Chancellor Rishi Sunak made some big announcements in Parliament today that will have a big impact on SME businesses.
There will be a lot more detail to come in the next few days. In the meantime, here is a high level summary of what was announced today.
As previously announced, the Coronavirus Job Retention Scheme (CJRS) comes to an end on 31 October. To replace it, there is a new Coronavirus Jobs Support Scheme (CJSS) that is designed to support viable jobs. It appears to be based around the German “Kurzarbeit” or short time working scheme. Employees must work at least 1/3 of their normal hours, and the government will make up 2/3 of the shortfall. For example;
⇒ Employee A works 1/3 of their normal hours, which the employer must pay for. Of the remaining 2/3 of hours not worked, the government will pay 2/3, which is 4/9. In total the employee will receive 7/9 of their salary.
⇒ Employee B works ½ of their normal hours, which the employer must pay for. Of the remaining ½ of hours not worked, the government will pay 2/3, which is 2/6 = 1/3. In total the employee will receive 5/6 of their salary.
All SME businesses will be eligible to claim the CJSS, even those who did not claim under CJRS. This is very good news for businesses and their employees, to address the fact that we are getting back to work but many are not yet at their normal capacity.
For those who are self-employed, a similar extension to the existing self-employed scheme will be offered.
Both the BBLS and the CBILS loan schemes have been extended to the end of 2020, and new loan schemes will be made available in January 2021.
Businesses that have borrowed under the BBLS may choose to extend the repayment term from 6 years to 10 years. Businesses that are struggling can elect to pay interest only, and for those in serious difficulty they can opt to have a 6-month repayment holiday.
Businesses that have borrowed under the CBILS may choose to extend the repayment term from 6 years to 10 years.
Businesses that deferred the VAT bill from the first quarter of 2020, which is due at the end of March 2021 can now be spread across a period of 11 months.
For businesses in the Hospitality and Tourism sectors, the reduce rate of 5% VAT has been extended to the end of March 2021.
Broadly speaking, this is good news for all SME business owners and their staff. As ever, the devil is in the detail. We do not have any details yet, and as the government issues them in the coming days, I will be sharing my analysis of these schemes in plain English.