South West-based accountancy firm Milsted Langdon have said that the Chancellor’s Winter Economy Plan will play an important role in supporting businesses during these difficult times – but may still leave some workers without support.
Prime Minister Boris Johnson announced new restrictions to stem the second wave of COVID-19 infections, which led to calls from businesses, MPs, and workers to extend financial support measures.
Responding to the calls, Chancellor Rishi Sunak has launched his Winter Economy Plan, which will offer ongoing support to viable businesses for up to six months.
Chief among the Government’s new measures is the Job Support Scheme, which promises to help employers retain employees by allowing them to reduce their hours, while subsidising workers for the hours not worked.
Jon Stocker, General Practice Partner at Milsted Langdon, said that from 1 November 2020 the scheme will ensure that for every hour which is not worked, the employer and the Government will each pay one-third of the employee’s usual pay, with the Government contribution capped at £697.92 per month.
‘In many cases, employees using the scheme will still receive at least 77% of their usual pay, and it ensures that the employers are reimbursed in arrears for the Government contribution,’ said Jon.
‘However, the scheme is only available to SMEs and larger businesses who can demonstrate that they have been adversely affected by COVID-19. The Government also expects that the large employers who use the scheme won’t make dividend payments.
‘Most importantly, this scheme will not be available to those employees on a redundancy notice, but the scheme can be used alongside the £1,000 Job Retention Bonus announced earlier this year.’
The Government also announced that the Self-Employment Income Support Scheme would be extended, starting with a new grant that will cover the three months from November to the end of January, paying 20 per cent of average monthly profits, capped at £1,875. An additional grant will then be available from January to March, at a yet to be determined rate.
Jon added: ‘Supporting people in work is essential, but many businesses will also be pleased to see that the Government has extended applications for the existing Bounce Back Loan Scheme (BBLS) and the Coronavirus Businesses Interruption Loan Scheme, until the end of November 2020.
‘The Chancellor also announced a new Pay as you Grow scheme for those businesses who have already used the BBLS. This scheme allows for the loans to be repaid over a longer period, and offers payment holidays to those in distress.’
Jon explained that these measures come in addition to several others, including a three month extension to the 15 per cent VAT cut for the hospitality and tourism sectors, and amendments to the existing VAT and tax deferral schemes – thereby giving businesses and taxpayers longer to settle their tax bill.
However, Milsted Langdon said that the devil is often in the detail with these policies, and encouraged businesses to seek advice on how to make the most of the new support on offer.
‘Whilst the Government has published some detail on these new measures, we do not yet have all the ins and outs,’ said Jon.
‘We have found from previous schemes that there are often a lot of conditions and criteria that businesses and individuals need to fulfil when it comes to accessing financial support, so it is important that professional advice is sought.’