The Chancellor’s Winter Economic Plan

Opening Remarks

• Rishi Sunak said the UK is in a fundamentally different position to what it was in March when the coronavirus first spread
• He gave a summary of the furlough scheme so far:
  • It has cost the UK £39.3bn so far
  • 9.6 million jobs have been furloughed
• He says  the “economy is now likely to undergo a more permanent economic adjustment”

Furlough Scheme Replacement

• A new “jobs support scheme” has been announced to subside the wages of people in work to replace the furlough scheme when it ends next month.
• Businesses will have the option of keeping employees in a job on shorter hours, rather than making them redundant.
• Workers must work a third of their usual hours, paid by their employer as normal.
• For the time they are not working, the government will pay a third of their usual pay, and the employer will pay a third of their usual pay.
• Including the pay for the hours they are working, the Treasury says this means workers will get 77% of their usual pay.
• The scheme will be targeted at businesses that need it most – all small and medium-sized firms – but only for big companies if turnover has fallen by a third.
• The scheme will run for six months starting in November.
• Firms can claim both the jobs support scheme and the jobs retention bonus.
• A grant for self-employed workers will be extended on similar terms.

Business Loans

• Sunak announces “pay as you grow” to help companies repay state-backed business loans.
• Loans can be extended from six to 10 years, almost halving repayments. Interest-only payments can be made, and firms in “real trouble” can suspend their payouts.
• All of the government’s state-backed loan schemes will be extended until the end of 2020, and the government is starting work on a new guarantee loan programme to begin in January.
• The chancellor will allow businesses more time and flexibility over deferred tax bills by allowing them to spread their VAT bills over 11 separate payments.

Hospitality Sector

• Rishi Sunak said the current plans for the hospitality and tourism sectors were to increase VAT to 20% on 13 January 2021
• This plan has now been scrapped
• The new plan is to keep the current rate of 5% until 31 March 2021

If you would like help on any of the above, please contact us on 01865 921150 alternatively you can email hello@progressaccountants.com.

Subscribe to our newsletter here to receive the latest updates.