What you need to know about the Chancellor’s announcement
At the end of September, Chancellor Rishi Sunak announced a new Winter Economy Plan, with new measures to support businesses and individuals through the economic impact of the coronavirus pandemic, as well as extensions of current measures.
While he faced pressure to extend the furlough scheme, the scheme ended as planned in October and was replaced with the Job Support Scheme.
Here are some support measures in place.
Support for employers and employees: Job Support Scheme
From 1 November, the Government is now helping employers by subsidising the salary of employees who are working at least one-third of their usual hours. The aim is to reduce redundancies and keep people in the workforce.
For the hours that an employee is unable to work, the Government will pay 33% of their usual salary, up to a maximum of £697.92 per month. The scheme will run for six months.
So, if you are working half of your usual hours, you’ll receive 100% of your salary for those hours, plus 33% of your salary for the unworked hours (totalling 66.5% of your usual salary), assuming the cap is not met.
Support for self-employed people: Self-employed Income Support Scheme (SEISS)
SEISS grants will continue to be available to self-employed individuals if they are actively trading but their business activities have been limited by the pandemic.
One grant will cover the period from 1 November to 31 January, offering 20% of the individual’s average trading profits. The second grant will cover the period from 1 February to 30 April, on the same basis.
Application for these grants is available online, following the same process as the first and second waves of grants.
Support for small business owners: Bounce Back Loan Scheme
The existing Bounce Back Loan Scheme is to be extended to 30 November, allowing small businesses to apply for loans of between £2,000 and £50,000 (capped at 25% of their turnover) with no repayments for the first 12 months.
The Government will pay any interest accrued in those 12 months, as well as guaranteeing the loan to make it easier for small businesses to borrow.
Additional support for small business owners: Pay as you Grow
Businesses that have received a loan under the Bounce Back Loan Scheme will be given up to ten years to repay that loan, significantly reducing the monthly repayments.
Plus, to give business owners added flexibility in repaying the loan, they will have two options to cope with temporary cash flow problems in the future:
- Pause repayments for up to six months (an option they can use just once within the ten-year repayment period)
- Move to interest-free repayments for up to six months (an option they can use three times).
Support for Self-Assessment taxpayers: Time to Pay
Taxpayers with taxes due in January 2021 of below £30,000 will be able to spread their payments over an additional 12-month period, i.e. until January 2022. This includes tax payments on account that were due in July 2020, which had previously been deferred until January 2021.
Making good decisions in unprecedented times
During these challenging times, making good financial decisions can feel overwhelming. If you’re experiencing a change in your financial circumstances due to coronavirus (COVID-19), we are here to guide you and support you with professional financial advice. Please contact us to see how we can help.