Job Support Scheme

After the recent news of the new Job Support Scheme, we wanted to provide our clients with as much knowledge on the scheme as we can at this moment in time.

The Job Support Scheme will replace the Furlough Scheme when it ends on 31 October 2020, after fears that firms will make mass job cuts when the furlough scheme ends.

It is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees in the workplace.

Employees will have to work for at least one-third of their normal hours to qualify for the new scheme, which begins on 1 November 2020 and last’s for 6 months, until April 2021.

An example:

• If the employee works reduced hours, the employer pays for that and in addition, the employer and government pay one-third of the lost pay each (up to the cap of £697.92 a month).
• For someone on £2,000 a month working half their hours would receive £1,000 normal pay, plus £333 from their employer and £333 from the government.

Who is eligible:

• All small and medium sized businesses, where as larger businesses will only be eligible if their turnover has fallen due to the crisis – a financial assessment test will be provided through HMRC.
• Employers with a UK bank accounts and UK PAYE schemes.
• The scheme is also available even if the employers did not use the furlough scheme.
• Employees must be on their employers payroll on or before 23 September 2020.

How can you claim:

• Employers will be able to make a claim online through the HMRC website from December 2020.
• Grants will be payable in arrears, meaning that a claim can only be submitted in respect of a given pay period.

All employers must agree the new working hours with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.

The employer can also claim the job retention bonus – as long as they qualify for that. The Job Retention Bonus is a one-off payment to employers of £1,000 for every employee who they previously claimed for under the scheme, and who remains continuously employed through the pandemic to 31 January 2021. Eligible employees must earn at least £520 a month on average between 1 November 2020 and 31 January 2021.

Other announcements:

• It has also been announced that businesses that have borrowed money through the government’s loan scheme will be given more time to repay the money.
• Small businesses who took out Bounce Back loans can use a new Pay as You Grow flexible repayment system. It means borrowings can be repaid over 10 years instead of the original six year term.
• The longer repayment time also applies to small and medium sized firms who have borrowed under the Coronavirus Business Interruption Loan Scheme.
• Businesses will also have more time to apply for these loans, as well as the Coronavirus Large Business Interruption Loan Scheme and the Future Fund. Application dates for the various schemes had been due to end in October and November.
• The cut from 20% to 5% VAT for the hospitality and tourism companies due to expire on 12 January next year however has been extended until March 2021.
• You will now be able to spread deferred VAT bills over 11 smaller repayments with no interest to pay rather than a lump sum at the end of March 2021.
• An extension for self-assessed income taxpayers on their outstanding tax bill over 12 months from next January 2021.

The government will review the new scheme after 3 months and as soon as we know more information we will be in touch.

Adderley Hill & Co Team