Winter Economy Plan is latest financial help package

By David Charles Furlough, Glasgow, grants, Lanarkshire, Wages 0 Comments

Announced on Thursday 24th September, the new Winter Economy Plan, was announced by the Chancellor.

The package of measures applies to all regions and nations of the UK, include:-

A new Jobs Support Scheme to protect millions of returning workers.
Extending the Self Employment Income Support Scheme.
Continuing the 15% VAT cut for the hospitality and tourism sectors.
More help for businesses in repaying government-backed loans.

Support for workers: Employees

Viable jobs will be protected by the new Job Support Scheme.

The scheme will start from 1st November and run for 6 months.

This new scheme is designed to top up the wages of those employees who remain working but for fewer hours than normal due to decreased customer demand.

Employees must work at least 33% of their usual hours, and employers will pay for those hours as normal.

The top up grant aims to share some the cost of wages for the lost hours. The government and the employer will each pay one third of their equivalent salary for those hours not worked.

The grant will be capped at £697.92 per month.

The Government has issued a Fact Sheet which contains some additional detail about this new scheme.

The existing Flexible Furloughing grant scheme is due to be cut back from 1st October – see below for details.

There are additional small value employment grants available to help employers retain or recruit. They are primarily designed to help young unemployed people or those seeking an apprenticeship. Conditions vary throughout the UK, by local authority, and by trade sector.

Support for workers: Self-employed

The Self Employment Income Support Scheme Grant (SEISS) is being extended, but on a reduced basis payable in two instalments.

The first payment will be paid to those who are currently eligible for the Self Employment Income Support Scheme. They must continue trading, despite reduced sales due to the crisis. This lump sum grant will be calculated on profits earned during 1st November 2020 to 31st January 2021. The grant will be worth 20% of average monthly profits, up to a total of £1,875.

The second grant will be available for February 2021 to the end of April 2021. The calculation may be altered in light of changing economic circumstances.

Many self-employed business owners will be worried by the small scale of these new grants. The maximum grant has fallen from £7,500 down to £1,875.

Tax cuts and deferrals.

The temporary 15% VAT cut for the tourism and hospitality sectors is extended until 31st March 2021.

VAT bills deferred from earlier this year can now be repaid via 11 smaller interest-free payments during the 2021-22 financial year via the New Payment Scheme. This avoids the lump sum VAT repayment that was due by 31st March 2021.

Self-assessment taxpayers can get an additional 12-month extension from HMRC on the “Time to Pay” self-service facility. Tax payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022. These include:-

Taxpayer will have to apply for this time to pay – it will not be offered by HMRC.

Giving businesses flexibility to pay back loans

Pay As You Grow is a new flexible repayment system for Bounce Back Loans. The loans can now be extended from six years to ten years. During repayment, interest-only periods of up to six months, and payment holidays, will also be available to businesses.

Coronavirus Business Interruption Loan Scheme (CBILS) can also be extended six years to ten years.

Loan application deadline extended

The application deadline for fresh CBILS applications has been extended to 30th November 2020.

Bounce Back Loan applications also close on 30th November.

Flexible Furloughing and Cash-flow planning.

As of Thursday 1st October employers must increase the amount they contribute towards furloughed wage payments. This is in addition to paying the Employer NIC and AE pension contributions (within the furlough grant range) which became a requirement as of 1st August.

The detail of this phased shift is summarised below.

	June	July	August	September	October
Government contribution: employer NICs and pension contributions (1)	Yes	Yes	No	No	No
Government contribution: wages	80% up to £2,500	80% up to £2,500	80% up to £2,500	70% up to £2,187.50	60% up to £1,875
Employer contribution: Employer NICs and pension contributions (1)	No	No	Yes	Yes	Yes
Employer contribution: wages	Nil	Nil	Nil	10% up to £312.50	20% up to £625
Employee receives	80% up to £2,500 per month	80% up to £2,500 per month	80% up to £2,500 per month	80% up to £2,500 per month	80% up to £2,500 per month

(1) – Government contribution covers employer NICs and pension contributions (up to an amount equivalent to the minimum automatic enrolment employer pension contribution) calculated on 80% of wages up to £2,500 a month.

NB: Employers are still able to choose to top up employee wages above the scheme grant at their own expense, if they wish.

A further illustration, based on the average claim, demonstrates the impact of changes in the coming months with employers gradually contributing to furlough costs. The following shows the Employer’s costs as a % of the gross employment costs that the Employer would have incurred, relating to furloughed employees, had they not had the opportunity to furlough employees through CJRS:

Month	‘% of gross employment costs the employer would have incurred had the employee not been furloughed’
June	0%
July	0%
August	5%
September	14%
October	23%
November	100%

In addition to requiring employers to contribute, this new phase, known as Flexible Furloughing, allows part-time working and cut-off dates for furloughing more employees.

• From 1 July, employers can bring previously furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked.

• From 1 July, employers will be able to agree any working arrangements with previously furloughed employees.

• When claiming the CJRS grant for furloughed hours; employers will need to report and claim for a minimum period of a week.

• This is a minimum period and those employers making claims for longer periods, such as those on monthly or two weekly cycles will be able to do so.

• To be eligible for the grant, employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing.

• Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. Further details will be included in future guidance.

• Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.

• For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.

About the Author

David Charles

I really enjoy helping ambitious entrepreneurs achieve their business and personal goals. I have 30 years business experience, including 25 years hands-on practical experience running my own business. AD+ is an ambitious company, and so we relate exceptionally well to ambitious entrepreneurs.