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Coronavirus Winter Economy Plan: Key Points for Businesses and Sole Traders

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Updated: 24th September 2020

With the Coronavirus Job Retention Scheme (CJRS), which saw millions of people being placed on furlough during the spring and summer, due to end at the end of October, the pressure was on Chancellor, Rishi Sunak, to unveil a replacement scheme when he gave his winter economic plan.

Replacement of the furlough scheme

While stating many people have been brought back into work after being placed on furlough, he acknowledged that measures were still needed to protect those in vulnerable, but viable, jobs going forwards.

 To this end, he introduced a new initiative, known as the Jobs Support Scheme, which would subsidise part of the wages of employees who have not yet returned to their full contracted hours.

This scheme does differ from the CJRS, and is aimed at those who are working at least a third of their regular hours. Worked hours will be paid by the employer, however, for the hours they are not working, the government will chip in to help top up employee’s salary.

The government will cover a third of their usual pay, with the employer also contributing a third; this is on top of employers paying for worked hours. For employees, this means they will receive 77% of their usual pay.

All SMEs will be eligible for the scheme, however, for larger companies, only those whose turnover has dropped by at least a third can take advantage of it. Running for six months, starting in November, it is hoped that this will go some way to protecting employees working in those sectors which have taken the brunt of business disruption.

A similar scheme will also be introduced for sole traders and the self-employed.

Bounce Back Loans and Pay As You Grow

Additionally, Sunak also announced Pay As You Grow. As part of this, Bounce Back Loans can be extended for up to 10 years from the current six, a move which will almost halve the average monthly repayment figure. Furthermore, interest-only payments can be made for companies which are struggling, with those most in financial distress, able to take a six-month repayment holiday to help them get back on their feet.

Best of the rest

The planned VAT increase for retail and hospitality has been cancelled, meaning businesses in these key industries will continue to pay VAT at 5% until 31 March 2020. All of the government’s state-backed loan schemes will be extended until the end of the year, giving more companies the opportunity to apply. Furthermore, businesses will now be able to pay their VAT over 11 months in an effort to boost immediate cash flow.

Keith Tully

Partner

0800 644 6080

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