Cirencester and Malmesbury-based accountancy firm McGills Chartered Accountants has said that the Chancellor’s Winter Economy Plan announced in Parliament will play an important role in supporting businesses during these difficult times but may still leave some workers without support.
Earlier this week, the Prime Minister, Boris Johnson, announced new restrictions to stem the tide of a second wave of infection, which led to calls from businesses, MPs and workers to extend financial support measures.
Responding to the calls, the Chancellor, Rishi Sunak, has launched his Winter Economy Plan, which will offer ongoing support to viable businesses for up to 6-months.
Chief among the Government’s new measures is the Job Support Scheme, which promises to help employers retain employees by allowing them to reduce their hours, whilst subsidising workers for time that is not worked.
Sharla Dandy, Partner at McGills Chartered Accountants, said that, from 1 November 2020, the scheme will ensure that for every hour not worked, the employer and the Government will each pay one-third of the employee’s usual pay, with the Government contribution capped at £697.92 per month.
“In many cases, employees using the scheme will still receive at least 77 per cent of their usual pay and it ensures that the employers are reimbursed in arrears for the Government contribution,” said Sharla.
“However, the scheme is only available to small and medium-sized businesses and larger businesses that can demonstrate that they have been adversely affected by COVID-19. The Government also expects that large employers using the scheme won’t make payments, such as dividends.
“Most importantly, this scheme will not be available to those employees on a redundancy notice, but the scheme can be used alongside the £1,000 Job Retention Bonus announced earlier this year.”
The Government also announced that the Self-Employment Income Support Scheme would be extended, starting with a new grant that will cover the 3 months from November to the end of January, paying 20 per cent of average monthly profits, capped at £1,875. An additional grant will then be available from January to March at a yet to be determined rate.
Sharla added: “Supporting people in work is essential but many businesses will also be pleased to see that the Government has extended applications for the existing Bounce Back Loan Scheme (BBLS) and the Coronavirus Businesses Interruption Loan Scheme until the end of November 2020.
“The Chancellor also announced a new Pay as you Grow scheme for those businesses that have already used the BBLS, which will allow the repayment of this loan to be spread out over a longer period and offer payment holidays to those in distress.”
Sharla explained that these measures came alongside further measures, including a 3-month extension to the 15 per cent VAT cut for the hospitality and tourism sectors, and amendments to the existing VAT and tax deferral schemes giving businesses and taxpayers longer to settle their tax bill.
However, McGills Chartered Accountants said that the devil is often in the detail within these policies and encouraged businesses to seek advice to make the most of the new support on offer.
“Whilst the Government has published some detail on these new measures, we do not yet have all the ins and outs,” said Sharla.
“We have found from previous schemes that there are often a lot of conditions and criteria that businesses and individuals need to fulfil when it comes to accessing financial support, so it is important that professional advice is sought.”
To find out how McGills Chartered Accountants can assist you and your business with the Chancellor’s new financial support measures, please visit www.mcgills.co.uk.