Chancellor Rishi Sunak made a statement outlining plans to help workers and businesses affected by the new coronavirus restrictions.
It includes plans for an employment support program to replace holidays, help for the self-employed, business loans and VAT reductions.
Here is a summary of the main points.
Employment support program
- As part of this program, the government will subsidize the wages of employees who work less than normal hours due to declining demand.
- Workers must work at least a third of their normal hours
- Employers will pay staff for hours worked
- Government and employer will pay a third each for the hours they cannot work
- This means that a person working a third of their hours would receive 77% of their salary.
- The grant will be capped at £ 697.92 per month
- All small and medium-sized businesses will be eligible for the program
- Large companies will be eligible if their turnover decreased during the crisis
- It will be open to UK employers even if they have not yet used the leave scheme.
- The program will last six months starting in November and replaces the “leave” program
- This means that the government will pay a maximum of 22% of someone’s salary, up from 80% at the start of the holiday policy.
How could the new employment assistance program work?
If an employee works reduced hours, the employer pays for it. In addition, the employer and the government each pay a third of the lost wages (up to the limit).
So for someone who earns £ 2,000 a month and works 50% of the hours, he will receive £ 1,000 regular pay plus an additional £ 333 from their employer and £ 333 from the government.
Help for the self-employed
- The Chancellor extends the subsidy for the self-employed under conditions similar to the employment support program
- A grant will be available to those eligible for the Self-Employment Income Support Program grant
- The grant will cover three months of benefits for the period from November to the end of January
- It will cover 20% of average monthly profits up to a total of £ 1,875
- Another grant may be available for freelancers to cover February 2021 through the end of April, depending on the circumstances
- Bounce loans to drop from six to ten years, cutting monthly repayments by almost half
- Coronavirus Business Disruption Loan Program lenders will also be able to extend loan terms from the current maximum of six years to 10 years
- Chancellor also extends deadline for government coronavirus loan programs to end of November
- Distressed businesses can choose to pay only interest for six months, and “struggling” businesses can ask to suspend repayments for six months.
- Businesses will not see their credit scores lower as a result, Chancellor says
- The emergency 15% reduction in VAT for the tourism and hospitality industries will be extended from January 2021 to March 31
- Businesses that have deferred their VAT invoices will be able to reimburse their taxes in 11 small interest-free installments
- Income taxpayers who need it will have more time to pay