The government today announced its Winter Economy Plan, which introduces new measures to protect jobs and businesses impacted by COVID-19, benefiting agencies and suppliers in the property sector during a time of great difficulty. Here is a breakdown of the key points:
Job Support Scheme
With the Furlough Scheme coming to an end on 31 October, Chancellor Rishi Sunak outlined that additional government support would be on its way with the launch of a Job Support Scheme on 1 November to protect viable jobs in businesses who are facing lower demand over the winter months due to COVID-19.
The scheme will run for six months to help companies maintain their employees, with the government contributing towards the wages of employees working fewer hours due to decreased demand.
Employers will still pay the wage of employees for the hours they work, but for the hours not worked, the government and the employer will each pay one third of their equivalent salary. Employees must be working at least 33% of their usual hours in order to qualify, and the level of grant will be calculated based on an employee’s usual salary, capped at £697.92 per month. The Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme.
Self-Employment Income Support Scheme Grant (SEISS)
The government has also chosen to extend the Self Employment Income Support Scheme Grant (SEISS) which provides critical support to the self-employed. The grant is 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 initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.
An additional second grant will be available for self-employed individuals to cover the period from February 2021 to the end of April.
Tax cuts and referrals
Businesses which deferred their VAT bills previously in the year will have access to further support through the New Payment Scheme, allowing them to pay back their VAT in 11 smaller instalments during the 2021-22 financial year, rather than paying a lump sum in full at the end March next year.
Self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the ‘Time to Pay’ self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
Flexibility on the payback of business loans
The government also announced a new ‘Pay as You Grow’ repayment system that will provide flexibility and support for businesses which took out and are repaying a Bounce Back Loan. This includes extending the length of the loan from six years to 10, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.
Lenders of the Coronavirus Business Interruption Loan Scheme will also be given the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
Applications for the government’s coronavirus loan schemes will also be extended until the end of November. This means more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund – with all end dates aligned.