Insights

On Thursday 24 September 2020 the Chancellor outlined the Government’s plan, together with an additional package of measures, to protect jobs and support businesses impacted by Coronavirus across the UK. The announcement comes after the Prime Minster set out further measures to combat the spread of the virus over the winter, while preserving the ability to grow the economy.

The package includes a new Jobs Support Scheme to protect millions of returning workers, extending the Self Employment Income Support Scheme as well as the extension of the 15% VAT cut for the hospitality and tourism sectors and help for businesses in repaying Government-backed loans. We set out below the details of this recent announcement.

We will continue to monitor any relevant development/announcement, therefore please speak to your usual Statura contact should you wish to discuss in more detail the content of this document or indeed the way in which the Covid-19 outbreak is affecting your business.

A new Job Support Scheme will be introduced from 1 November and is aimed at protecting viable jobs in businesses who are facing lower demand over the winter months due to coronavirus. Under the Scheme, which will run for six months to 30 April 2021, the Government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand. Employers will continue to pay the wages of staff for the hours they work - but for the hours not worked, the Government and the employer will each pay one third of their equivalent salary.

The Job Support Scheme will sit alongside the Jobs Retention Bonus (covered in our July 2020 Newsletter) and will be open to businesses across the UK even if they have not previously used the furlough scheme. The Scheme details and the eligibility criteria are as follows:

Employees

• Employees must be on an employer’s PAYE payroll on or before 23 September 2020;
• In order to support viable jobs, for the first three months of the scheme the employee must work at least 33% of their usual hours. After 3 months, the Government will consider whether to increase this minimum hours threshold;
• For the time worked, employees must be paid their normal contracted wage. For time not worked, the employee will be paid up to two-thirds of their usual wage. Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee;
• Employees will be able to "cycle on and off the scheme" and do not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven days.

Employers

• All employers with a UK bank account and UK PAYE schemes can claim the grant;
• Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme;
• Employers must pay employees their contracted wages for hours worked and a contribution for hours not worked (see 'Grant payments' below);
• Large businesses will have to meet a financial assessment test, so the scheme is only available to those whose turnover is lower now than before experiencing difficulties from Covid-19. There will be no financial assessment test for small and medium enterprises (SMEs).

Grant payments

• For every hour not worked by the employee, both the Government and employer will pay a third each of the usual hourly wage for that employee. The Government contribution will be capped at £697.92 a month;
• Grant payments will be made in arrears (meaning that a claim can only be submitted after payment to the employee has been made and that payment has been reported to HMRC), reimbursing the employer for the Government’s contribution. The grant will not cover Class 1 Employer NICs or pension contributions, although these contributions will remain payable by the employer.
• Employees who have previously been furloughed, will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.

The Government is continuing its support for millions of self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November 2020 to the end of January 2021. This is worth 20% of average monthly profits, up to a total of £1,875.

An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April 2021.

VAT Reductions and Deferrals

As part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors (covered in our Newsletter of July 2020) to the end of March 2021.

In addition, under the New Payment Scheme, business who deferred their VAT liabilities will be given more time to pay. Rather than paying a lump sum in full at the end March 2021, as originally announced (covered by our March 2020 Newsletter), they will be able to make 11 smaller interest-free payments during the financial year from April 2021- March 2022.

Coronavirus Loan Schemes

Businesses who took out Bounce Back Loans will be given more flexibility to repay then through a new Pay as You Grow flexible repayment system. This includes extending the length of the loan from six years to ten, interest-only periods of up to six months and payment holidays.

In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes (i.e. the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund) until the end of November 2020.