The Coronavirus Job Retention Scheme/Job Support Scheme

The existing Coronavirus Job Retention Scheme (or Furlough Scheme) will finish at the end of October as originally planned. However, this will be replaced by a new Job Support Scheme from 1 November. The details we have so far are:

 

  • The scheme is intended to support viable UK employers who face a reduced demand as a result of COVID-19.
  • Employees will need to work at least a third of their normal hours and be paid in full by their employer for that time.
  • For every hour not worked, the government and the employer will each pay one third of the employee’s usual pay.
  • The government contribution will be capped at £697.92 per month.
  • This means employees will receive at least 77% of their usual pay if the government contribution is less than the cap.
  • Employers will be reimbursed in arrears for the government contribution i.e. this must be paid to the employee and then claimed back.
  • The employee must not be on a redundancy notice.
  • The scheme will run for a period of six months from 1 November 2020.
  • It will be open to all employers with a UK bank account and UK PAYE scheme, even if relevant employees have not previously been furloughed.
  • All small and medium sized businesses will be eligible.
  • Any large businesses must demonstrate that they have been adversely affected by COVID-19. In addition, the government expect that distributions to shareholders (e.g. dividends) will not be made whilst using the scheme.

 

Self Employed Income Support Scheme (SEISS)

 

  • The scheme is to be extended for a further six months covering the period November 2020 to April 2021.
  • It will be limited to self employed individuals who are eligible under the current rules and are actively continuing to trade but facing a reduced demand as a result of COVID-19.
  • As with previous payments, it will be in the form of two taxable grants.
  • The first grant will cover the period November 2020 to January 2021. It will cover 20% of average monthly trading profits, capped at a total of £1,875.
  • The second grant will cover February 2021 to April 2021. The rate for the second grant will be confirmed in due course.

 

Other announcements:

 

  • The reduced VAT rate of 5% for businesses operating in the hospitality and tourism industry was due to end on 12 January. However, this has now been extended to 31 March 2021.
  • The government backed loan schemes will be extended to 30 November 2020 for new applications. This includes the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS), the large scheme (CLBILS) and the Future Fund.
  • Pay as you grow – Businesses that have borrowed under the BBLS will have the option to pay back their loan over a period of up to ten years. In addition, they will also have the option to move to interest only payments for up to six months.
  • The government also intends to allow CBILS lenders to increase the term of a loan to up to ten years.
  • Businesses who deferred their VAT liability earlier in the year will be given the option to spread their payments over the 2021/2022 financial year. All businesses will be eligible but will need to opt in when the process is launched during early 2021.
  • Taxpayers will be given more time to settle self assessment tax liabilities falling due during January 2021. Those with liabilities of up to £30,000 will be able to use a time to pay facility to spread the liability over an additional twelve months.

 

As with previous announcements, further guidance is likely to be released in the coming weeks.

 

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