Following the Chancellor, Rishi Sunak’s winter economic plan announcement today, we outline below the key points.

New Job Support Scheme

Chancellor Rishi Sunak announces a new Job Support Scheme, starting in November which will run for six months.

  • The scheme replaces ‘the furlough scheme’ and means the government will pay part of workers’ wages who are working shorter hours.
  • This new Jobs Support Scheme will be launched for employees working at least a third of their normal hours, who are being paid for that as normal. The government and employers will jointly increase their wages to cover two-thirds of their lost pay and the employee will keep their job.
  • The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
  • All small and medium-sized businesses are eligible, but larger businesses must show their turnover has fallen during the crisis. Employers can use it even if they have not previously used the furlough scheme it replaces.
  • The existing grant for self-employed people is being extended on similar terms to the Jobs Support Scheme.

Government Loans

  • The Government guarantee on Coronavirus Business Interruption Loans will be extended to 10 years and a new successor loan guarantee programme will be announced in January.
  • The existing grant for self-employed people is being extended on similar terms to the Jobs Support Scheme.
  • A “pay as you grow” scheme was announced for businesses, allowing them to extend their bounce back loans from six to ten years, reducing their payments.
  • Businesses can also move to interest-only payments or suspend repayments for six months if they are “in real trouble”. Credit ratings will be unaffected.

VAT

  • The temporary reduction of VAT from 20% to 5% for the hospitality and tourism sector will be extended until 31 March 2021.
  • Companies that deferred their VAT bill no longer have to pay a lump sum in March 2021.

Income Tax

  • Extra support has been announced to allow people to delay their income tax bill – but it will still need to be paid. Millions of self-employed people or those who have one source of income will continue to complete a self-assessment tax form every year.
  • The Chancellor said that those with a tax debt of up to £30,000 will be able to set up a payment plan over 12 months to January 2022.

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