You are here: Home - Household Bills - News -

Sunak announces Winter Economy Plan

Written by: Emma Lunn
The plan includes a new jobs support scheme, more support for businesses, and help for the self-employed.

Chancellor Rishi Sunak has laid out the government’s Winter Economy Plan, as fears grow about how a second wave of coronavirus will affect jobs, businesses and people’s finances.

Delivering a speech in Parliament, he said: “The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery. Our approach to the next phase of support must be different to that which came before.

“The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.”

Jobs support scheme

As rumoured yesterday a new ‘jobs support scheme’ beginning on 1 November will subsidise the wages of people in work. Businesses will have the option of keeping employees in a job on shorter hours, rather than making them redundant.

Sunak said the scheme will support “viable jobs” so employees must be working a third of their normal hours and be paid for that work, as normal, by their employer.

The government will cover two thirds of the pay employees have lost due to reduced working hours. Anyone who was employed as yesterday is employed is eligible.

The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.

The scheme will run from November to April, and all small and medium-sized businesses are eligible to apply. However, larger businesses can only apply if their turnover has fallen. Businesses are eligible even if they haven’t previously furloughed employees.

Employers retaining furloughed staff on shorter hours can claim both the Jobs Support Scheme and the Jobs Retention Bonus.

VAT rise cancelled

Sunak also announced that he was cancelling the planned increase in VAT for hospitality and tourism. The rate was due to rise from 5% to 20% on 13 January 2021.

The lower 5% VAT rate will now remain in place until 31 March 2021.

The chancellor said the move would support more than 150,000 businesses and protect 2.4 million jobs through the winter and give businesses in the sector the confidence “to maintain staff as they adapt to a new trading environment”.

In addition, up to half a million business who deferred their VAT bills will be given more breathing space through a New Payment Scheme, which gives them the option to pay their VAT bill in smaller instalments.

Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.

Paying self-assessment tax

About 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the Time to Pay self-service facility.

This means tax payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

Business loans

Businesses which took out a Bounce Back Loan will have more flexibility about paying it back due to a new Pay as You Grow repayment system.

Loans can be extended from six to 10 years, almost halving repayments. Interest-only payments can be made, and firms deemed “in trouble” can suspend payments altogether for up to six months.

The chancellor also announced he would be extending applications for the government’s coronavirus loan schemes until the end of November.

Sunak also said that the government was starting work on a new, successor loan programme, set to begin in January.

Self-employed workers

Sunak also announced that he was extending the existing self-employed income support scheme (SEISS) “on similar terms and conditions as the new Jobs Support Scheme”.

An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus.

The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This will be worth 20% of average monthly profits, up to a total of £1,875.

An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week