Following Boris Johnson’s announcement of further restrictions due to fears of a second wave, Rishi Sunak has now delivered his Winter Economy Plan. Here’s a breakdown of who will and won’t receive help under the new proposals.
Owner Managed Companies
The plan extends the Self Employment Income Support Grant (SEISS) but provides no additional support for owner-managed companies. These are businesses where owners pay themselves a basic wage and top-up with dividends.
With another six months of restrictions predicted, many business owners face an entire year with little or no financial assistance.
Now is the time to consider strategies to help your business survive. Focus on adapting costs and maximizing revenues.
Tax Cuts and Deferrals
Businesses in the tourism and hospitality sectors will continue to benefit from the 5% VAT reduction until March 2021.
Those who deferred VAT bills through the New Payment Scheme can now spread repayments over 11 smaller, interest-free instalments during the 2021/22 financial year, rather than making a lump sum payment by March 2021.
Self-assessment taxpayers will also benefit from a 12-month extension on HMRC’s ‘Time to Pay’ facility, providing extra flexibility during uncertain times.
Business Loans
The Government has introduced a ‘Pay as You Grow’ repayment system for businesses with Bounce Back Loans. This allows them to extend their loan terms from 6 to 10 years, reducing monthly repayments by nearly half. Businesses will also have the option to take payment holidays or opt for interest-only periods to ease financial pressure.
Businesses that accessed funding through the Coronavirus Business Interruption Loan Scheme (CBILS) can also extend their repayment terms from 6 to 10 years.
Additionally, the Chancellor announced that applications for Government-backed loan schemes are extended until the end of November. This means businesses now have more time to apply for CBILS, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme, and the Future Fund.
Job Support Scheme
The new Job Support Scheme will begin on 1st November, replacing the furlough scheme. It is designed to support employees who are working reduced hours due to decreased business demand.
To be eligible, employees must work at least 33% of their usual hours, with their employer paying for these worked hours. For hours not worked, the employee will receive 66% of their usual salary, shared equally between the employer and the Government. Payments under the scheme are capped at £697.92 per month, based on a salary of £2,500 per month.
The scheme is open to all UK companies, including those who have never used the furlough scheme.
If following the Chancellor’s announcement today you wish to take advice on the future of your business, complete our easy enquiry form and we’ll get in touch.