Update to the Winter Economy Plan
At the end of September, chancellor Rishi Sunak announced a number of support measures as part of a ‘winter economy plan’. Earlier today, a number of changes were made and further support announced for businesses operating in higher alert level areas.
To help you keep track of the changes, details from the original announcement have been included in red below:
The Job Support Scheme
The new Job Support Scheme is set to be introduced from 1 November (to replace the Coronavirus Job Retention Scheme). The scheme will now work as follows:
- 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 fifth of their normal hours and be paid in full by their employer for that time (original announcement: employees would be required to work a third of their normal hours).
- For every hour not worked, the employer will pay 5% of the employee’s usual pay with the government paying 61.67% (original announcement: employers would be required to pay one third of unworked hours with the government also paying a third).
- The government contribution will be capped at £1,541.75 per month (original announcement: £697.92 per month).
- This means employees will receive up to 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.
- Employers using the scheme will remain eligible for the Job Retention Bonus.
- 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 40% of average monthly trading profits, capped at a total of £3,750 (original announcement: 20% of average monthly trading profits capped at £1,875).
- The second grant will cover February 2021 to April 2021. The rate for the second grant will be confirmed in due course.
- Additional funding will be provided to local authorities to support businesses in high-alert level areas which are not legally closed but are severely impacted by the restrictions.
- The funding received by each local authority will be based on the number of hospitality, hotel, B&B and leisure businesses operating in their area, calculated as follows:
- £934 per month - Properties with a rateable value of up to £15,000
- £1,400 per month – Properties with a rateable value between £15,000 and £51,000
- £2,100 per month – Properties with a rateable value exceeding £51,000
- An additional 5% top up based on the above amounts.
- This is equivalent to 70% of the grant amounts provided to legally closed businesses.
- Each local authority will then determine which businesses are eligible for grant funding and how this is applied (this doesn’t have to be applied in accordance with the above values).
- Businesses in very high alert level areas will qualify for greater funding.