It was no surprise when the Chancellor announced last week the planned Autumn Budget had been cancelled.

With the country still in the grip of the Covid-19 pandemic, now wouldn’t have been the right time for the Government to unveil its long-term tax and spending strategy.

Instead, Chancellor Rishi Sunak has announced a Winter Economy Plan.

What is the Winter Economy Plan?

It’s a package of measures designed to protect as many jobs as possible and help businesses through the uncertain months ahead.

The scheme comes in the wake of new restrictions introduced in response to rising cases of coronavirus in England. These measures include encouraging people to work from home, and a 10pm closing time for restaurants and pubs.

At the heart of the Winter Economy Plan is the new Job Support Scheme. Plus, there will be an extension of the Self-Employment Income Support Scheme (SEISS), while the 15% VAT cut for the hospitality and tourism sectors will also be extended.

Job Support Scheme

The Job Support Scheme will start on 1 November, after the current furlough scheme ends. The new scheme, which will run for six months, is being launched by the Government to protect viable jobs in businesses facing lower demand because of Covid-19.

Under the initiative, employers will continue to pay their employees’ wages for the hours they work. But for the hours not worked, the employer and the Government will each pay one third of their usual wages (capped at £697.92 per month). Employers will also need to pay for employer National Insurance contributions and statutory pension contributions.

Self-Employment Income Support Scheme

If you’re self-employed or a member of a partnership, you might be able to benefit from a six-month extension to the Self-Employment Income Support Scheme (SEISS).

The extension will provide two grants and will run from November 2020 to April 2021. It will be open to people who are currently eligible for SEISS and are actively continuing to trade but facing a drop in demand because of coronavirus.

Tax cuts and deferrals

The temporary 15% VAT cut for the tourism and hospitality industries will be continued until the end of March 2021.

And if you’re a business owner who had deferred your VAT bill, you have the option of using the New Payment Scheme to pay the bill in interest-free instalments in the 2021-22 financial year.

What’s more, if you had already delayed paying your self-assessment tax until 31 January 2021, you might be able to make use of HMRC’s Time to Pay service, which offers an extra 12 months to pay the bill.

Our view

It’s important you’re aware of what is now available through the Winter Economy Plan, especially because the Government has made several changes since the start of the pandemic.

The furlough scheme is (and has been throughout) extremely complicated, so it’s crucial for you to use it correctly. HMRC will be looking for you to repay anything that wasn’t due to you and you don’t want to risk being liable for a penalty.

And if you’ve claimed income through SEISS, this is subject to tax and National Insurance. You should therefore make a note of what you’re claiming, so it can be included in your 2020-21 tax return.

Plain-English UK tax advice

The team at Churchill Taxation are here to help you make sense of your tax payments.

Our professional tax advisers have many years’ experience helping people and businesses in the West Midlands and across the UK.

To find out more about how our tax advice can help you, call us on 07813 434195 or send an email to stephanie.churchill@churchilltaxation.co.uk

Steph Churchill

Stephanie Churchill

Managing director & co-owner of Churchill Taxation