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AIMS Accountants – Information for Clients – Covid-19 Winter Economy Plan

Author: Naomi Cowan

Chancellor, Rishi Sunak, today announced his Winter Economy Plan to in order to find a sustainable way for us to live with the virus. He explained why the Furlough Scheme in its current form needs to end as it would be wrong to keep people in unviable jobs and that it must adapt and evolve. Overall, this will mean a targeted government support, rather than the blanket approach taken at the start of the pandemic.

So, what will the Winter Economy Plan include?

Job Support Scheme (JSS)

  • 6-month scheme, starting 1 November.
  • Open to all SME employers with a UK bank account and UK PAYE scheme and available to similarly qualified larger businesses only if they can prove they have been adversely affected by Covid.
  • Employees must not be on a redundancy notice

The numbers:

  • Employees must be working at least 33% of their hours.
  • Government and employer each pay 1/3 of wages for unworked hours.
  • Government contribution capped at £692.97 a month and reimbursed in arrears.

Self-employment scheme (SEIS)

  • Starts 01/11/2020
  • Runs for six months
  • Two taxable grants
    • First covering period 01/11/2020 to 31/01/2021
      • 20% of average monthly profits
      • Single instalment
      • Capped at £1,875 in total
    • Second covering 01/02/2021 to 30/04/2021
      • Level will be set later

VAT

  • VAT deferred until 31/03/2021 can be paid over 11 months rather than lump sum in the financial year 2021/2022
    • All businesses are eligible but must opt in
    • Opt in process to be in place early 2021
  • The 5% reduced rate of VAT for the hospitality & tourism sectors will be extended to 31/03/2021.

Income Tax

  • Enhanced Time to Pay for Self-Assessment taxpayers
    • Available to taxpayers with up to £30,000 falling due on 31/01/2021 (including tax deferred from 31/07/2020)
    • Tax due 30/01/2021 can be paid over 12 months to 31/01/2022
    • Online self-service facility

Loans – Pay as you Grow:

Bounce back loans

  • Can be extended from six to ten years.
  • Can move to interest only payments for up to six months and can do this three times
  • In extreme cases payments can be suspended for six months, only once and only after making six repayments
  • No credit ratings will be affected.

Coronavirus Business Interruption Loans (CBILS)

  • Can be extended for up to 10 years.
  • There will be a new loan scheme to replace these announced in January 2021.