Covid 19 New Winter Support Measures for Businesses and Individuals


Winter support measures for businesses and individuals

November 02, 2020

Winter Economic update was delivered on September 24, 2020 by Chancellor Rishi Sunak. It unveils a new package of Government support for Covid 19 affected businesses and employees.

To quote Chancellor Rishi Sunak -

“There has been no harder choice than the decision to end the furlough scheme. The furlough was the right policy at the time we introduced it. It provided immediate, short-term protection for millions of jobs through a period of acute crisis. But as the economy reopens it is fundamentally wrong to hold people in jobs that only exist inside the furlough. We need to create new opportunities and allow the economy to move forward and that means supporting people to be in viable jobs which provide genuine security.”

Under the new measures the following is worth noting:

A new Job Support Scheme:

A new Job support Scheme was announced for SMEs. The CJRS Scheme (Coronavirus Job Retention Scheme) was supposed to end on 31 October 2020 and will end as planned.

To quote Chancellor Rishi Sunak -

“Many businesses are operating safely and viably, but they now face uncertainty and reduced demand over the winter months. What those businesses need is support to bring people back to work and protect as many viable jobs as we can. To do that, I am announcing today the new Jobs Support Scheme.”

There may be employers who are able to retain employees but on shorter hours. The new Job Support Scheme will provide funding to such employers. It will start from November and run for 6 months as of now.

Following is worth noting:

  1. 1- Employees must work at least a third of their normal hours and be paid for that work, as normal, by their employer.
  2. 2- All small and medium-sized businesses are eligible but larger businesses, only when their turnover has fallen.
  3. 3- It will be open to employers across the United Kingdom, even if they have not previously used the furlough scheme.

 

Reduced VAT rate:
the temporary reduced (5%) rate of VAT was applicable on certain standard-rated items to help some businesses. The same will be extended till 31 March 2021.

To quote Chancellor Rishi Sunak -

“The final step I’m taking today will support two of the most affected sectors: hospitality and tourism. On current plans, their VAT rates will increase from 5% back to the standard rate of 20% on January the 13th. So to support more than 150,000 businesses and help protect 2.4 million jobs through the winter. I am announcing today that we are cancelling the planned increase and will keep the lower 5% VAT rate until March 31st next year.”

Flexibility over payment of VAT and personal tax bills:      

More flexibility is given to taxpayers over payment of VAT and personal (self-assessment) tax Returns. For VAT payment can be deferred by spreading it over 11 instalments, whilst 12 interest-free payments are allowed for self-assessment tax due on 31 January 2021

Bounce back loans:

For liquidity purpose the repayment terms of Bounce Back Loans and other coronavirus support loans are extended and that will help the cashflow of businesses. Particularly, a new Pay As You Grow scheme will allow businesses with bounce back loans to extend the term of the loan from six to 10 years.

One can apply for instalment plan if they wish to spread their payment an opt in process will be in place by early 2021 for VAT whereas for SA they can use HMRC’s self-service time-to-pay facility or contact HMRC’s Time to Pay Self-Assessment Helpline on 0300 200 3822.

In the words of Chancellor Rishi Sunak

“Bounce Back Loans have given over a million small businesses a £38 billion boost to survive this pandemic. To give those businesses more time and greater flexibility to repay their loans, we are introducing Pay As You Grow.

This means:

  • - Loans can now be extended from six to ten years – nearly halving the average monthly repayment
  • - Businesses who are struggling can now choose to make interest-only payments
  • - Anyone in real trouble can apply to suspend repayments altogether for up to six months

No business taking up Pay As You Grow will see their credit rating affected as a result.”

He further discussed the changes of other loan schemes:

More than 60,000 Small and Medium sized businesses have now taken out Coronavirus Business Interruption Loans.  To help them, I plan to extend the government guarantee on these loans for up to ten years, making it easier for lenders to give people more time to repay. I am also extending the deadline of all our loan schemes to the end of the year. And we are starting work on a new, successor loan programme, set to begin in January. Third, I want to give businesses more time and flexibility over their deferred tax bills. Nearly half a million businesses deferred more than £30 billion of VAT this year. On current plans, those payments fall due in March. Instead, I will allow businesses to spread that VAT bill over 11 smaller repayments, with no interest to pay. And any of the millions of self-assessed income taxpayers who need extra help, can also now extend their outstanding tax bill over 12 months from next January.