Published: October 23rd, 2020 in Finance News
On Thursday 24th September, The Chancellor of the Exchequer Rishi Sunak announced his updated Winter Economy Plan and how it will support the United Kingdom throughout the winter months.
Unveiling that the British Government aims to protect jobs and support businesses across the country, the updated Winter Economy Plan will be employed as the country faces an uncertain and somewhat testing time ahead.
Throughout his announcement, Rishi Sunak revealed several critical areas that will benefit from the updated Winter Economy Plan.
Stating that he “understands that the resurgence of the virus presents new challenges to businesses”, Sunak declared that he has implemented measures that will directly support organisations and their employees as COVID-19 is expected to continue to take its toll on the country this Winter.
The support bestowed on businesses will include a newly devised Job Support Scheme, tax cuts and deferrals. Furthermore, greater flexibility with regards to repaying business loans has been applied.
Additional self-employment grants and reduced VAT rates for the hospitality sector have also been formulated.
At The Financial Management Centre, we understand that regardless of whether you are self-employed or the owner or a small or large organisation, the unknown that the winter period presents will leave you feeling somewhat apprehensive.
With this in mind, we have outlined the updated Winter Economy Plan below, explaining what it means for you and how your business may benefit.
Job Support Scheme
Opening on the 1st November 2020, the Job Support Scheme will provide additional funding to small and medium enterprises as the Furlough scheme comes to an end.
Understanding that the Furlough scheme prevented numerous businesses from having to permanently closing their doors, the Job Support Scheme will further ensure that employers can retain their employees.
The scheme, which will run for six months, will see the Government contribute towards employee wages.
However, as outlined in the updated Winter Economy Plan, for businesses to qualify, they must provide evidence that employees are working at least 33% of their contracted hours. This can be done either from the workplace or at home.
If you would like to find out more about the Job Support Scheme and uncover the terms and conditions, we have published an additional blog here.
Business Loan Extensions
As the height of COVID-19 saw businesses across the UK forced to shut their doors temporarily, the Government announced the launch of various business loans.
Said business loans included the Coronavirus Business Interruption Loan Scheme and the Bounce Back Loan Scheme.
These loans enabled businesses to take advantage of additional funding to help them weather the storm administered by COVID-19.
Understanding that the longer COVID-19 impacts businesses, the longer it may take them to repay loans, Rishi Sunak announced that the loans could be repaid over six years, with no interest charges within the first year.
However, within his updated Winter Economy Plan, Rishi Sunak confirmed that the length of the loan would be extended to ten years. This will give businesses an additional four years to take advantage of and repay the loan.
Deadline Extension for Business Loans Applications
Another key announcement in the updated Winter Economy Plan was the deadline extension for business loans. Initially, applications for loans including the Bounce Back Loan Scheme was set to close on 4th November 2020.
If your business was established before the 1st March 2020 and has been impacted by COVID-19, you will now have until the end of November to apply for the business loans that were specifically devised to help organisations cope at the height of COVID-19. In addition to the Bounce Back Loan, deadlines have been extended for the following;
- – Coronavirus Business Interruption Loan Scheme – the new deadline is 30th November 2020
- – Coronavirus Large Business Interruption Loan Scheme – the new deadline is 30th November 2020
- – Future Fund – the new deadline is 30th November 2020
Reduced VAT For The Hospitality Sector
One of the most severely impacted industries, the hospitality sector will continue to benefit from the 15% VAT cut that was implemented on 8th July 2020.
The new extension will see restaurants, pubs, hotels and cafes benefit for an additional six months. As a result, the reduction in VAT for the hospitality sector will continue until March 2021.
The reduced VAT will see many facilities boast lower prices, encouraging consumers to continue to dine and drink out where restrictions permit them too.
Tax Deferrals
If your business is one of the many that took advantage of the VAT payments deferral scheme in June, you will be pleased to know that the Chancellors updated Winter Economy Plan will enable you to settle your VAT payments in smaller installations over almost two years.
Initially, payments were due in full by March 2021. However, they are now only required by March 2022. The payments will continue to be interest-free.
If you are self-employed, you will also benefit from a 12-month payment extension. Any self-assessment payments that were deferred in June 2020 will now only need to be settled by January 2022.
Self-Employment Grants
Recognising that an estimated 2.6 million people are self-employed in the UK, the updated Winter Economy Plan also outlines that the UK Government will additionally extend The Self Employment Income Support Scheme Grant.
Having already provided over £13 billion worth of support, the scheme will continue to act as a pillar to the 2.6 million self-employed individuals across the country.
The funding offered as part of the extended grant will support individuals that continue to operate but have, unfortunately, due to COVID-19, reported a decrease in demand for their services.
The funding offered within the self-employment grants will cover 20% of average monthly profits over three months. Funding will be provided in one lump sum and will amount to a total of £1,875.
Contact Us Today
Regardless of the type of business you own, if you would like to find out more about how the updated Winter Economy Plan will impact you, please feel free to contact us.
Our team can help you to determine how you can benefit from the Winter Economy Plan. We can also provide you with any support you may need with regards to your finances.
