In replacement of the Job Retention Scheme (Furlough) which ends on 31 October 2020, Rishi Sunak has announced today, a wider Winter Economy Plan aiming to stop mass redundancies in response to the end of the Furlough scheme.
The new scheme (Jobs Support Scheme) begins on the 1 November 2020 and will support the wages of people in work giving businesses the option of keeping employees in a job, on shorter hours rather than making them redundant. The scheme will be open to all employees even if those employees have not previously been furloughed. It will apply to staff who can work at least a third of their usual hours, which will be paid by the employer. The hours the employee cannot work, the government and employer will each cover one third of the lost pay; the government top-up being capped at £697.92 per month.
All small and medium sized businesses will be eligible and larger business will qualify for the Scheme as long as their turnover has been affected due to the COVID-19 crisis.
In addition, a reduction in VAT for the hospitality and tourism companies from 20% to 5% has been extended until March 2021. The original cut in VAT came into effect in 15 July and was due to expire on 12 January 2021.
Rishi Sunak also announced that businesses who had taken out loans through the Government’s scheme would be given more time to repay the money along with businesses who took out the “Bounce Back” loans. The ‘Pay as You Grow’ flexible repayment scheme will enable businesses to pay back over a 10 year period instead of the original 6 year loan term. This added repayment time has also been applied to small and medium sized businesses, who borrowed money under the Coronavirus Business Interruption Loan Scheme.
Further information is being released but will be reviewed as soon as possible and additional guidance will be provided in due course. Detailed analysis of Rishi Sunak’s Winter Economy Plan announcement will also be discussed in greater detail during our free webinar tomorrow. If you have not yet signed up, please do so by clicking here