Chancellor announces new measures to support UK economy
Neil Moon, Director of Tax at Page Kirk, takes a closer look at the latest announcements from the government on supporting businesses and protecting jobs.
On Thursday 24th September, Chancellor Rishi Sunak updated parliament with the latest plan aimed at minimising further unemployment throughout the winter months. With the popular Job Retention Scheme being phased out within the next month, new restrictions have forced many UK employers to continue to cut hours for their staff. This had led many business groups to ask for an extension on the support available.
Key Updates for Employers
The Chancellor has warned that not all jobs will be saved, but the new plan will offer the following support to businesses throughout what could be a turbulent winter ahead:
Job Support Scheme (lasting for six months)
This scheme is designed to encourage struggling firms to keep people employed, but on fewer hours.
It will be replacing the Job Retention Scheme, which is due to expire at the end of October.
Employees must work at least a third of their hours (33%), which the employer will pay for.
Two-thirds of the remaining pay is to be topped up by the government and the employer, paying one third each. According to HM Treasury, someone who works 33% of their hours will be paid for 77% of their wage.
All small and medium-sized firms are eligible, but large ones only qualify if they can prove that they have seen a reduction in turnover since the pandemic.
Pay As You Grow Scheme
With more than one million small businesses making use of the Bounce-Back Loan scheme announced earlier this year, the Chancellor has announced that there will be more flexibility for organisations paying the debt back. Businesses are being offered more time to repay their loans, with an extension from six to ten years. There will also be an option available to make interest-only payments or suspend payments for up to six months.
Using the scheme will not affect credit ratings.
Extension of VAT cut for Hospitality Sector
In July, the VAT rates for the hospitality and tourism sectors was reduced from 20% to 5%. This was due to expire in mid-January 2021, but it has been extended until 31st March in order to help the struggling sector free up some cash-flow and protect jobs.
Bounce-Back Loan & Business Interruption Loan Scheme
Deadline Extension
It has been announced that businesses can now apply for these two schemes until the end of November.
VAT Payments
Businesses who deferred their VAT bills earlier this year can pay the tax back in 11 interest-free payments in order to help with cash-flow.
Self-Employed Income Support Scheme
The Chancellor has created an offer similar to the Job Support scheme, covering three months' worth of profits from November to the end of January, representing a total of 20% of average monthly profits up to £1,875.
At Page Kirk we aim to keep our clients up to date with the latest changes in legislation, particularly at times of such economic uncertainty. If you would like any more information on the details mentioned or wish to apply for the new support schemes on offer, we are always on hand to offer advice. Please contact us by calling on 0115 955 5500 or emailing enquiries@pagekirk.co.uk