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winter economy plan
 

In the last week of September, the UK Chancellor Rishi Sunak unveiled another aid package as a substitute for the Autumn Budget 2020, namely, the Winter Economy Plan. The new schemes are designed to help businesses in the UK that are finding it hard to find the shore during the ongoing COVID-19 storm. 

Amid all the new schemes and aid plans being announced, it is the Accountants that have been handed over the helmsman responsibilities to guide business owners out of the crisis. While the Accountants are ethically bound to help their clients, they are going through many challenges including emotional and mental distress.

Here we will be first discussing the recently announced Winter Economy Plan and then we will go on to discuss what challenges it has raised for the Accountants. 

Winter Economy Plan Overview

The newly announced Winter Plan package introduces 5 measures as an emergency response to the furlough scheme which ends on October 31st. The new measures are as follows:

Job Support Scheme:

  • It starts from November 1st, 2020 onwards and will continue for the next 6-months.
  • In order to qualify for the scheme, employees are required to work a minimum of one-third of the total number of their working hours, paid as normal. Thereon, the employer and the UK government will each pay one-third of the wage, for the number non-working hours remaining. 
  • This means that employees will receive a minimum of 77% of their salary.
  • The scheme applies to all businesses of mid-small sizes. The employer will be solely responsible for the employee’s NI and pension contributions. Large-businesses, however, can be a part of the scheme, if they have faced significant losses, owing to the pandemic outbreak.
  • New participants can avail the benefits of the scheme even if they didn’t register under the CJRS scheme. 
  • Employers using the job support scheme can also claim the coronavirus job retention bonus scheme for employees who qualify.

Self-Employment Income Support Scheme extension:

The ongoing second SEISS grant will applications close on 19 October. This was supposed to be the last and final grant for the self-employed. However, Rishi Sunak included a third SEISS grant in his Winter Economy Plan which is capped at £1,875 per for each taxpayer. The application dates are yet to be announced and the scheme will continue for three months until February 2020. The grant will continue to cover 20% of the avg. monthly profits, for those who were eligible for previous SEISS grants. Here’s how the rates will apply:

Grant number Average monthly profit % Maximum per month  £ Maximum grant £ Last date to apply
          1           80 %         2,500       7,500       13 July 2020
          2           70%         2,190       6,570    19 October 2020
          3           20%         625       1,875             TBA
          4         unknown     unknown       unknown            TBA

 

Bounce Back Loan scheme modified and upgraded to Pay As You Grow:

  • All existing COVID relief loan schemes extended and have been pushed back until 30 November 2020.
  • CBILS and BBLS loan schemes Government guarantee extended to 10 years from 6 years.
  • Businesses that have taken out a Bounce Back Loan will be able to benefit from a new Pay As You Grow flexible repayment system.
  • Bounce Back Loan rebranded as ‘Pay as you grow’, offering borrowers a flexible repayment schedule.   
  • Interest-only repayments for up to six months to make repayments flexible. 

Tax deferrals:

Earlier, businesses were given the option to defer their VAT payment duties until 31 March 2021(applicable for VAT liabilities due between 20 March 2020 and 30 June 2020). However, under the Winter economy plan, businesses

  • The Chancellor has now confirmed that businesses will instead be able to make 11 smaller interest-free payments during the 2021-22 financial year.
  • Businesses had the option to defer the payment of any VAT liabilities due between 20 March 2020 and 30 June 2020.
  • The Chancellor further confirmed that businesses that took advantage of the deferral will now be able to pay the deferred payments over 11 equal installments payable between April 2021 and March 2022.

VAT reduction for the hospitality and tourism sector:

  • The end date for the VAT reduction has now been extended until 31 March 2021. VAT charged on food, accommodation, and attractions (such as eat-in or takeaway food in restaurants, cafes and pubs, cinemas, theme parks, and zoos) will see VAT reduced from 20% to 5% until the end of March 2021.

Challenges faced by Accountants:

Accountants are so stressed about the constant and never-ending flow of announcements from the government. Accounting people have been answering queries of their clients during this crisis as the dependency of businesses on Accountants to find the right solution to their problems is taking a toll on the mental health of Accountants. It is all happening because of the traditional tax season workload along with the struggle of migrating clients into making tax digital for the VAT regime and all this while the COVID-19 has left businesses in a state of turmoil.

The ongoing pandemic has once again showed us that we still are in a state of continuous evolution. Various studies show that mental health is taking a toll on Accountants. And while people from various industries are trying to adapt to the ‘new normal’, it has once again become important for people to come together and share their experiences.

by:
Bitnami