Chancellor outlines economic plan for winter including longer loan repayment terms and extended employee support

Chancellor of the Exchequer, Rishi Sunak,

Chancellor Rishi Sunak has outlined a series of economic measures created in a bid to retain jobs and keep businesses afloat amid the ongoing impact of the pandemic.

Speaking in Parliament today (September 24) the Chancellor revealed a new wage payment help scheme and more tax and VAT breaks.

The schemes are:

Employees working shorter hours will receive top ups from employers and government. Employees must be working at east a third of their normal hours with the other 2/3rds of income subsidised between government and employer. This will start in November and run for 6 months. It is open to firms even if they have not previously used the furlough scheme. Businesses can claim from both the new Job Support Scheme and Job Retention Scheme. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.

A similar scheme to extend the self-employment grant will also be put in place. An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. 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, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April.

Loans

Bounce Back loans – more time will be given to repay these loans through pay as you grow. Repayments can be extended from six to ten years – halving many repayment amounts -interest only payments can also be made. For any business really struggling payments can be deferred for 6 months. Credit ratings will not be affected.

The deadline for all loan schemes extended to end of year

An extension of ten years for repayments will also be made to the Coronavirus Business Interruption loan scheme.

VAT and tax payments

Businesses with VAT payments that had been deferred to March 2021 will now be able to pay over 11 months.

Self assessment tax can be spread over 12 months from January 2021. The “Time to Pay” self-service facility will mean payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

For hospitality and tourism businesses the VAT rate due to increase from 5% back to 20% on January 13 will not now happen until March 31, 2021.

The Chancellor said: “Our lives can no longer be put on hold. Life means more than simply existing. We find meaning and hope in our friends and family and our work and community.”