The Chancellor of the Exchequer provided an economic update, in which he set out the next stage of the Government’s strategy to protect jobs and businesses impacted by Covid-19. Below are the highlights from the Statement, scroll down for links to his speech, the accompanying news article and the policy paper, which provides a bit more of the detail.
New Job Support Scheme
This follows on from the CJRS, which will end in October.
- From 1 November, for the next six months, the Job Support Scheme (JSS) will protect viable jobs in businesses who are facing lower demand over the winter months due to COVID-19.
- Employees will have to work at least a third of normal hours and they will be paid as normal for those hours.
- The Government and employers will cover pay lost, therefore employees working 33% of their hours will receive at least 77% of their pay.
- The scheme is open to all employers with a UK bank account and a UK PAYE scheme.
- All Small and Medium-Sized Enterprises (SMEs) will be eligible.
- Large businesses will be required to demonstrate that their business has been adversely affected by COVID-19.
- All employers will be allowed to apply, even if they did not use the furlough scheme and firms can use it alongside the Job Retention Bonus.
Business loan schemes
- The application deadline for all coronavirus loan schemes – including the future fund – has been extended to 30 November ensuring even more businesses can benefit from Government-backed support.
Bounce Back Loan Scheme
- The Chancellor will introduce ‘Pay as you Grow’ to help with repayment of this loan.
- This means loans can be extended from six to ten years, almost halving the average monthly repayment.
- Businesses which are struggling can choose to make interest-only payments.
- Any business in difficulty can apply to suspend repayments altogether for up to six months.
Coronavirus Business Interruption Loan Scheme (CBILS)
- Lenders have been enabled to offer borrowers more time to make their repayments where needed, meaning loans can be extended from six to ten years.
- The Self-Employment Income Support Scheme (SEISS) will be extended on similar terms to the JSS.
- The grant will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to COVID-19.
- The scheme will last for 6 months, from November 2020 to April 2021.
- The extension will be in the form of two taxable grants.
- The first grant will cover a three-month period from the start of November until the end of January. This initial grant will cover 20%of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total.
- The second grant will cover a three-month period from the start of February until the end of April. The government will review the level of the second grant and set this in due course.
Deferred VAT payments
- Businesses who deferred their VAT payments will no longer have to pay a lump sum at the end of March 2021.
- They will have the option of splitting it into smaller, interest free payments over the course of 11 months – which will benefit up to half a million businesses.
- Any of the self-assessed income taxpayers who need extra help, can also now extend their outstanding tax bill over 12 months from January 2021.
- The Government has extended the 15% VAT cut (from 20% to 5%) for the tourism and hospitality sectors to the end of March 2021.
The Chancellor’s speech in full is available here.
The policy paper supporting the Statement can be accessed here.