Today, Chancellor Rishi Sunak announced a number of further support measures for employees, employers and businesses alike.
With the current furlough scheme coming to an end in in October, the Government have been coming under increasing pressure to either extend the scheme or come up with a new and different scheme to help those who could be facing redundancy when the Furlough scheme ends.
New support measures have been announced and we summarise below what the Chancellor announced.
JOB SUPPORT SCHEME
- Under the scheme, the government will subsidise the pay of employees who are working fewer than normal hours due to lower demand
- Workers must do at least a third of their normal hours
- Employers will pay staff for the hours they work
- The government and the employer will pay a third each for the hours they can’t work
- It means someone working a third of their hours would receive 77% of their pay
- The grant will be capped at £697.92 per month
- All small and medium sized businesses will be eligible for the scheme
- Larger business will be eligible if their turnover has fallen during the crisis
- It will be open to employers across the UK even if they have not previously used the furlough scheme
- The scheme will run for six months starting in November and replaces the “furlough” scheme
- It means the government will pay a maximum of 22% of someone’s wages, down from 80% at the start of the furlough policy
HOW DOES THE SCHEME WORK?
If an employee works reduced hours the employer pays for that. And in addition the employer and government pay one third of the lost pay each (up to the cap).
So for someone on £2,000 a month working half of their hours, they would get £1,000 normal pay plus £333 extra from their employer and £333 from the government.
SELF EMPLOYED HELP
- The chancellor is extending the self-employed grant on similar terms to the Job Support Scheme
- A grant will be available to those eligible for the Self Employment Income Support Scheme Grant
- The grant will cover three months’ worth of profits for the period from November to the end of January
- It will cover 20% of average monthly profits up to a total of £1,875
- A further grant may be available to the self-employed to cover February 2021 to the end of April, depending on circumstances
- Bounce Back Loans will be extended from six years to 10, cutting monthly repayments by nearly half
- Coronavirus Business Interruption Loan Scheme lenders will also be able to extend the length of loans from the current maximum of six years to 10 years
- The chancellor is also extending the deadline for the government’s coronavirus loan schemes to the end of November
- Businesses struggling can choose to make interest only payments for six months and those “in real trouble” can apply to suspend repayments altogether for six months
- Businesses will not see their credit rating fall as a result, the chancellor says
WHAT ABOUT TAXES?
- The 15% emergency VAT cut for the tourism and hospitality industries will be extended from January 2021 to 31 March 2021.
- Businesses who deferred their VAT bills earlier this year as part of the COVID support measures will no longer have to pay a lump by the end of March 2021.As part of the new measures Companies will be able to pay back their taxes in 11 smaller interest-free instalments
- Self-assessment income taxpayers who need to will be given more time to pay. If debts are less than £30,000 can arrange a 12 month payment plan – subject to speaking to HMRC and agreeing the same.
If you have are affected by any of the above new measures or are unsure on any of the changes do not hesitate to contact us.