After new COVID-19 restrictions were put in place earlier this week, the Chancellor Rishi Sunak announced the UK government’s Winter Economy Plan today (24 September).
Measures include the creation of a new job support scheme to replace the current furlough scheme and an extension of the 5% VAT cut for hospitality and tourism companies.
Read more on what was announced below.
Job Support Scheme
This new scheme will replace the current furlough scheme which runs until the end of October. The Job Support Scheme will run for six months and employees will have to work a third of their normal hours to be eligible. Employers and the government will pay the remaining two thirds of their wage.
All small and medium-sized firms will be eligible for the scheme. Larger firms will be eligible only if their turnover has fallen during the crisis.
The scheme is open to all employers across the UK, even if they have not previously used the furlough scheme.
The current Self Employment Income Support Scheme will be extended on similar conditions as the new Job Support Scheme.
Bounce Back Loans - Pay as you Grow
The terms of Business Bounce Back Loans can be extended from six to ten years, almost halving the cost of monthly repayments.
Businesses who are struggling can now choose to make interest-only payments and repayments can be suspended altogether for up to 6 months. This will not affect the company’s credit rating.
The planned increase in VAT for the hospitality and tourism industry has been cancelled, with the lower 5% VAT rate staying in place until March 31st.
Businesses who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Instead of paying in full at the end of March 2021, they will be able to pay in 11 smaller interest-free payments during the 2021-22 financial year.
Adrian Watson, chief executive of Aberdeen Inspired, said: “Any support for jobs and key industries during this time is to be welcomed, particularly with the recently announced restrictions.
“The need for a continuation of some form of job support was paramount and it is our hope that the announcement of the Job Support Scheme, will go some way to further help city centre businesses at a time when they urgently need it. In addition to this, the extension of the VAT cut for hospitality and tourism companies amongst other measures is helpful, as it will allow businesses hardest hit to navigate the difficult times ahead.
“However it remains to be seen if this action will be enough to help those of our levy payers that are already on the line and need even more support. For all of local businesses this continues to be a hugely worrying time despite the announcement today, and Aberdeen Inspired will continue to lobby at a local and national level to ensure that they get the further help and support they need.”