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UK Winter Economy Plan – what it means for your business

The UK Winter Economy plan was delivered by Chancellor, Rishi Sunak, to the House of Commons on 24th September 2020. It outlines plans to help protect jobs across the UK whilst the country faces a resurgence of coronavirus and a winter of uncertainty. 

It has also been confirmed that the Budget that was expected to be delivered in the autumn will now take place next year. 

At the time the main focus of the Chancellor’s announcements is a new Job Support Scheme and an extension to the Self Employment Income Support Scheme as well as additional flexibilities for businesses who have borrowed money as a result of the pandemic. Following a further lockdown period in November, the plan has been updated. The Chancellor announced the extension of the Coronavirus Job Retention Scheme (furlough scheme) rather than the proposed Job Support Scheme which was due to come into effect from 1st November 2020.

Further details of the plan are below, your business may benefit from many of the measures outlined;

 

Self-Employment Income Support Scheme extension

The Chancellor announced additional help for the self-employed based on similar terms and conditions as the new Jobs Support Scheme.
The extended scheme will apply for 6 months from 1 November 2020 with an initial taxable grant made available to those who continue to trade and are currently eligible for SEISS.
The initial lump sum will cover three months of profits from 1 November 2020 calculated as 20% of average monthly profits, up to a total of £1,875.
An additional second grant will be available from 1 February 2021 to 30 April 2021, but the level of this second grant amount is subject to review.


Loan deadlines extended

Businesses that have taken out a Bounce Back Loan will be able to benefit from a new Pay As You Grow flexible repayment system.
This will include an extension in the loan term from six to ten years. There will also be new options for interest-only repayments for up to six months as well as payment holidays.
The Coronavirus Business Interruption Loans will also have their Government guarantee extended to ten years.
The deadline for applying for all the Government’s coronavirus loan schemes will be standardised and pushed back until 30 November 2020.
A new successor loan guarantee programme is also expected to be introduced early next year.


New VAT Payment Scheme

Businesses had the option to defer the payment of any VAT liabilities due between 20 March 2020 and 30 June 2020.
The deferred payment was due to be paid in full to HMRC by 31 March 2021.
The Chancellor has now confirmed that businesses will instead be able to make 11 smaller interest-free payments during the 2021-22 financial year.
Self-Assessment payment deadlines

Taxpayers that were due to make their second payment on account for the 2019-20 tax year had the option to have the payment due date deferred until 31 January 2021.
It will now be possible to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility for this payment and also for payments due in January 2021 extending the deadline until January 2022.


VAT reduction for hospitality and tourism sector

The VAT reduction that was announced as part of the Summer Economic update was scheduled to end on 12th January 2021.
The end date for the VAT cut has now been extended until 31 March 2021 to give the affected sectors more time to adjust to the difficult trading conditions. This means that VAT charged on food, accommodation and attractions (such as eat-in or takeaway food in restaurants, cafes and pubs, cinemas, theme parks and zoos) will see VAT reduced from 20% to 5% until the end of March 2021.
The new incentives announced today should be welcomed as the government continues to try and cope with this unprecedented pandemic. Managing the economic ramifications are causing great difficulties for many people and businesses across the country. These steps, at least, give affected businesses and individuals a degree of certainty as to the level of government assistance available to them throughout the coming months.

 

You can access the plan in full by following this link https://www.gov.uk/government/publications/winter-economy-plan/winter-economy-plan

If you would like any advice or support to access the help outlined above, please get in touch

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