Tom Biggs ACA CTA, summarises the changes to the Job Support Scheme and other government announcements.
Please note: The Government announced on 31 October that we will be entering a second national lockdown and the CJRS furlough scheme will be extended into November. The Job Support Scheme has been postponed until the extended CJRS ends, which is currently set to be 2nd December 2020.
First we had furlough 2.0, and now furlough 3.0! Was it a u-turn by Rishi Sunak? It certainly seemed so given the latest version of the Job Support Scheme (JSS) appears not that different to the original furlough scheme.
Throughout the Summer, the Chancellor insisted he wouldn't extend furlough support. To recap this scheme has been paying a considerable amount of the wages of people who weren't able to work due to the coronavirus pandemic. JSS was then announced in September which was akin to a scaling back of government support.
JSS is far less generous than the furlough scheme but rising coronavirus cases and unemployment have necessitated a change of tact. In this post we explain the revisions to JSS as well as some of the other measures announced. Has it all come too late for struggling SMEs and are the jobs this is all designed to save already gone?
1. The revised job support scheme
To recap, the scheme was originally designed for employees not able to work their full normal hours as a result of COVID-19. Now, there are two schemes:
These scheme will run from 1 November 2020 to 30 April 2021. The qualifying conditions for the schemes are set to be reviewed in 2021. You'll be able to claim either JSS from 8 December 2020. Claims will have to be made for a minimum of a 7 day period, employees won't have to work the same pattern each month and they can jump in and out of JSS Open.
Have a UK, Isle of Man, or Channel Island bank account
Have employees on the payroll from 6 April 2019 - 23 September 2020 and included in at least one RTI submission in that period
JSS Open applies to small and medium sized businesses that are not forced to close. From 1 November, as an employer, your contribution towards employees' wages for hours they haven't worked will be cut from the originally proposed 33% down to 5%.
This is up to a limit of £125 per month and your employees must work at least 20% of their normal hours. That's equivalent to one day a week for someone usually working full time. This means 61.67% of their unworked hours are covered by the government subject to a limit of £1,541.75 per month. You will continue to pay your employees for the hours they do work.
You'll have to pay all of the employer’s national insurance (NIC) on the wages your employees receive as well as the employer’s minimum contribution to the workplace pension. You can top up employees wages if you so choose.
JSS Closed applies to businesses forced to close by coronavirus regulations, such as tier 3 restrictions in England. Where businesses are in a restricted location and therefore limited at their premises to delivery or collection services, or only service outdoors, then this is classified as closed.
In such scenarios the government will pay up to two thirds of an employee's salary up to a limit of £2,083.33 per month. Your member of staff will have to sacrifice a third of their wages and that may have to be agreed in their employment contract. However, you can choose to top up their wages.
Of note, HMRC will publish the names of businesses that make use of JSS Open or JSS Closed so that employees can check if their employer has made a claim. The idea being to ensure claims are transparent so that employers don't claim JSS whilst making employees work hours they shouldn't.
The aim behind Rishi Sunak's latest alterations is to provide organisations with a stronger incentive to retain employees. The government is trying to prevent mass unemployment as COVID-19 cases rise and more regions face greater lockdown restrictions.
2. Grants for businesses impacted by tightening restrictions
Grants are to be made available for businesses whereby they will receive up to £2,100 for every month spent in tier 2 restrictions. This applies from August 2020 meaning it's retrospective and distributed by councils.
This is primarily aimed at businesses in the hospitality, leisure, and tourism sectors. The issue had been that these businesses weren't legally required to close under a local tier 2 lockdown however, the social restrictions were having a significant negative impact on their trade.
Local authorities will receive funding to provide grants as follows:
£934 per month for properties with a rateable value up to £15,000
£1,400 for properties with a rateable value of between £15,000 - £51,000
£2,100 for properties with a rateable value of over £51,000
3. Additional support for the self-employed
There will be an increase in the amount of profits covered by the two forthcoming self-employed grants. This will shift from 20% to 40% resulting in the maximum grant increasing to £3,750 from the original £1,875.
This means there is now a further £3.1bn of support available to the self-employed from November 2020 - January 2021. Furthermore another grant will then follow to cover February - April 2021.
The content of this post was created on 26/10/2020 and updated on 2/11/2020. Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.