Rishi Sunak unveils government’s plan to protect jobs and support businesses over the coming months.
The Chancellor announced a package of measures that will continue to protect jobs and help businesses through the uncertain months ahead as we continue to tackle the spread of the virus. The package includes a new Jobs Support Scheme to protect millions of returning workers, extending the Self Employment Income Support Scheme and 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.
The announcement comes after the Prime Minster set out further measures to combat the spread of the virus over the winter, while preserving the ability to grow the economy.
You will find more information specific to the Job Support Scheme and Self Employment Income Support Scheme in our separate blog.
5% VAT on Hospitality and Tourism
As part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year. This will give businesses in the sector – which has been severely impacted by the pandemic – the confidence to maintain staff as they adapt to a new trading environment.
If you supply food and non-alcoholic beverages for consumption on your premises, for example, a restaurant, café or pub, you were to previously charge VAT at the standard rate of 20%. However, when you make these supplies between 15 July 2020 and 31st March 2021 you will only need to charge 5%. This date has been extended from 12th January 2021.
Please contact Chippendale and Clark immediately if you were unaware or have not actioned these changes.
Repayment of deferred VAT bills
In addition, up to half a million business who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives you the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, you will be able to make 11 smaller interest-free payments during the 2021-22 financial year. You will need to opt-in to the scheme, and for those who do, this means that your VAT liabilities due between 20 March and 30 June 2020 do not need to be paid in full until the end of March 2022.
Self-assessment payment deferral
On top of this, around 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022. Further details are to be announced by HMRC regarding this.
Giving businesses flexibility to pay back loans
The burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan.
This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses. These measures will further protect jobs by helping businesses recover from the pandemic.
We also intend to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November. As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund. This change aligns all the end dates of these schemes, ensuring that there is further support in place for those firms who need it.
Share this Story