What Does the Winter Economy Plan Mean for Hospitality?
The Chancellor, Rishi Sunak, has now announced a multi-billion pound"winter market plan", aimed at preventing widespread redundancies within the coming months.
The set of measures come as the UK Government this week slashed coronavirus limitations for hospitality companies in England - a movement that was followed in Scotland, Wales, and Northern Ireland.
Here's a breakdown of all the new steps.
New Jobs Support Scheme
The most crucial announcement is the furlough scheme will be replaced as it ends on October 31st. In its place, the Chancellor will present the Jobs Support Scheme, modelled on a similar programme employed in Germany.
Under the new scheme, the Treasury will offer"top-up pay" for employees who were given fewer hours at the crisis. The intention is to keep employees on the job, as opposed to paying them to stay home.
Beginning on November 1st, the programme will run for 6 weeks, and eligible employees must work at least forty of the regular hours, paid as ordinary by their employer. The Government will then top-up their wages, covering one-third of the cover, while the employer makes up another third.
What this means in practice is that workers could still get 77% of the wages, despite working just 33 percent of the hours. In this scenario, the employer will be liable for contributing 55% of the worker's wages.
The approach is meant to encourage companies to retain workers in workable jobs while ensuring that other workers aren't kept in so"zombie posts" that exist only due to the government's furlough scheme.
SMEs will be the key beneficiaries of the Jobs Support Scheme, although larger companies that can prove they've been negatively impacted by the pandemic could be eligible.
Significantly, companies will be able to claim both the tasks support strategy and the jobs retention bonus.
Sources
"Pay as you grow" loans
In what's going to be a substantial boost for SMEs, the Chancellor has improved the conditions of government-guaranteed loans for six to ten years, radically reducing monthly repayments. Loans may also proceed to interest-only payments or suspend payments if companies are"in real trouble" for up to six months.
VAT rate extension
In a further boost to the hospitality industry, Sunak also announced an expansion of the VAT rate decrease. Originally set to run until January next year, the special 5 percent speed for tourism and hospitality companies has been extended to March 2021.
Furthermore, companies who deferred their VAT will no longer need to pay a lump sum at the end of March next year. Rather, they will have the option of dividing it into smaller, interest-free payments over the course of 11 months
References
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