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Chancellor Unveils New Job Support Scheme To Replace Furlough Scheme
The Chancellor has announced a new Jobs Support Scheme to replace the furlough scheme, which is due to end on 31 October 2020.
The Chancellor has announced a new Job Support Scheme to replace the furlough scheme, which is due to end on 31 October 2020.
This is a developing article that is updated throughout the day. Last updated 24 September, 5pm.
JOB SUPPORT SCHEME:-
The new Job Support Scheme will subsidise the pay of employees who are working fewer than their normal hours due to lower demand, rather than making them redundant.
The scheme is based on three principles:
it will support ‘viable’ jobs – employees must work at least a third of their normal hours and be paid for that work as normal by their employer. The government and the employer will between them cover two thirds of the lost wages. The government contribution will be capped at £697.92 per month. The employer will bear the cost of the employer’s NI and pension contributions on all the employee’s pay.
the government will target support at firms who need it the most – all small and medium sized businesses are eligible, but larger businesses are only eligible when their turnover has fallen through the crisis.
the scheme will be opened to employers across the UK, even if they have not previously used the furlough scheme.
“Usual wages” calculations will follow a similar methodology as for the Coronavirus Job Retention Scheme. Full details will be set out in guidance shortly.
The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.
The scheme will run for 6 months, beginning in November, and employers retaining staff on shorter hours can claim both the Job Support Scheme and the Job Retention Bonus.
There will be no restrictions for small and medium-sized businesses who want to use the job support scheme. However, large employers (as yet undefined), will have to show that their business has been adversely affected before they can use the Job Support Scheme. It is understood larger employers will also be banned from paying dividends to shareholders, or using share buy-back schemes, while they are using the job support scheme.
The scheme will be open from 1 November 2020 to the end of April 2021.
Employers will be able to make a claim online through Gov.uk from December 2020. They will be paid on a monthly basis.
Grants will be payable in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.
Employers must agree the new short-time working arrangements 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.
SELF-EMPLOYMENT INCOME SUPPORT SCHEME:-
The existing Self-Employment Income Support Scheme will be extended on similar terms and conditions as the new Jobs Support Scheme.
The grant extension will be limited to self-employment people who are currently eligible for SEISS and are actively continuing to trade but with reduced demand due to the pandemic. The scheme will end in April 2021.
The extension comes in the form of two taxable grants:
the first grant will cover a three month period, from the start of November until the end of January. It will cover 20% of average monthly trading profits and will be paid out in a single instalment, covering 3 months’ worth of profits, capped at £1,875.
the second grant will cover a three month period, from the start of February until the end of April. Figures for the second grant are yet to be reviewed.
NEW MEASURES FOR BUSINESSES:-
The government will introduce a ‘Pay As You Grow’ scheme for Bounce Back Loans to be extended from 6 to 10 years, nearly halving the average monthly repayment. Businesses who are struggling can now choose to make interest only repayments, and anyone in severe trouble can apply to suspend payments for up to 6 months. Businesses taking up ‘Pay As You Grow’ will not see their credit rating affected as a result.
For small and medium sized businesses who have taken out Coronavirus Business Interruption Loans, the government guarantee will be extended to up to 10 years, making it easier for lenders to give people more time to repay.
The deadline for all loan schemes will be extended until the end of 2020, while work has begun on a new successor guarantee programme, set to begin in January 2021.
VAT due in March to June 2020 can now spread their VAT bill over 11 equal payments in 2021-22 with no interest. Businesses will need to opt in, but all are eligible. HMRC will put in place an opt-in process in early 2021.
Self-assessed income tax payers will be able to extend their outstanding tax bill over 12 months from next January.
The plan to increase VAT rates back to 20% for the Hospitality and Tourism sector has been halted. VAT rates will be kept at 5% until 31 March 2021.