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  3. What is the Winter Economy Plan?

What is the Winter Economy Plan?

In the absence of an autumn 2020 budget, the government has announced a package of targeted measures  that will enable businesses to protect jobs and manage their finances  over the forthcoming winter months.

The plan comprises job support, grants and payment plan relaxation terms for  bounce back loans, self-assessment  and VAT.

These are summarised below: 

The New Job Support Schemes – What has now changed?

There are now two job support schemes (JSS). The original one designed for businesses that are legally required to close  because of COVID restrictions – now called JSS Closed, and the “new”  one  introduced by the Chancellor on 22 October for businesses that remain open but with employees working reduced hours, i.e.  JSS Open.

Read More: here

What is the VAT deferral ‘New Payment Scheme’?

The government will give businesses which deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021-2022. Rather than paying in full at the end of March 2021, businesses will be able to choose to make 11 equal instalments over 2021-22.

All businesses which took advantage of the VAT deferral can use the New Payment Scheme. Businesses will need to opt in, but all are eligible. HMRC will put in place an opt-in process in early 2021.

Enhanced Time to Pay for Self-Assessment taxpayers

The government will give the self-employed and other taxpayers more time to pay taxes due in January 2021, building on the Self-Assessment deferral provided in July 2020.

Taxpayers with up to £30,000 of Self-Assessment liabilities due 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.

Any Self-Assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan.

Extension of access to finance schemes

The government is extending the following four temporary loan schemes for new applications until the 30th November 2020 :

  • Bounce Back Loan Scheme (BBLS) – Pay as you Grow Option
  • Coronavirus Business Interruption Loan Scheme (CBILS)
  • Coronavirus Large Business Interruption Loan Scheme (CLBILS)
  • Future Fund

What is the Bounce Back Loan Scheme (BBLS) – “Pay as you Grow” Option?

Under the current scheme, the borrower does not have to make any repayments for the first twelve months, with the government covering the first twelve months’ interest payments. Under the new Pay as you Grow options,  Bounce Back Loan borrowers will all be offered the choice of more time and greater flexibility for their repayments. 

Under the Pay as you Grow option, the government will give all businesses that borrowed under the BBLS the option to repay their loan over a period of up to ten years. This will reduce their average monthly repayments on the loan by almost half. UK businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments). These changes will provide greater flexibility to repay these loans over a longer period and in a way that better suits businesses’ individual circumstances.

Are there any VAT rate changes?

The  temporary VAT reduced rate of 5%  for hospitality and tourism  is extended  from 12 January to 31 March 2021. This will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions across the UK.

What is the eligibility criteria for the self-employment income support scheme (SEISS) Grant Extension?  Updated 5th November 2020

(this applies to self- employed individuals such as sole traders and partnerships only)

Who can claim the self-employment income support scheme( SEISS) Grant Extension?

To be eligible for the grant extension self-employed individuals, including members of partnerships, must:

  • have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
  • declare that they intend to continue to trade and either: 
    • are currently actively trading but are impacted by reduced demand due to coronavirus
    • were previously trading but are temporarily unable to do so due to coronavirus

How long will the self-employment income support scheme (SEISS) last for?

The scheme will last for 6 months, from November 2020 to April 2021. 

What grants will I receive?

The extension will be in the form of two taxable grants. The first grant will cover a three-month period from the start of November until the end of January. The Government will provide a taxable grant calculated at 80% of 3 months average monthly trading profits, paid out in a single instalment and capped at £7,500 in total. This is an increase from the previously announced amount of 55%.

The Government are providing the same level of support for the self-employed as is being provided for employees through the Coronavirus Job Retention Scheme which has also been extended until March 2021.

The Government has already announced that there will be a fourth grant covering February 2021 to April 2021. The Government will set out further details, including the level, of the fourth grant in due course.

When can I claim the next grant?

The online service for the next grant will be available from 30 November 2020. HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.

Updated on 6th November 2020

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