28 Sep 2020
The government has outlined additional support to provide certainty to businesses and workers impacted by coronavirus.
The support package includes:
• A new Jobs Support Scheme
• Extending the Self Employment Income Support Scheme
• An extension to the 15% VAT cut for the hospitality and tourism sectors
• Extensions for businesses repaying government-backed loans
• Deferred tax and vat payments
Job Support Scheme
A new Job Support Scheme will be introduced from 1st November to protect jobs in businesses who are facing lower demand due to coronavirus.
The scheme will run for six months and help keep employees attached to the workforce.
Employers will continue to pay the wages of staff 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. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month. Employees do not need to have been previously furloughed.
Self-Employment Income Support Scheme Grant (SEISS)
The government is extending the Self Employment Income Support Scheme Grant (SEISS). 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 will be available for self-employed individuals to cover the period from February 2021 to the end of April.
Tax cuts and deferrals
The government will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year.
In addition, business who deferred their VAT bills now have the option to pay back in smaller instalments under the New Payment Scheme. Rather than paying a lump sum in full at the end March next year, businesses will be able to make 11 smaller interest-free payments during the 2021-22 financial 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.
Coronavirus loan schemes
Businesses who took out a Bounce Back Loan can now extend the length of the loan from six years to ten, cutting monthly repayments by nearly half, through a new Pay as You Grow flexible repayment system.
Interest-only periods of up to six months and payment holidays will also be available to businesses.
In addition, applications for the government’s coronavirus loan schemes, Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund are now being extended until the end of November.
Reaction from the Chamber network
Responding to The Chancellor’s announcement, Dr Adam Marshall, Director General of the British Chambers of Commerce, said:
“The measures announced by the Chancellor will give business and the economy an important shot in the arm. Chambers of Commerce have consistently called for a new generation of support to help protect livelihoods and ease the cash pressures faced by firms as they head into a challenging and uncertain winter.
“The Chancellor has responded to our concerns with substantial steps that will help companies preserve jobs and navigate through the coming months. The new Jobs Support Scheme will help many companies hold on to valued, skilled employees. Businesses will be eager to see the detail and consider whether and how they will be able to use the scheme.
“The Chancellor has listened to our consistent calls for an extension of business lending schemes, more flexible repayment terms for loans, and tax forbearance measures. With almost 40% of our Members saying they have 3 months cash in reserve or less, this will lessen the immediate pressure and provide reassurance for many affected firms at a challenging time.
“The Chancellor must remain open to taking additional action to support parts of the economy facing unprecedented challenges over the months ahead. Chambers of Commerce across the UK will continue to work with government to ensure the benefits of these schemes are delivered to firms on the ground.”