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Chancellor Rishi Sunak has outlined a new scheme to protect jobs as the furlough scheme ends this month, as a part of his ‘winter economy plan’.
Job Support Scheme
The replacement for the furlough scheme is intended to support people who are in work so they continue on shorter hours rather than being made redundant.
It will apply to employees working a minimum of 33% of their usual hours. For the remaining hours not worked, the government and the employer will pay one third each. This means employees working 33% of their hours will receive at least 77% of their pay.
The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
All small and medium-sized businesses are eligible but larger businesses will need to show that their turnover has fallen through the crisis.
The new scheme will be open to employers across the UK, even if they have not previously used the furlough scheme.
Employers retaining furloughed staff on shorter hours can claim both the jobs support scheme and the jobs retention bonus.
Tax cuts and deferrals
As part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year. This will give businesses in the sector – which has been severely impacted by the pandemic – 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 the New Payment Scheme, which gives them the option to pay back 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.
On top of this, around11 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, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
Giving businesses flexibility to pay back loans
The burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan.
This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses. These measures will further protect jobs by helping businesses recover from the pandemic.