The chief talking point from the chancellors Winter Economy Plan was the new Job Support Scheme, being implemented as the furlough scheme comes to a close. Opening on 1 November, and with the plan to run for six months, the Job Support Scheme’s main aim is to help employers keep their employees in “viable” jobs.
Under the new scheme, employers will continue to pay the regular wages of staff for the hours they work, providing they are working at least a third of their usual hours. For the hours not worked, the government and the employer will each pay one third of their equivalent salary, and the final third will be unpaid. The Government contribution will be capped at £697.92 a month.
If an employee works nine hours per day at £10 an hour, they would typically be paid £90 per day. If they are now working for a third of their usual nine hours, so three hours per day, they will receive a third of their pay – in this case £30 (three x £10 per hour) – automatically from their employer, to cover the full amount of hours worked.
For the remaining six hours not worked, one third is paid by the government, one third by the employer and one third will not be paid. So for this example, a third of six hours = two hours, so the government will pay £20 (two x £10 per hour) and the employer will also pay £20. The final £20 is unpaid.
The employee will therefore receive £70 per day in total (£30 +£20 + £20) – equivalent to 77.7% of their typical £90 per day salary. The more hours a person is working, the higher the percentage of their typical salary they will receive.
The scheme is only available to employers whose turnover is lower now than it was before experiencing COVID-19 difficulties. Neither the employer nor the employee needs to have previously used the furlough scheme.
Large businesses will have to meet a financial assessment, but there will be no financial assessment test for SMEs. The government expects that large employers using the Job Support Scheme will not be making capital distributions, such as dividend payments, whilst accessing the grant.
Employees must be on an employer’s PAYE payroll on or before 23 September 2020. In order to support viable jobs, for the first three months of the scheme the employee must work at least 33% of their usual hours. Employees will be able to cycle on and off the scheme, and they do not have to be working the same pattern each month.
Employers will be able to make a claim online from December 2020. They will be paid on a monthly basis.
If you are unsure whether or not you are eligible for the scheme, please do not hesitate to get in touch. The Clayton & Brewill team has already handled hundreds of Coronavirus Job Retention Scheme claims this year, and we can support you with making a claim through the new Job Support Scheme too.
It was also announced in the Winter economic update that the Self Employed Income Support Scheme grant has been extended with similar terms and conditions as the new Job Support Scheme.
The initial lump sum payment to cover three months of profits from November to the end of January next year, and the grant will be capped at 20% of average monthly profits, up to a total of £1,875. People will be able to apply for a second grant to cover February to the end of April.
The temporary 15% VAT cut for the tourism and hospitality sectors has been extended to March 2021.
Businesses that deferred their VAT bill will be given the option to pay it back in 11 smaller, interest-free payments during the 2021-22 financial year, rather than paying a lump sum in full at the end March 2021.
Self-assessment taxpayers will also be able to benefit from 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 need to be paid in full by January 2022 by agreeing a payment plan with HMRC.