This update is written and posted on 26 October 2020 and is likely to quickly become out of date. We will endeavour to update information as it becomes available.
Previous updates and other useful information can be found at our WEBSITE.
Following criticism that the Job Support Scheme, as announced by The Government in September and reported in last month’s update, the Chancellor did not provide support for those businesses in tier 2 of the three-tier system for local restrictions, the Chancellor announced last week changes, as well some other support measures which we have outlined below.
Job Support Scheme (“JSS”)
The revised JSS works in the main, as previously announced, in that an employee has to work for part of their normal hours. However, the number of hours is less than was previously the case and the Government contribution will be more. When originally announced, the JSS would see employers paying a third of their employees’ wages for hours not worked, and required employers to be working 33% of their normal hours. The new announcement reduces the employer contribution for unworked hours to just 5% and reduces the minimum hours requirement to 20%.
Key points are:
- The revised JSS applies to all areas, not just tiers 3 and 2;
- Employers must pay staff for the hours they work;
- The employer must pay 5% of the hours not worked and the Government will pay 61.67% of those hours not worked (not 61.67% of the normal wage);
- Subject to a cap on the Government’s contribution of £1,541.75 per month per employee
The announcement does not change the additional support for businesses in tier 3 (very high risk) announced when the tier system was introduced, where a business has to close, for example betting shops, pubs who don’t sell food etc:
- There is no requirement for the employee to work any hours;
- Should the employee work any hours, the employer must pay for those hours;
- For the hours not worked, the Government will pay up to two thirds (67%). Employer must pay the National Insurance and pension contributions;
- Subject to a cap of £2,100 per month per employee.
Unlike the furlough scheme, whereby an employee could be furloughed during their notice period, an employer cannot claim under the Job Support Scheme during any period an employee is on notice due to redundancy.
The scheme opens on 1 November 2020 and runs until the end of April 2021. The Government have said they will review the scheme after three months. The Furlough Scheme closes at the end of this month.
For a worker who is paid £1,100 a month and works 20% of their hours, they will receive 73.4% of their pay, funded as follows:
Worked hours - 20% by employer £220
Unworked hours – 61.67% by Government £543
Unworked hours – 5% by employer £44
Total pay for hours worked and not worked £807
HMRC have produced a FACTSHEET on the revised scheme which goes live 1st November.
Self-Employed Income Support Scheme - Extension
Further to Winter Economy Plan Statement, where the Chancellor announced a third phase of the taxable grant payable for those who are self-employed or in partnership and continue to trade but face difficult trading conditions. The Chancellor has enhanced the scheme such that while the eligibility criteria and calculation will remain the same as in the previous two grants, the grant to cover November to January will be valued at 40% of average monthly profits over last 3 years (16/17, 17/18 and 18/19) up to a maximum total of £3,750 (or £1,250pm). (This is up from the previous 20% announced).
The government has published a factsheet which can be found here.
- Tier 3 - if your business premises are legally required to close (on a regional or national basis), the Government is offering grants based on the rateable value of your business properties. Small businesses £1,300pm. Medium businesses £2,000pm. Large businesses £3,000pm;
- Tier 2: Business in the Hospitality, Leisure and Accommodation sectors can apply for similar grants from their Local Authorities totalling up to around 70% of the above figures. Small businesses £934pm. Medium businesses £1,400pm. Large businesses £2,100pm.
The grant claimed can be applied for retrospectively back to August for areas that have already been in these higher alert tiers. The Government has published a FACTSHEET.
Full details of The Chancellor’s announcement can be found here.
- Covid Crime – The Government has instructed local councils to carry out more detailed checks on all grants paid to businesses during the Covid-19 pandemic to validate them, making sure they were paid to the right businesses in the right way. This is in addition to Banks undertaking a number of checks in respect of Bounce Bank Loans, and the powers given to HMRC to audit furlough claims.
- HMRC Furlough Claims Checks - HMRC is now issuing 3,000 so-called ‘nudge’ letters per week, urging employers it believes may have claimed too much under the furlough scheme to review their claims. The letter says that HMRC understands that mistakes happen and “will not seek out innocent errors and small mistakes for compliance action”. HMRC has forecasted that it will contact approximately 27,000 organisations in total, representing 2% of those claiming under the CJRS. This move comes after reports of furlough fraud received by HMRC increased by 53% in a three-week period in July.
- Bounce Bank Loans (“BBLS”) & Coronavirus Business Interruption Loan Scheme (CBILS) – Both these Government backed loan schemes, with low interest and generous repayment terms, end on 30 November 2020. The CBILS application can take a period of time due to the information required so, with the pandemic impact continuing, consideration should be given to seeking a loan to assist with cash flow in the winter period.