Job Support Scheme Summary

Human Resources
Written By Vignes Rajagopal

Last week, the Government announced the introduction of the Job Support Scheme, which replaces the Coronavirus Job Retention Scheme and is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19.  The scheme will open on 1 November 2020 and run for 6 months.

In this week’s newsletter, Dragon Argent highlights the main features of the scheme, albeit further guidance is due to be published on the operation of the scheme:

  • Workers must work at least a third of their normal working hours to be eligible

  • Employers will pay staff for the hours they work, with the government and the employer paying a third each for the hours they don't work

  • It means someone working a third of their hours would receive 77% of their pay.

  • The grant from the government will be capped at £697.92 per month paid to the employee.

  • All small and medium sized businesses will be eligible for the scheme and larger business will be eligible if their turnover has fallen during the crisis

  • It will be open to employers across the UK even if they have not previously used the furlough scheme

 

Working Example

If an employee normally earns £2,000 a month, but due to lower demand as a result of Covid-19, can only work 50% of their hours, they would get £1,000 normal pay from their employer, plus £333 extra from their employer and £333 from the government, bringing their total pay to  £1,666 a month.

This means this employee would receive 83.3% of their normal salary for working 50% of their normal hours.

 

Other Features

The Job Support Scheme also has implications on business loans, support for the self-employed and taxes which we have summarised below:

 

Business Loans

  • Bounce Back Loans will be extended from six years to 10, cutting monthly repayments by nearly half

  • Coronavirus Business Interruption Loan Scheme lenders will also be able to extend the length of loans from the current maximum of six years to 10 years

  • The chancellor is also extending the deadline for the government's coronavirus loan schemes to the end of November

  • Businesses struggling can choose to make interest only payments for six months and those "in real trouble" can apply to suspend repayments altogether for six months

  • Businesses will not see their credit rating fall as a result

 

Support for the Self-Employed 

  • A grant will be available to those eligible for the Self Employment Income Support Scheme Grant

  • The grant will cover three months' worth of profits for the period from November to the end of January

  • It will cover 20% of average monthly profits up to a total of £1,875

  • A further grant may be available to the self-employed to cover February 2021 to the end of April, depending on circumstances

 

Taxes

  • The 15% emergency VAT cut for the tourism and hospitality industries will be extended from January 2021 to 31 March 2021

  • Businesses who deferred their VAT bills will be able to pay back their taxes in 11 smaller interest-free instalments

  • Self-assessment income taxpayers will be given more time to pay

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