What to know about the Winter Economy Plan
It was on 24 September when chancellor Rishi Sunak announced the Winter Economy Plan. This is the government’s new range of economic support packages meant to help businesses and the self-employed over the next six months. This was also announced along with the declaration of new restrictions in response to Covid’s second wave.
If you are a freelancer or a small business owner, understanding the Winter Economy Plan will allow you to leverage the economic support available. Ultimately, it will help you navigate the next few months and ensure that your venture survives.
The Winter Economy Plan 2020
The plan generally aims to protect jobs as well as the economy. It includes assistance to anxious businesses as well as various measures to allow digitisation across the economy. Ultimately, its overarching goal is to support the economy during the coming winter months, considering the resurgence of COVID-19 infections.
However, the chancellor admitted that not everyone can be saved. Furthermore, viable businesses will be prioritised over others.
What Small Businesses Must Know About the Winter Economy Plan
Job Support Scheme or JSS is being introduced to replace the furlough scheme that ended in October. This scheme aims to provide financial support to workers who are not able to work their regular hours, especially during this time of reduced demand.
Despite working for only 33% of their normal working hours, they will still receive the remaining 77% of their pay. Their employers will pay a third of their pay, while the remaining percentage will be split between employers and the government.
If you are a small business owner, you are eligible for claiming this support. Doing so will enable you to continue your operations while ensuring your employees receive sufficient compensation in these critical times.
What Self-employed Individuals Must Know About the Winter Economy Plan
If you are a freelancer or an independent worker, there are also elements in the Winter Economy Plan that you can leverage. It extends the Self-employment Income Support Scheme that has proven to be an effective aid for self-employed individuals during the first six months of the pandemic.
Specifically, the chancellor announced two new grants: one covering November to January 2021, and another covering February to April 2021.
However, there are certain requirements you must meet to become eligible for the Self-employment Income Support Scheme. Here are some of them:
- You must be self-employed as a sole trader.
- You must make more than half of your income from self-employment.
- Your self-employment must start before the 6 April 2019.
- You must have submitted a Self Assessment tax return for the 2018-19 tax year.
- You must state or prove that COVID-19 has caused you to lose trading.
You should also take note that, compared to the Job Support Scheme, claimants will only receive 20% of their average monthly profits.
Tax Relief Programmes
Aside from the schemes mentioned above, the Winter Economy Plan also includes helpful tax support for small businesses and self-employed individuals.
Tax repayments can now be spread over 11 smaller payments without any interest. This is a substantial benefit compared to the previous arrangement, wherein the single lump sum of deferred payments need to be paid by the end of March 2021.
Self-employed individuals who pay through Self Assessment can also enjoy this benefit. They will be allowed to defer their outstanding tax payments until January 2022.
Ultimately, those in the hospitality and tourism sectors will receive a temporary VAT reduction of 5%. This has been extended to 31 March 2021.
Conclusion
Amidst the resurgence of COVID-19 cases, the Winter Economy Plan can help businesses and self-employed individuals survive the second wave. It can help control the blow of the worsening pandemic on livelihoods. Ultimately, it can help the economy survive the challenging and uncertain winter and safely make it to the other side.
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