Autumn Budget axed as new ‘winter economy plan’ comes into play

28th September 2020

Last week ended with the Chancellor announcing that there will be no Autumn Budget as he continues to focus on measures to protect jobs amid the COVID-19 pandemic, launching his “winter economy plan” on the 24 September.

As the furlough scheme comes to an end as planned on 31 October, Sunak has announced that the Government will subsidise employees’ wages for anyone who can work at least 33% of their contracted hours. Through the scheme, employers and the Government will each cover a third of the employee’s pay for every hour not worked, meaning employees receive at least 77% of their usual salary. The new scheme will run for six months from 1 November 2020.

The scheme is designed to encourage employers to retain workers in viable jobs whilst ensuring that non-viable posts are not simply sustained by the furlough scheme. It is available to small and medium sized business. However, for large businesses to access, they will need to show that turnover has been reduced by the pandemic.

The winter economy plan also covers:

  • SEISS: the self-employment income support scheme will now remain in place until 30 April 2020 for those currently eligible and actively continuing to trade. The support will come in the form of two taxable grants, the first covering 20% of average monthly trading profits and capped at £1,875 in total. This first instalment will be for the three months 01 November to 31 January 2021. The level of the second three-month tranche is yet to be set.
  • Deferred payments: those who need extra help can also now extend their outstanding tax bill over 12 months from 01 January. Taxpayers with up to £30,000 in self-assessment liabilities due in January 2021 will be able to use the HMRC’s time-to-pay facility to pay over an extra 12 months.
    Businesses that deferred their VAT payments between 20 March and 30 June 2020 now have the option to split this repayment into smaller, interest free payments over a period of eleven months.
  • Loans extended: The Chancellor has confirmed that new applications for the following four existing business loans schemes have been extended until 30 November 2020 – CBILS; Coronavirus large business interruption loan; Bounce-back loans (BBL); The future fund.
  • Hospitality & Tourism VAT rate: the temporary reduction from 20% to 5%, initially to end on 12 January 2021, has now been extended until 31 March 2021.

    For further details, read our special bulletin here.