Key points from the government winter economy plan, and how it may affect you and your business
The government outlined their economic plan for the coming months; here is what this may mean to you:
Grants for self-employed
The second self-employment grant closes on 19 October however, the government will still offer a third and a fourth grant. The third grant is much lower than the first and second grant as you will only be able to claim 20% of your operating profits up to £1,875 per month.
If you qualified for the first two grants then you will qualify for the third one as the qualifying criteria remains the same. The qualifying criteria for the fourth grant has not yet been released but it is possible that if you have missed out on the first 3 grants, the fourth grant will have something in offer to you.
Tax cut and due date extension
The %15 cut in VAT for the tourism and hospitality sectors will be extended until March 2021.
Self-employed individuals will have 12 months extension from HMRC. This means that instead of paying your 2019/20 tax liability on 31 January 2021, you will now only need to pay your tax liability on 31 January 2022.
Government loans for businesses
The deadline for the bounce back loan, the business interruption loan and the large business interruption loan has been extended until the end of November.
The bounce back loan was initially repayable over six years, this has now been extended to 10 years which means that the repayment could almost be halved.
The loan amounts to 25% of your annual turnover up to £50,000, with zero interest for the first year.
Jobs support scheme
The furlough scheme will come to end on 31 October 2020 and will be replaced by a new job support scheme from 1 November 2020.
Under the new scheme, an employee can work part time with you. You pay them for the hours worked and the reminder is split three ways. You, the employer, pay a third, the government pays a third, and the employee pays a third in the form of the lost wages.
To qualify for the above, the employee must work at least 33% of their full working hours. The grant is capped at £697.92 per month.
The new scheme means that you will have to pay a third of the employee’s remaining wage. This means that you will effectively be paying for hours that have not been worked.
The above may lead to some businesses choose to retain one member of staff full time rather than two working part time.