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Many businesses have welcomed the news that the Government will introduce a new scheme to support them with their employment costs once the Coronavirus Job Retention Scheme ends.
The new Job Support Scheme will launch on 1 November 2020 and is designed to support viable jobs by subsidising the wage costs for staff working reduced hours until April 2021.
To help businesses understand the new scheme and plan for its implementation, the Government has published new guidance, which we wanted to share with you.
If you have queries about the new Job Support Scheme and its implementation, please contact us.
The Chancellor, Rishi Sunak, has announced a new job protection scheme and a range of new business support measures.
Announcing his Winter Economy Plan at a hastily arranged statement in the House of Commons, Mr Sunak said: “Our task now is to move to the next stage of our economic plan, nurturing the recovery by protecting jobs through the difficult winter months.”
The statement came the day after plans to hold an Autumn Budget were scrapped because rising numbers of confirmed cases of Coronavirus and various new restrictions across the UK meant the Treasury no longer considered it appropriate to make long-term plans.
Against this background of increasing case numbers and fears of further new restrictions on the horizon, employers’ groups and trade unions alike had been pushing for new measures to be introduced to replace the Coronavirus Job Retention Scheme (CJRS), which ends in just five weeks’ time.
The upturn in cases reignited widespread fears about the economic impact of the crisis and the possibility of a wave of redundancies being announced in the coming days.
Employers making between 20 and 100 redundancies must begin consulting at least 30 days in advance, meaning the last day they could begin the process before being required to bring staff back from furlough on full pay at the beginning of November is just a week away.
Around three million of the 9.6 million workers ever furloughed are thought still to be furloughed from their jobs, with the scheme having cost £39.3 billion up to 20 September 2020.
As he rose to deliver the statement, just two months after his Summer Economic Statement, the pressure was on Mr Sunak to deliver the “creative and imaginative” solutions to protect jobs and businesses the Prime Minister had promised just 24 hours earlier.
- Job Support Scheme
- Self-Employment Income Support Scheme
- Bounce Back Loans & the Pay as You Grow Scheme
- Extensions to other loan schemes
- Extended tax deferrals
- Extended VAT cut for Tourism & Hospitality
Saying that it is “fundamentally wrong to hold people in jobs that only exist inside the furlough”, the Chancellor announced the launch of a new Job Support Scheme (JSS).
The scheme will come into effect on 1 November 2020 for six months and will apply to employees who work a minimum of 33 per cent of their usual hours. The Government and the employer will then pay one-third of the remaining amount each, with the employee forgoing the pay they would have received for the remaining one-third of their usual hours not worked. The Government contribution will be capped at £697.92 per month.
The scheme means that employees working one-third of their usual hours and not affected by the cap will receive at least 77 per cent of their usual wages, according to the Treasury.
The Chancellor confirmed that the JSS is open to all small and medium-sized enterprises and to larger businesses that have been “adversely affected by COVID-19”, subject to certain conditions such as not making capital distributions including dividends while using the scheme.
The scheme will be open to employers, irrespective of whether they previously used the CJRS. However, the employees they claim for cannot be on a redundancy notice.
Additionally, the Chancellor confirmed that employers will be able to use both the JSS and Coronavirus Job Retention Bonus at the same time. The Coronavirus Job Retention Bonus, announced earlier this year, will provide employers with a one-off £1,000 grant in respect of every employee they bring back from furlough and pay an average of £520 a month between 1 November 2020 and 31 January 2021.
The JSS bares a strong resemblance to the German Kurzarbeit scheme, which was first introduced after the 2008 financial crisis and was reinstated earlier this year. The scheme, which is in some ways less generous than the CJRS, is credited with being effective in saving jobs at a much lower cost to the taxpayer. Both the CBI and TUC had advocated variations of the German scheme.
The Chancellor moved on to announce a six-month extension to the Self-Employment Income Support Scheme (SEISS) for those self-employed individuals currently eligible.
A third grant will cover the three months from November to the end of January, paying 20 per cent of average monthly profits, capped at £1,875.
Meanwhile, a fourth grant will cover the period from February to the end of April, with the level set to be determined at a later date.
Self-employed individuals and members of partnerships to whom all of the following apply are currently eligible for grants from the SEISS:
Carry on a trade that has been adversely affected by Coronavirus;
- Traded in the tax year 2018-2019 and submitted a Self-Assessment tax return on or before 23 April 2020 for that year;
- Traded in the tax year 2019-2020;
- Intended to continue to trade in the tax year 2020-2021;
- Have trading profits of less than £50,000 and more than half of their total income comes from self-employment. This can be with reference to at least one of the following conditions:
- Trading profits and total income in 2018-2019
- Average trading profits and total income across up to the three years between 2016-2017, 2017-2018, and 2018-2019.
The scheme is not available to people working through their own limited companies.
Moving away from direct support for employment and self-employment, the Chancellor said the second challenge facing the economy is the effect of the crisis on businesses’ cash flow.
He announced the extension of the Bounce Back Loan Scheme (BBLS) through Pay as you Grow (PAYG), which will allow all businesses in receipt of BBLS loans the option to repay over a period of up to 10 years, nearly halving their monthly payments.
