Chancellor Rishi Sunak has announced in the House of Commons that he will extend the 5% rate of VAT for the hospitality and tourism industries until the end of March 2021.
VAT will not go back up to 20% in January and Sunak said today’s measures are an “important evolution in our approach” to the pandemic.
The Chancellor said it was the “right policy at the time we introduced” the furlough scheme, but said it would be “fundamentally wrong to hold people in jobs that only exist inside the furlough.”
In order to help the economy to move forwards he announced the launch of the Jobs Support Scheme with allows employers to keep workers in a job on short hours rather than making them redundant.
Sunak told MPs that the new scheme will “directly support” the wages of people in viable jobs, which will start in November and run for six months.
From 1 November, for the next six months, the Job Support Scheme will protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19. pic.twitter.com/8NpIKpQV8y
— HM Treasury (@hmtreasury) September 24, 2020
The Chancellor further announced that 2.6m self employed small businesses have thus far helped during the coronavirus pandemic.
Sunak announced that he is to extend the self-employed grant on similar terms, as the new jobs support scheme, adding his policies have never been “tried in this country before.”
On bounce back loans, small businesses will now be given more time and flexibility and the Chancellor has introduced a new “pay as you grow,” allowing loans to be extended from six years to ten years.
Sunak said that this will help businesses as this will almost halve the average monthly repayment.
Businesses that are struggling will be able to make interest only repayments, enabling anyone being able to apply to suspend repayments for up to six months, which will no affect the companies credit ratings.