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Government Announces new Job Support Scheme

Government Announces new Job Support Scheme
24 September 2020
 

In a speech in the Commons today, Chancellor Rishi Sunak has announced a new Job Support Scheme to help protect employment once the current furlough scheme ends.

The scheme will start in November, and employees who are working 33 per cent of their hours will be eligible. The government and the employer will make up the cost of hours not worked, paying one-third each.

The scheme for self-employment will continue, and a “pay as you grow” scheme for businesses which took out government loans will also begin, giving people longer to pay them back.

The cut in VAT to 5 per cent for the hospitality and tourism sector will be extended until 31 March.

It has also been confirmed that this year’s Budget has been postponed.

 

“The primary goal of our economic policy remains unchanged - to support people’s jobs - but the way we achieve that must evolve.”

–Rishi Sunak

UK Chancellor

 

How Does the Job Support Scheme Work?

 

  • A new Job Support Scheme will be introduced from 1 November to protect 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 and help keep employees attached to the workforce, 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.
  • This means employees who can only go back to work on shorter time will still be paid two-thirds of the hours for those hours they can’t work.
  • In order to support only viable jobs, employees must be working at least 33 per cent of their usual hours. The level of grant will be calculated based on employees’ usual salary, capped at £697.92 per month.
  • The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course.
  • It is designed to sit alongside the Jobs Retention Bonus and could be worth over 60 per cent of average wages of workers who have been furloughed – and are kept on until the start of February 2021. Businesses can benefit from both schemes in order to help protect jobs.

 

Job Support Scheme

Picture: a graphic provided by the Treasury, demonstrating that employees working 33 per cent of their hours will receive 77 per cent of their pay.

 

Winter Economy Plan - Self Employment Income Support

 

In addition, the government 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 to the end of January next year. This is worth 20 per cent 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.

 

Tax Cuts and Deferrals

 

As part of the package, the government also announced it will extend the temporary 15 per cent VAT cut for the tourism and hospitality sectors to the end of March next year.

In addition, up to half a million business who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make eleven smaller interest-free payments during the 2021-22 financial year.

On top of this, around eleven million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

 

Flexibility to pay Back Loans

 

More than a million businesses who took out a Bounce Back Loan will be able to take advantage of the new Pay as You Grow flexible repayment system. 

This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses. 

The treasury also intends to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.

In addition, the Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes until the end of November.

Picture: a graphic showing a person holding an umbrella with the words "winter economy plan" over the image

Article written by Ella Tansley | Published 24 September 2020

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