There will also be an option for businesses to move to interest-only repayments for up to three six-month periods or to take one six-month payment holiday. The six-month payment holiday will only be available to businesses that have already made six payments.
The BBLS provides loans of between £2,000 and £50,000, up to a cap of 25 per cent of turnover and backed by a 100 per cent Government guarantee to the lender. The Government covers interest payments for the first 12 months of the loan, with the borrower only required to make repayments after that period.
The deadline for businesses to apply for loans under the BBLS has also been extended until 30 November 2020.
Addressing the other business loan schemes announced since the beginning of the crisis, the Chancellor confirmed that repayments under the Coronavirus Business Interruption Loan Scheme (CBILS) can be extended to a term of up to 10 years.
CBILS is available to UK-based businesses with turnovers of up to £45 million, offering loans of up to £5 million, backed by an 80 per cent Government guarantee to the lender, with the Government also covering interest and fees for the first 12 months.
As with BBLS, the Chancellor confirmed the deadline for applying for CBILS will be extended to 30 November 2020, as will the deadlines for the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Future Fund.
He said that the Treasury is working on “a new, successor loan programme, set to begin in January.”
Meanwhile, he said that the Bank of England’s COVID-19 Corporate Financing Facility will remain open until 22 March 2021.
The Chancellor moved next to deal with outstanding taxes owed by businesses and individuals to HM Revenue & Customs (HMRC), following deferrals earlier in the year.
He confirmed a VAT deferral ‘New Payment Scheme’ which will allow businesses that deferred VAT between March and June 2020 an option to spread payment in 11 equal instalments over the 2021-2022 financial year. The payments had been due in full by the end of March 2021.
The scheme will be open to all businesses that took up the offer of a deferral, but they will need to opt-in to benefit from the extended repayment period. HMRC is expected to put this process in place early in the new year.
He then moved to announce similar arrangements for individuals who deferred their Self-Assessment payments on account in July 2020. Those with up to £30,000 of self-assessment liabilities will be able to arrange an additional 12-month repayment plan through the HMRC self-service Time to Pay facility. This means the deferred payment will not need to be made in full until January 2022.
Finally, the Chancellor confirmed an extension to the temporary five per cent rate of VAT for certain goods and services in the tourism and hospitality sectors from 13 January 2021 to 31 March 2021, after which the rate will revert to 20 per cent.
The extent of the Chancellor’s announcements will have taken many people by surprise, having far exceeded once again the measures that were trailed in advance of his speech.
However, it remains to be seen whether these measures will be sufficient to match the scale of the economic challenge in the months ahead.
The Chancellor will hope that the JSS, in particular, will help avert a wave of redundancy announcements in the coming weeks as the CJRS comes to an end.
Link: Winter Economy Plan
More than 500 organisations have registered as intermediaries under the Government’s landmark Kickstart Scheme, it has been announced. Read more
Firms with furloughed staff must now contribute at least 10 per cent of workers’ wages as the Government’s landmark Coronavirus Job Retention Scheme (CJRS) begins to wind down. Read more
With numerous Government schemes open to businesses and individuals to help deal with the impact of the Coronavirus outbreak, there are dozens of key dates to be aware of in the coming months, including:
31 August 2020
Eat Out to Help Out closes to customers.
1 September 2020
Grants from the Coronavirus Job Retention Scheme (CJRS) taper down to 70 per cent of a furloughed employee’s usual wages up to £2,187.50 a month, with employer required to contribute another 10 per cent, so that furloughed employees continue to receive 80 per cent of their usual wages.
30 September 2020
The deadline for venues to claim from the Eat Out to Help Out scheme.
1 October 2020
Grants from the CJRS taper down to 60 per cent of a furloughed employee’s usual wages up to £1,875 a month, with employer required to contribute another 20 per cent, so that furloughed employees continue to receive 80 per cent of their usual wages.
31 October 2020
CJRS closes. Employees can no longer be furloughed after this date.
30 November 2020
Last date for making claims for the CJRS.
31 January 2021
Deadline for Self-Assessment payments on account deferred from 31 July 2020.
Date until which staff previously furloughed under the CJRS, who have been brought back and paid £520 on average from October to January must be continuously employed for the employer to qualify for a £1,000 Job Retention Bonus.
31 March 2021
Deadline for payments of VAT payments deferred between March and June 2020.
We have also prepared a grid of Government support timeframes to help clarify the support available at any point in time over the coming months.
With the first week of the Eat Out to Help Out scheme now concluded, the online portal is opening for pubs, bars, restaurants and certain other hospitality venues to claim funds from the scheme.
The scheme offer grants covering the whole cost to restaurants, cafes and pubs that sell food of providing a 50 per cent discount, capped at £10 per head, on food and non-alcoholic drinks purchased for consumption on the premises from Mondays to Wednesdays in August.
Eat Out to Help Out is open to businesses that were registered with their local authority as food businesses on or before 7 July 2020, provides or shares a dining area for eat-in meals and sells food for consumption on the premises.
