The UK government announced the Winter Economy Plan in September 2020 to support businesses and employees affected by the pandemic.
The plan included a new Job Support Scheme, which would provide funding to help employers keep their staff in work.
This scheme was designed to be more flexible than the previous furlough scheme, allowing employees to work part-time while still receiving government support.
Employers would need to pay at least 1/3 of their employees' wages, with the government contributing a further 1/3.
The plan also introduced a new tax relief for businesses, allowing them to claim up to £2,000 per employee on certain expenses.
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Government Support for Self-Employed
The government has extended the Self-Employed Income Support Scheme for six months, providing taxable grants to self-employed workers whose trade has been impacted by reduced demand due to Covid-19.
The new grants are calculated at 20% of a trader's average monthly profits, with a cap of £1,875 between November and January.
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Self-employed individuals who earn over 50% of their income from self-employment and intend to continue trading are eligible for the scheme.
To be eligible, traders must also be actively trading, and the grants will be subjected to Income Tax and National Insurance.
The extended scheme is available to sole-traders, business owners, and freelancers, and does not need to be repaid, but will be reported on your 2020 to 2021 Self Assessment tax return.
The Self-Employed Income Support Scheme has been extended to April 2021, and is available to self-employed individuals who are actively continuing to trade but are facing reduced demand due to Covid-19.
Taxpayers with up to £30,000 of self-assessment liabilities due in January 2021 will be able to use HMRC's self-service 'Time to Pay' facility to secure a plan to pay over an additional 12 months.
This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022.
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Job Support Scheme
The Job Support Scheme is a new initiative that will start on 1 November 2020 and last for 6 months, until the end of April 2021.
It will replace the Coronavirus Job Retention Scheme, also known as the furlough scheme, which ends on 31 October 2020. HMRC will be checking claims and pursuing those making fraudulent or incorrect claims.
To be eligible for the Job Support Scheme, employees must work a minimum of 33% of their hours for the first three months of the scheme.
After the first three months, the government will consider increasing this minimum hours threshold.
The government and the employer will pay a third of the wages each for the remaining hours not worked, with the government contribution being capped at £697.92 per month.
This will ensure employees earn a minimum of 77% of their normal wages, subject to the government cap.
The grant will not cover class 1 employer NICs or pension contributions, which will remain payable by the employer.
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All small and medium-sized enterprises will be eligible for the scheme, while large businesses will have to meet a financial assessment test to demonstrate that their turnover is lower as a result of the pandemic.
Businesses claiming under the Job Support Scheme will also be able to claim the job retention bonus if they meet the eligibility criteria.
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Tax and Finance
The government has extended the deadline for applying to four temporary loan schemes to 30 November 2020.
A new loan scheme will be made available in January, offering additional financial support to businesses.
Businesses that deferred their VAT payments will no longer have to pay the deferred payments in one lump sum in March 2021. They can now split the payment into smaller, equal, interest-free payments over 11 months.
The temporary cut in VAT for food, non-alcoholic drinks, accommodation, and admissions to UK attractions has been extended until 31 March 2021, encouraging customers to spend more in affected sectors.
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Extension of Access to Finance Schemes
The government has extended the deadline for applying to four temporary loan schemes until 30 November 2020.
The four schemes include the Bounce Back Loans Scheme, the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, and the Future Fund.
A new loan scheme will be made available in January, offering additional financial support to companies.
The government may also consider providing bespoke financial support for companies that have exhausted other options.
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Tax Cuts
The government has extended the temporary cut in VAT for certain sectors until 31 March 2021.
This includes a reduction in VAT from 20% to 5% for food, non-alcoholic drinks, accommodation, and admissions to UK attractions. It's hoped this will encourage customers to spend more in sectors badly affected by the pandemic.
Businesses that deferred their VAT payments will no longer have to pay the full amount in one lump sum in March 2021. Instead, they'll have the option to split the payment into 11 equal, interest-free payments over the course of a year.
To take advantage of this new payment scheme, businesses will need to opt-in through the HMRC process, which will be available in early 2021.
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Conclusion
The new incentives announced in the Winter Economy Plan are a welcome step towards helping businesses and individuals cope with the economic ramifications of the pandemic.
These measures aim to provide a degree of certainty for affected parties regarding government assistance over the coming months.
The government is continuing to try and manage the economic impact of the pandemic, which is causing difficulties for many people and businesses across the country.
As more details surrounding the support schemes are announced, we will share the information with you.
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