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We've tried to cut through the noise from today's "Winter Economy Plan" and pulled 6 key points out to help you understand how the news could impact you and your business.
1) The New Job Support Scheme
From 1st November, this new scheme will last six months, is designed to protect viable jobs in businesses if you are facing lower demand over the winter months and will sit alongside the Job Retention Bonus scheme.
It will only be available to employees who are working fewer than normal hours due to decreased demand from COVID 19. As a employer you don't have to have used the furlough scheme previously and you will continue to pay staff for hours that they work. For the hours they've not worked you and the government will pay one third of their equivalent salary. Please note there is a cap of £697.92 per month for the government grant per employee.
The picture below may help describe it better for you and as always we can work with you to help you understand how to apply and factor this into your forecasts.
2) The VAT Deferral can be paid in instalments
Those of you who deferred your VAT payment will no longer have to pay this back as a lump sum at the end of March 2021 as originally expected. You now have the option of splitting it into smaller, interest free payments over a period of 11 months. This could be another welcome bit of cash head room for your business.
3) The VAT Rate of 5% for the Tourism and Hospitality Sector is extended
For all businesses in the tourism and hospitality sector, the 5% rate has been extended until the end of March 2021. We know this is a very tough period for you with further restrictions to your opening hours and this extension will be one of the ways you can navigate through the coming months.
4) There is an extension to the government loan schemes
Applications for The Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), Future Fund Scheme and Bounce Back Loans have all been extended to 31st March 2021 ensuring more businesses can benefit from this government-backed support. Furthermore, CBILS lenders will be able to extend the terms of the loans from a maximum of 6 years up to 10 years if it will help you recover from the pandemic.
If you haven't accessed this funding already then please drop our corporate finance team a message here and we can confirm if you are eligible and where to go to access this support.
5) There is a new "Pay as you Grow" method for the Bounce Back Loans
We know many of you have been able to access the Bounce Back Loan Scheme and you will be offered the choice of more time and greater flexibility for your repayments.
Like the CBILs loans, it means loans can now be extended from 6 to 10 years, nearly halving the average monthly repayment. Furthermore, if you are struggling when it comes to the repayment period then you can now choose to make interest-only payments and anyone in real trouble can apply to suspend repayments all together for up to 6 months.
A further positive is that if you do take up the pay as you grow offer then your credit rating will not be affected as a result. This is another welcome bit of news for your medium to longer term cash flow forecasting.
6) Self-Employment Income Support Scheme
This scheme will extend until 30th April 2021 to support viable traders who are facing reduced demand over the winter months due to the pandemic. This will cover 20% of average monthly trading profits via a government grant up to a total of £1,875.