Those offering the scheme have been able to register since 13 July to take part, however, it has only been possible to make claims from the scheme since 7 August 2020.
Participating venues can only claim seven days after registering and can only claim once each week, with payments being made within five working days of claiming.
The deadline for making claims is 30 September 2020.
To claim, venues must record and submit:
- total number of diners who have used the scheme discount
- total value of all eat in food and non-alcoholic drink sold where the scheme discounts were given
- total value of scheme discounts given and claimed for
Venues must submit claims themselves and cannot use an agent to do so on their behalf.
The Chancellor has confirmed the extension of the Self-Employment Income Support Scheme (SEISS), with the announcement of a second and final grant to support the income of self-employed individuals during the Coronavirus outbreak.
The first and current round of grants under the scheme allows self-employed individuals to claim a taxable grant worth 80 per cent of three months’ average monthly trading profits, capped at a total of £7,500 and paid in a single instalment.
It has seen 2.3 million claims to date, collectively worth £6.8 billion.
Applications for this round of grants will close on 13 July 2020. However, the Chancellor has now announced that self-employed individuals will be able to claim a second grant in August. This will be worth 70 per cent of three months’ average trading profits and will be capped at £6,570 in total, also paid in a single instalment.
Individuals do not need to have claimed the first grant to be able to claim the second.
Unlike the Coronavirus Job Retention Scheme (CJRS) for employees, self-employed individuals may continue working, begin a new trade or take on new employment while in receipt of a grant.
The full criteria for qualification for the scheme remain unchanged. Applicants must:
- Be self-employed or a member of apartnership;
- Have lost trading/partnership trading profits due to COVID-19;
- File a tax return for 2018-19 as self-employed or a member of a trading partnership;
- Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020 to 2021; and
- Have trading profits of less than £50,000 and more than half of their total income come from self-employment. This can be with reference to at least one of the following conditions:
- Trading profits and total income in 2018-19
- Average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.
The scheme is not available to people working through their own limited companies.
Further details about how to apply for the second and final grant will be announced on 12 June 2020.
The Chancellor, Rishi Sunak, has announced a series of changes to the Coronavirus Job Retention Scheme (CJRS) from July that will see furloughed employees able to return to work part-time, but with the value of Government support reducing gradually from August.
Meanwhile, the scheme will, in effect, close to employees who have not previously been furloughed from 10 June, before closing completely at the end of October.
A system of ‘flexible furloughing’ will come into effect from 1 July, allowing employers to bring back furloughed employees for any amount of time on any shift pattern, while still able to claim a grant in respect of the time not worked when they otherwise would.
Employers will have to pay employees at their usual rate of pay for any hours they work, while also covering the cost of Employer National Insurance Contributions (NICs) and minimum employer automatic enrolment pension contributions thatthis pay attracts.
They will need to reach new flexible furlough agreements with any furloughed employees brought back on a part-time basis.
From 1 August, CJRS grants will cease to cover Employer NICs and pension contributions, with this cost passing to employers. The grant will continue to cover 80 per cent of furloughed employee’s usual wages, up to a cap of £2,500 a month.
However, from 1 September, the value of the grant will fall to 70 per cent of a furloughed employee’s usual wages, capped at £2,187.50 a month. Employers will be expected to contribute the remaining 10 per centplus NICs and pension contributions to reach a combined total payment to the employee of 80 per cent of their usual wages, up to a cap of £2,500 a month.
October will see the value of the Government contribution fall again to 60 per cent, capped at £1,875 a month, with employers expected to contribute 20 per centof a furloughed employee’s usual wages plus NICs and pension contributionsto reach the total of 80 per cent, capped at £2,500 a month.
At the same time, the Chancellorconfirmed the closure of the scheme to new entrants from 30 June. After this point, employers will only be able to furlough employees who have been furloughed for three full weeks at any point before 30 June.
This means the last day an employer can furlough an employee for the first time will be Wednesday 10 June.
Furthermore, after 30 June, employers will not be able to claim for more employees in a claim period than the maximum number they have claimed for in any period under the scheme in its current format.
Full details of how the scheme will operate from this point are expected to be announced on 12 June 2020.
The announcement comes against the background of an easing of the lockdown restrictions that have closed down large sections of the economy since late March, with the Government now encouraging certain sectors back to work.
The CJRS was announced by the Chancellor in March and currently allows employers to furlough any employees who were on a PAYE payroll and reported to HM Revenue & Customs (HMRC) through the Real-Time Information (RTI) system by 19 March 2020.
Since then, more than a million employers have collectively claimed £15 billion from the scheme in respect of 8.4 million employees, via the Government’s online portal.
The announcement comes days after the Chancellor issued a new Direction to HMRC, updating the record-keeping requirements of the scheme.
Under these requirements, the written agreement that the furloughed employee will, under the current terms of the scheme, cease all work must be retained until 30 June 2025 and:
- State the main terms and conditions;
- Be incorporated either expressly or implicitly in the contract of employment; and
- Be either made or confirmed in writing.
It is widely expected that HMRC will audit use of the scheme retrospectively over the coming months and years, with potentially hefty penalties for those found to have acted improperly.
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