New Jobs Support Scheme and continuing business support measures
Following the announcement yesterday that the Autumn Budget had been cancelled, the Chancellor Rishi Sunak today announced a new Jobs Support Scheme which will replace the Coronavirus Job Retention Scheme (CJRS). The Chancellor also announced extensions and revised payment terms to various other Government support schemes.
- The furlough scheme will end on 31 October 2020, as planned.
Jobs Support Scheme
- This will replace the existing furlough scheme.
- Employers can use this scheme even if they have no previously used the furlough scheme.
- It is a 6 month scheme, starting from 1 November.
- Eligible employees must be on a PAYE payroll on or before 23 September 2020
- The government will directly support the wages of people who have reduced working hours, working in businesses who are facing lower demand and struggling as a result of Covid-19.
- Employees must work a minimum of 33% of their hours, which will be paid by the employer. After 3 months, the Government will consider whether to increase this minimum hours threshold.
- For the remaining hours not worked, the government and employer will pay 1/3 of the usual wages each. The Government contribution will be capped at £697.92 a month
- Businesses will not be able to issue redundancy notices to employees on the Job Support Scheme.
- The scheme is aimed at small and medium sized businesses, however larger businesses must show that their turnover has fallen during COVID-19 in order to qualify. The eligibility criteria is expected to be more stringent than that of the existing furlough scheme.
- There will be restrictions for larger companies on capital distributions to shareholders whilst companies are in receipt of money for their workers on this scheme, however details of these restrictions are yet to be announced.
- The employer can also claim the job retention bonus as long as they qualify for it.
- Example 1:
Hours Employee Worked 33%
Hours Employee Not Working 67%
Employee Earnings (% of normal) 77% (33% worked plus 44% for hours not worked)
Gov’t Grant (% of normal wages) 22% (1/3 of the 67% not worked)
Employer Cost (% normal wages) 55% (1/3 of the 67% not worked plus 33% worked)
- Example 2:
Hours Employee Worked 70%
Hours Employee Not Working 30%
Employee Earnings (% of normal) 90% (70% worked plus 20% for hours not worked)
Gov’t Grant (% of normal wages) 10% (1/3 of the 30% not worked)
Employer Cost (% normal wages) 80% (1/3 of the 30% not worked plus 70% worked)
The Government have published a policy paper but full guidance is awaited.
Self-Employment Income Support Scheme (“SEISS”)
- The SEISS has been extended until 30 April 2021 for traders who are facing reduced demand over the winter months.
- Those eligible will receive a grant covering 20% of average monthly trading profits.
Pay as you grow scheme
- Businesses which have borrowed funds under the Bounce Back Loan Scheme will be offered the choice of more time and greater flexibility for their repayments where needed.
- Businesses will be able to extend their loans from 6 to 10 years, hence reducing their payments.
- Businesses may also move to interest-only payments or suspend repayments for 6 months if required, and their credit ratings will be unaffected.
- The government guarantee on Coronavirus business Interruption loans will be extended to 10 years, and there will also be a new loan scheme announced in January.
Future Fund Scheme
- The application deadline for this has been extended to 30 November to ensure more businesses can benefit from government-backed support.
Self-assessment – spreading your tax bill over 12 months
- Individuals on self-assessment who require financial help can now extend their outstanding tax bill over 12 months from January 2021.
VAT deferral – 12 month interest-free payment plan
- Businesses who deferred their VAT payments will no longer have to pay a lump sum in March 2021.
- Businesses will now have the option of splitting it into smaller, interest-free payments over the course of 11 months.
Tourism & Hospitality – 15% VAT rate cut extended
- The 5% VAT rate for the tourism and hospitality sectors will remain until 31 March 2021.