On 24th September, Rishi Sunak unveiled the Government’s ‘Winter Economy Plan’, announcing a number of measures designed to protect jobs and businesses throughout the COVID-19 crisis.
However, millions of freelancers, contractors and small business owners will feel they have been overlooked yet again. This is despite the Chancellor unveiling a ‘Job Support Scheme’, announcing an extension to the Self-Employment Income Support Scheme (SEISS) and offering businesses flexibilities to help pay back Government-backed loans.
Speaking to Parliament, Mr Sunak said the “next phase of support must be different to that which came before”, adding, “the primary goal of our economic policy remains unchanged - to support people’s jobs - but the way we achieve that must evolve.”
Job Support Scheme announced
Employment seems to be Chancellor’s core focus, as he revealed the details of a new Job Support Scheme, which will replace the Coronavirus Job Retention Scheme on 1st November. The Government will roll this out to protect what Mr Sunak described as “viable jobs” at firms facing lower demand in the coming months.
This 6 month initiative hopes to prevent an expected hike in unemployment and keep businesses operating when the furlough scheme winds down. In simple terms, the Government will top up employees’ wages - up to £697.92 a month - if an employer cannot afford to bring them back full time. To be eligible, employees need to work at least a third of their contracted hours, with the cost of unworked hours split between the Government and the employer.
It is, in many respects, a halfway house designed to get the wheels of the economy turning and stave off mass unemployment. However, it has been widely criticised for not catering to the needs of most freelancers and contractors who, under the scheme, could in theory only qualify for £177 per month, as Contractor UK explains.
Third and fourth SEISS grants announced
While many individuals operating via their own limited company fall between the cracks yet again, it was revealed that sole traders eligible for the Self-Employment Income Support Scheme (SEISS) can apply for a third and soon after, a fourth grant.
Like the Job Support Scheme, the third grant will be available in November to cover three months’ worth of profits - capped at 20% up to £1,875 - until the end of January 2021. Mr Sunak said one more grant, which could be adjusted depending on the changing circumstances, will be provided to support self-employed workers to help them from February to the end of April 2021.
VAT payment plan
In addition to extending the temporary 15% VAT cut for the tourism and hospitality sectors until March 2021, the Winter Economy Plan allows up to 500,000 businesses who deferred their VAT bills earlier this year to repay them in smaller instalments.
It means VAT-registered freelancers and contractors who made use of the VAT bill deferral can make 11 smaller interest-free payments throughout the 2021/22 tax year.
Further self-assessment returns extension
Alongside this, the reported 11m individuals who file self-assessment tax returns annually can benefit from a 12-month extension granted by HMRC as part of the ‘Time to Pay’ facility. The announcement means self-assessment payments that were deferred in July 2020 and due in January 2021 will not need to be settled until the following January.
Greater flexibility for COVID-19 loan repayments
The Chancellor also explained that over 1million businesses making use of the Bounce Back Loan can repay this via a ‘Pay as You Grow’ system, aimed to provide greater flexibility for businesses.
Along with extending the length of the loan from six to ten years (which reportedly reduces monthly repayments by 50%), businesses that took out this finance - including freelancers and contractors - can benefit from interest only periods of up to six months and payment holidays.
Meanwhile, firms using the Coronavirus Business Interruption Loan can repay this in ten years rather than six, should they need to. And finally, after taking into account the threat of a second wave of the virus, applications for the Government’s COVID-19 loans will be extended until the end of November.
In conclusion, there has been a mixed reaction to these measures. On the one hand, the Chancellor has been decisive and generous, recognising that employees and businesses require ongoing financial help in the coming months.
However, scratch beneath the surface and the holes in the Winter Economy Plan become apparent, with millions of independent professionals - who are likely to prove vital in the economic recovery - cast aside.
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