New Measures announced by the Government for Businesses and Employees
The furlough scheme will officially end on 31 October 2020. Whilst it is unfortunate to see it end for many businesses struggling to thrive at this time, the Government has rightly pointed out that they can no longer support jobs that exists solely because of furlough. The message is clear, the country must try to move on and cannot seek to rely on this scheme indefinitely.
The replacement scheme and surrounding business support that has been introduced by the Government today has been far more generous than expected with even the Shadow Government murmuring approval.
Jobs Support Scheme
The furlough scheme will be replaced by the even more flexible but targeted, Job Support Scheme (JSS). The entire point of the JSS is to stop mass job losses as the economy recovers from the pandemic.
The JSS will top up the salaries of employees who are working fewer hours than normal. It will apply only to staff who are able to work at least 1/3 of their normal hours, the employer and the Government will cover 1/3 each of the time that the employee cannot work for, meaning they can receive up to 77% of their wages. However, the grant will be capped at £697.92 per month. All small and medium businesses will be eligible for the JSS and only the larger businesses that have seen their turnover fall will be eligible. The scheme is open to all qualifying employers and will start 1 November 2020 and will last for 6 months.
Businesses who have borrowed money under the government's loan schemes will be given more time to repay the money they owe. Those who took out the ‘Bounce Back’ loans will be able to use a new ‘Pay as you Grow’ and pay back the loans over 10 years instead of the original 6.
Longer repayments of 10 years are also offered to Large businesses and SME’s who used the Coronavirus Business Interruption Loan Scheme. Whilst this scheme itself has been extended and will continue to be offered to new businesses until the end of November. The Government are also allowing those struggling to either suspend or pay interest only payments for 6 months and this will not affect the credit rating of the businesses.
The hospitality and tourism sectors benefited for a VAT holiday where VAT sat at 5% instead of 20%. This came into force in July and was due to expire in January, it has now been extended until March. Businesses who deferred their VAT payments will be allowed to pay it back interest free over 11 months.
The Government will produce more guidance in the next few days, but millions will benefit from this new round of government stimulus.