Mr Sunak today announced that the autumn statement (the Budget) has been cancelled. He did not feel that he could make long term decisions at this time.
He announced several important measures. We do not have a great amount of detail; we have not yet seen any Treasury releases on this, so we can only give you an outline summary at this time. More detail will follow.
Furlough and the new job support scheme for employees
The furlough scheme is closing as planned at the end of October but the Government is introducing a Job Support Scheme to replace it.
Mr Sunak said that the furlough scheme was the right policy at the time the Government introduced it…but as the economy reopens, it is fundamentally wrong to hold people in jobs that only exist inside the furlough.
The Chancellor said the new job support scheme will begin in November and last six months.
He announced that:
- The scheme will only support “viable jobs”. To ensure that, employees must work one-third of their hours and be paid by their employees for that time.
- Secondly, support will be targeted at “firms that need it most”. Therefore, all SMEs will be eligible for the scheme, but larger businesses will only be eligible if their turnover has fallen during the crisis.
- Thirdly, it will be open to all employers, even if they have not used the furlough scheme.
To be eligible under that scheme employees must work 33% of their hours. For the remaining hours not worked, 1/3 will be paid by the Government and 1/3 by the employer. We assume the employer could make up the remaining 1/3.
We shall have to see if there are any further conditions.
Self-employed and self-assessment tax
The self-employed income support scheme is to be extended to 30/04/2021. It will provide a grant covering 20% of average monthly trading profits.
Anyone who deferred their July 2020 payment on account will no longer have to pay this in full in January 2021. They will able to pay it monthly, over 12 months starting January 2021, interest free.
The Government has extended the 15% VAT cut for the tourism and hospitality sectors until March next year, that was previously due to end in January 2021.
He also announced that businesses who have deferred VAT until March 2021 will no longer have to pay it back in one lump but will have the option of splitting it into smaller, interest free payments over the course of 11 months.
Bounce back loans
Bounce back loans can be extended from six years to ten years, reducing repayments. Businesses can also move to interest only payments or suspend payments for six months if they are in “real trouble”.
As mentioned above we will provide more detail as soon as it is known but in the meantime do not hesitate to call us if you have concerns on 01392 360008.