Speaking to Parliament, Sunak also noted that the “economy will now undergo a permanent adjustment” as the country was set to be in a state of restriction “for at least the next six months”.
He added: “Today’s measures mark an important evolution in our approach. Our lives can no-longer be put on hold.”
The key element of the package is a more targeted version of the Coronavirus Jobs Retention Scheme (CRJS) which will be launched in November to support employees working at least one third of their normal hours.
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 their normal salary.
The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
A revamped programme for self-employed people will also be added on “similar terms and conditions” as the jobs support scheme.
An initial taxable grant will be provided to those who are currently eligible for the existing Self Employment Income Support Scheme Grant (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 per cent 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.
Tax cuts and deferrals
As part of the package, the government also announced it will extend the temporary 15 per cent VAT cut for the tourism and hospitality sectors to the end of March next year.
It said 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.
For businesses which deferred their VAT bill until March 2021, they will be given the option of pay this over 11 interest-free instalments during the 2021-22 financial year.
Around 11 million self-assessment taxpayers will be given 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.
Businesses which took out a Bounce Back Loan will be able to repay this through a Pay as You Grow flexible repayment system, which includes extending the length of the loan from six years to ten. Interest-only periods of up to six months and payment holidays will also be available to businesses.
Coronavirus Business Interruption Loan Scheme (CBILS) lenders will be given 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.
Applications for the government’s coronavirus loan schemes for businesses will also remain open until the end of November.