Winter Economy Plan leaves landlords out in the cold

by Nick Thompson

14:02 PM, 24th September 2020
About a month ago

Winter Economy Plan leaves landlords out in the cold

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Winter Economy Plan leaves landlords out in the cold

Rishi Sunak has outlined additional government support to businesses and workers impacted by coronavirus with a package of measures that will continue to protect jobs and help businesses through the uncertain months ahead as the spread of the virus is tackled.

The package includes a new Jobs Support Scheme to protect millions of returning workers, extending the Self Employment Income Support Scheme and 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.

The announcement comes after the Prime Minster set out further measures to combat the spread of the virus over the winter, while preserving the ability to grow the economy.

The Chancellor of the Exchequer Rishi Sunak said: “The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery.

“Our approach to the next phase of support must be different to that which came before. The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.”

Since the beginning of the pandemic, the government has taken swift action to save lives, limit the spread of the disease and minimise damage to the economy.

Ministers have introduced one of the most generous and comprehensive economic plans anywhere in the world with over £190 billion of support for people, businesses and public services – including paying the wages of nearly 12 million people, supporting over a million businesses through grants, loans and rates cuts and announcing the Plan for Jobs in July.

The government has been consistently clear that it would keep its support under review to protect jobs and the economy, with today’s action reflecting the evolving circumstances and uncertainty of the months ahead. The package of measures, which applies to all regions and nations of the UK, includes:

Support for workers:

A new Job Support Scheme will be introduced from 1 November to protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus.

Under the scheme, which will run for six months and help keep employees attached to the workforce, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.

Employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one third of their equivalent salary.

This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work.

In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.

The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course.

It is designed to sit alongside the Jobs Retention Bonus and could be worth over 60% of average wages of workers who have been furloughed – and are kept on until the start of February 2021. Businesses can benefit from both schemes in order to help protect jobs.

In addition, the Government is continuing its support for millions of self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.

An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April – ensuring our support continues right through to next year. This is in addition to the more than £13 billion of support already provided for over 2.6 million self-employed individuals through the first two stages of the Self Employment Income Support Scheme – one of the most generous in the world.

Extended VAT cut and deferrals:

As part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year. This will give businesses in the sector – which has been severely impacted by the pandemic – the confidence to maintain staff as they adapt to a new trading environment.

In addition, up to half a million business who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.

On top of this, around11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

Giving businesses flexibility to pay back loans:

The burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan.

This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses. These measures will further protect jobs by helping businesses recover from the pandemic.

We also intend to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.

In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November. As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund. This change aligns all the end dates of these schemes, ensuring that there is further support in place for those firms who need it.

Investment in public services:

At the start of the pandemic, the Chancellor pledged to give the NHS and public services the support needed to respond to coronavirus – and as of today, £68.7 billion of additional funding has been approved by the Treasury, including £24.3 billion since the Summer Economic Update in July.

This funding has helped ensure the procurement of PPE for frontline staff, provided free school meals for children while at home and protected the country’s most vulnerable. In addition, the £12 billion funding to roll-out the Test and Trace programme has played a key role helping to unlock the economy, enabling businesses like restaurants and bars to serve customers again.

As announced earlier this year, the Treasury has also guaranteed the devolved administrations will receive at least £12.7 billion in additional funding. This gives Scotland, Wales and Northern Ireland the budget certainty to for coronavirus response in the months ahead.


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Comments

Helen Morley

14:17 PM, 24th September 2020
About a month ago

To clarify, the govt will pay 1/3 of the balance of the employee’s pay (subject to the cap), and the co. will pay 1/3 of that balance. So if the employer is in a position to offer to the employee 1/3 of their normal hours, then the employer will pay roughly 55% of salary for 33.3% of the hours and the govt will pay roughly 22% of the employee’s total salary. The employee will receive around 77% of their normal pay for a third of the job.
Have seen nothing yet re the effect on employers NI and pension contributions or maintenance of holiday pay/maternity/paternity rights etc. Not particularly appealing to many employers.
Cue (1) redundancies at a vile level and at a rate we’ve never seen before and (2) large scale personal and corporate bankruptcies. None of which is exactly helpful to your average landlord......

The Forever Tenant

12:37 PM, 25th September 2020
About a month ago

I honestly expect that there will be redundancies now. It's cheaper for a company to have 1 person working full time, than two people working part time.

What employer would want to effectively pay double the wages of their employees?

It does nothing for people who are employed, but for whatever reason their industry is currently shut down. Those people get nothing.

Pete27car8vno

14:29 PM, 25th September 2020
About a month ago

I dread the knock on effect - no job - no rent - no mortgage payed - no property - no income ! Landlord licensing is coming to our area soon does that include vacant properties and is council tax payable too?

Muggle

0:56 AM, 26th September 2020
About a month ago

Yes, land licensing and council tax still payable.

The Governments long term goal is to see the end of small landlords with pension funds taking over to provide a stable income for pension Investors.

moneymanager

13:13 PM, 26th September 2020
About 4 weeks ago

Debt, if you can't sell it to willing customers FORCE it onto those being made destitute by policy, the last century ended up with a war over that.

TrevL

21:27 PM, 26th September 2020
About 4 weeks ago

Reply to the comment left by Pete27car8vno at 25/09/2020 - 14:29
I'm still amazed the sales market is holding up so well...if I still had mortgages on my rentals I would be making use of the temporary stamp duty change to get rid....is there such a housing shortage that it can stay boyant, hope so!

Landlord Phil

14:27 PM, 27th September 2020
About 4 weeks ago

Muggle is spot on. Gov hates the small landlord. Pension funds are visible from a tax perspective & are large enough to warrant tax audits. They don't like us lot because they have to rely on us paying our dues voluntarily. As we are portrayed as evil landlords by the popular media & Shelter, then we must all be fiddling our taxes. The sooner someone exposes Shelter as a gov funded, anti landlord lobbying organisation, the better it will be for us. But what's the chances of that? Slim to none I'd say.


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