Rishi’s Sunak’s Winter Plan: A Guide for Small Businesses
The past 6 months have been extremely turbulent for many small businesses across the UK. The impact of the Coronavirus has been a huge threat for many businesses and support for small to medium enterprises is now more important than ever.
In this article we share everything you need to know about Rishi Sunak’s Winter Plan, including how the Job Support Scheme will work, details on the extension of the Self Employed Income Support Scheme, eligibility criteria for these schemes and more.
What is Rishi Sunak’s Winter Plan?
The Winter Economy Plan will be launched with the aim of supporting businesses and protecting jobs over the next 6 months (starting in November 2020). The key components of the plan include:
- The introduction of the Job Support Scheme to replace the Furlough Scheme
- An extension of the Self Employed Income Support Scheme (SEISS)
- Flexibilities to be put in place to help businesses pay back loans
- Tax cuts and deferrals
How will the Job Support Scheme Work?
The Job Support Scheme will replace the Furlough scheme and will work in a similar way in order to protect jobs and help keep employees in their current places of work.
It will come into place from the start of November 2020 and will last for a total of 6 months. Employees on the scheme will be required to work a minimum of 33% of their hours. Then, for every hour not worked, the government and the employer will pay a third each of the employee’s usual hourly wage (with the government’s payment being capped at £697.92 per month).
Once this has been done, you will have been paid the majority of your normal wage for the hours you haven’t worked. The exact proportion of your wage you will receive will vary depending on the percentage of your hours you’ve worked.
The grants will be payable in arrears, so will be paid retrospectively after you’ve been paid by your employer and the payment has been reported to HMRC.
Am I eligible for the Job Support Scheme?
In order to be eligible for this scheme you must be an employee and must:
- Have a UK bank account and UK PAYE schemes
- Have been on your employer’s PAYE payroll on or before 23rd September 2020
- Work at least a third of your normal hours (more information for those on zero hour contracts and those who work irregular hours will be announced in due course)
- Work for either an SME or a large business whose turnover is now lower than before the coronavirus outbreak.
Full eligibility details can be found here.
How do I apply for the government’s Job Support Scheme?
You’ll be able to make a claim on the government’s website from December 2020. If successful, you will then be paid monthly. More information on how to apply for the scheme will be announced by the government closer to the time.
What does this mean for self employed freelancers and business owners?
As part of the Winter Economy Plan, the government’s Self Employed Income Support Scheme (SEISS) has now been extended in order to provide financial support for self employed workers. This extension will start in November 2020 and finish in April 2021, lasting for a total of 6 months.
During this time, two more grants will become available to self employed workers, one covering the period from the start of November to the end of January and another from the start of February running through to the end of April. The grant will be worth 20% of your average monthly profits, with an overall cap of £1,875.
Am I eligible for the Self Employed Income Support Scheme?
The scheme will be available to self employed individuals who are eligible for the scheme and have been continuing to trade but struggling due to the impact of the Coronavirus pandemic. You do not have to have been in receipt of the previous grants before this extension comes into play to be eligible. To be eligible for the Self Employed Income Support Scheme you must meet the following criteria:
- You must be currently trading and intending to carry on trading.
- You must be currently impacted by reduced demand due to the coronavirus pandemic.
- You must have submitted your self assessment tax return on or before 23rd April 2020 for the trading tax year of 2018 to 2019.
- You must have also traded in the 2019 to 2020 tax year and intend to continue trading in 2020 to 2021.
- Over 50% of your total income must come from self-employment.
- Your average annual trading profit must be £50,000/year or less.
It’s important to note that if you trade through a limited company or trust, you will be ineligible for this scheme.
For more information of eligibility criteria for the Self Employed Income Support Scheme see the latest government’s guidance here.
The government has not yet announced when applications for the extension of the SEISS will open, but we will update this guide as soon as the information becomes available.
What support is there to help businesses pay back loans?
As part of the Winter Economy Plan, the Bounce Back Loan length will be extended to 10 years (having previously been 6 years). This will in turn significantly reduce the amount due in monthly repayments. What’s more, the government has also made interest-only periods and payment holidays available to businesses who are struggling to repay their loans.
There are also plans for the government to give lenders of the Coronavirus Business Interruption Loans the ability to extend the period of their loans to make it easier for businesses to repay them. The Chancellor has also announced that he’ll extend applications for the government’s coronavirus loan schemes, with more information being provided in due course.
What tax changes will be made for businesses in Rishi Sunak’s Winter Plan?
The government will be extending the 15% VAT cut for tourism and hospitality businesses until the end of March 2021. On top of this, businesses who deferred their VAT bills will have the opportunity to pay them back in 11 smaller, interest-free installments during the 2021-22 financial year.
Another opportunity the government has put in place is the “Time to Pay” self-service facility, which should benefit self employed workers or anyone who conducts their own self assessments. This additional 12-month extension from HMRC will mean that any payments that are deferred from July 2020 or January 2021 will not be due until January 2022.
We hope this guide to Rishi Sunak’s new Winter Economy Plan has been helpful and we wish you and your business the best of luck in the upcoming months.
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Rishi’s Sunak’s Winter Plan: A Guide for Small Businesses
The past 6 months have been extremely turbulent for many small businesses across the UK. The impact of the Coronavirus has been a huge threat for many businesses and support for small to medium enterprises is now more important than...