On 24 September 2020, the Chancellor, Rishi Sunak, unveiled a package of new measures designed to support the economy and save jobs during the ongoing Covid-19 pandemic.
Key amongst these measures is the Job Support Scheme, which will replace the Coronavirus Job Retention Scheme (aka the ‘furlough’ scheme) which is due to end on 31 October 2020.
What is the Job Support Scheme (‘JSS’)?
According to the BBC, as of 24 September 2020, around 12% of the UK’s workforce remained on full or partial furlough. The Chancellor has, therefore, been under a great deal of pressure to provide additional support for businesses and individuals when the furlough scheme ends.
As a result, he announced the Job Support Scheme with an emphasis on supporting ‘viable’ jobs and businesses and allowing the economy to move forward, rather than holding “people in jobs that only exist inside the furlough scheme”.
The JSS will come into force on 1 November 2020 and will run for 6 months until April 2021. Under the scheme, the government will subsidize the pay of employees working reduced hours due to lower demand in the business, enabling the employees to be kept on rather than being made redundant.
The scheme is flexible, meaning that employees can be placed on and taken off the JSS, and the working pattern can vary each month subject to it being in place for a minimum of seven days.
As with the furlough scheme, the changes must be agreed with staff and recorded in writing with written agreements available for inspection by HMRC if requested.
Who is eligible for the scheme?
To be eligible for the scheme, employees must have been on PAYE as of 23 September 2020 and must work a minimum of 33% of their normal hours. The Government will consider increasing this minimum hours’ threshold after three months.
Employers will be responsible for paying the employee for the hours worked at full pay, however, the employer and the Government will then each pay one third of the employee’s remaining salary for the balance of hours not worked. Therefore, employees working at least 33% of their hours will receive at least 77% of their normal pay. The Government has expressed an expectation that employers will not top up employee salaries.
The amount of grant payable by the Government will be based on the employee’s usual salary and will be capped at £697.92 (excluding class 1 employer NICs and pension contributions which will remain payable by the employer).
The scheme is open to all small and medium businesses, however, large businesses must be able to show that their turnover has fallen during the Covid-19 crisis.
In addition, employers will be able to access the scheme even if they have not previously used the furlough scheme.
Job Support Scheme and the Job Retention Bonus
Employers who wish to take advantage of the new scheme will also be able to benefit from the Job Retention Bonus Scheme (‘JRB’) and will be able to claim £1,000 for every employee they bring back from furlough and keep in employment until 31 January 2021. For further details on the criteria to qualify for the JRB, click here.
Redundancy and the Job Support Scheme
The Chancellor has made clear that employees on the JSS cannot be made redundant or put on notice of redundancy whilst in receipt of JSS.
How do you apply for the scheme?
Employers will be able to make a claim online through Gov.uk from December 2020. It is expected that the process will be similar to the one used for the furlough scheme.
Grants will be payable in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.
HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information.
What support is there for the self-employed?
The Chancellor announced an extension to the self-employed grant, which will cover 20% of an individual’s monthly profits up to a total of £1,875 from November 2020 to January 2021.
A second grant was also announced to cover the period from February 2021 up until the end of April 2021, however, there was no further information on how much this grant will pay out.
Businesses will be eligible for the new help if they previously qualified for the self-employment income support scheme (SEISS) and are actively trading, even if they are facing reduced demand.
The self-employed will also be able to defer their tax bill until January 2022.
Further announcements made by the Chancellor
Four additional measures were also announced aimed at helping businesses make it through the Covid crisis and to save and create jobs. These include:
- VAT cut extension – VAT was cut from 20% to 5% for the hospitality industry at the start of July and was set to last until 12 January 2021; this has now been extended until 31 March 2021.
- Extra time for businesses to pay back bounce back loans – Businesses will now be given 10 years (instead of 6) to pay back their bounce back loans, halving the average monthly repayment. Businesses can also choose to make interest only payments and if the business is in serious trouble they can choose to suspend the payments all together, with no affect to their credit rating.
- VAT bills – Businesses will be able to be defer or split these payments over 11 months.
- Coronavirus Business Interruption Loan Scheme – Lenders will also be able to extend the length of loans from the current maximum of six years to 10 years.
If you would like further information on what the new schemes might mean for you, please contact James Simpson on 01494 478689 or at firstname.lastname@example.org or Debbie Sadler on 01494 478671 or via email at email@example.com.