Following the Chancellor's Budget speech yesterday (27 October) Head of Tax John Endacott gave his insights on the following themes: Setting the scene - the challenges…
Today Chancellor Rishi Sunak set out his plans to help businesses and employees as the economic impact of the Covid-19 pandemic continues into the winter months.
So what are the key points of his Winter Economy Plan?
Job Support Scheme
Replacing the Coronavirus Job Retention Scheme, the Job Support Scheme will start on 1 November and run for six months.
- To be eligible, employees must work a minimum of 33% of their normal hours, for which they will be paid as normal by their employer
- For the remainder of their normal hours, the government and the employer will each pay a third of the employee’s wages
- This means that an employee working a third of their normal hours will receive 77% of their normal pay, only slightly less than under the current furlough scheme.
- However, the grant is capped at £697.92 per month.
Steve Ashworth has reviewed what we know so far about the Job Support Scheme here.
Support for businesses
For businesses, the Chancellor announced an extension of the government guarantee for Coronavirus Business Interruption Loans and Bounce Back Loans.
Richard Wadman outlines what we know so far about the Coronavirus Loan Schemes here.
There were also two key measures relating to VAT:
- The reduced VAT rate of 5% will remain in place until 31 March 2021 (extended from the original end date of 13 January). This applies to certain supplies of hospitality, holiday accommodation and admission to attractions.
- Businesses that have made use of the VAT payment deferral offered earlier this year will be given extra time to pay. Rather than paying in full at the end of March 2021, these businesses will be able to choose to make 11 equal payments over 2021-22. All businesses which deferred VAT payments are eligible for this extension, but it is understood they will have to opt in.
Support for the self-employed
If you were eligible for grants under the Self Employment Income Support Scheme, you will be able to claim another grant to make up for lost earnings in November, December and January.
This will be worth 20% of your average monthly profits, up to a total of £1,875.
As more details are announced over the coming days, our experts will be looking at what they mean for businesses, so please keep an eye on our Coronavirus Updates hub for more information.