has now been extended to the end of March 2021
  • Businesses 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, businesses will be able to make 11 smaller interest-free payments during the 2021-22 financial year
  • Self-assessment taxpayers have been granted an additional 12-month extension from HMRC on the ‘Time to Pay’ self-service facility. This means that payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022

If you are considering applying to any of the Government loan scheme to support your business, please contact your usual Beavis Morgan Client Partner.

For further information about the Government measures to protect individuals and businesses, visit our COVID-19: Support for UK businesses hub.