Chancellor Rishi Sunak today announced financial measures aimed at supporting businesses, employees and the self-employed during the next 6 months. Here are the headlines:
1. Current Furlough Scheme ends
The Furlough Scheme, in its current form, will end on 31 October 2020 as originally planned.
2. Job Support Scheme
A new 6-month scheme, beginning on 1 November 2020. To be eligible, employees must work a minimum of 33% of their usual hours (pre-Covid19).
For the remaining hours not worked, the Government and the employer will pay 1/3 wages each.
So, employees working 33% of their hours will receive at least 77% of their pay. (22% paid by Govt, 55% paid by employer)
3. Self Employment Scheme
The scheme will be extended on “similar terms” to the existing job support scheme.
4. Pay As You Grow
This is for businesses who have accessed Government-backed loans during the crisis. The terms of the loan can be extended from six years to ten years, nearly halving the average monthly repayment amount.
Furthermore, in deep financial trouble, taxpayers can elect to pay interest-only, or take a payment holiday for up to six months, with no effect on their credit rating.
5. VAT Deferral
Businesses that deferred their VAT will no longer have to pay a lump sum at the end of March 2021. Instead, they will have the option to split the payment into eleven equal interest-free payments.
6. Hospitality/Tourism VAT Increased Deferred
Originally the 5% VAT rate on hospitality & tourism was expected to increase on 13 January 2021. The increase from 5% to 20% will now take place on 31 March 2021.
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