LONDON, Sept 24 (Reuters) – British finance minister Rishi Sunak announced on Thursday a new jobs support scheme that would help firms keep people employed but on shorter hours, as he warned he could not save every business or role.
As part of a “Winter Economy Plan,” Sunak also announced changes to tax rules and the terms of government loans to businesses. Here are the details:
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JOB SUPPORT SCHEME
– Government to contribute to wages of employees who work fewer hours than normal due to decreased demand.
– Will be introduced from Nov. 1 and run for six months.
– Employers will continue to pay the wages of staff for the hours they work.
– But for the hours not worked, the government and the employer will each pay one-third of their equivalent salary.
– Employees must be working at least 33% of their usual hours in order to focus the support on viable jobs.
– The level of grant will be calculated based on employee’s usual salary, capped at 697.92 pounds per month.
– Government also introducing a Self Employment Income Support Scheme Grant (SEISS).
– The initial lump sum under SEISS will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of 1,875 pounds, the finance ministry said.
– Extra flexibility for the Bounce Back Loan scheme.
– The length of the loan is extended from six years to 10, cutting monthly repayments by nearly half.
– Interest-only periods of up to six months and payment holidays will also be available to businesses.
– Government says it also intends to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to 10 years if it will help businesses to repay the loan.
– Sunak said he would extend applications for the government’s coronavirus loan schemes until the end of November.
– The government extended the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year.
– Up to half a million businesses who deferred their VAT bills will be given the option to pay back in smaller instalments.
Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
– Around 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
Reporting by Alistair Smout and William James; editing by Stephen Addison