The Chancellor Rishi Sunak has today announced that VAT for hospitality and tourism businesses will remain at 5% until March 2021.
Speaking to the House of Commons today, Sunak detailed plans to keep the 5% VAT in place past the original cut-off date of January 12 next year, bringing hope to thousands of concerned hospitality firms.
It means that VAT for sector businesses, including food, accommodation and attractions will continued to be reduced from 20% to 5% for the next six months.
Businesses who deferred their VAT will no longer have to pay a lump sum at the end of March next year. They will have the option of splitting it into smaller, interest free payments over the course of 11 months.
Sunak also announced a new Jobs Support Scheme, which would see the government ‘top up’ wages of workers, covering two-thirds of their hours.
To be eligible, employees must work a minimum of 33% of their hours and for the remaining hours not worked, the government and the employers will each pay a third to ‘top up’.
It means that employees working only 33% of their normal hours will still receive two-thirds of their pay.
The scheme will run for six months, starting on November 1 and has been designed to bring people back to work and protect viable jobs, rather than making workers redundant.
It is targeted towards small and medium sized businesses and larger businesses which have seen turnover shrink during lockdown.
Sunak then explained that to help companies with cash flow, he was introducing ‘pay as you grow’ loans, extending the terms from six to ten years with flexible payment options and credit ratings unaffected.
He is also changing the terms of the CBILS, extending the government guarantee on these loans for up to ten years.
There will also be a new loan scheme announced in January.
Sunak said that the country was in a ‘fundamentally different position to where we were in March’ and that there had been ‘no harder decision’ than to bring to an end to the furlough scheme.