In recent weeks I’ve spoken to many business owners who are keen to make sure they get the appropriate support during these unprecedented times. One of the most common questions I am asked is around will the Coronavirus / Covid-19 Job Retention Scheme continue, or will there be anything to replace it?
October 2020 is the last month under the furlough government Contributions – Job Retention Scheme. Wage caps are proportional to the hours not worked.
Furlough Government Contribution Wages (CJRS):
60% up to a cap of £1,875 in October 2020
Furlough Employer Contribution Wages (CJRS):
20% up to a cap of £625 in October 2020
Last week on the 24th September 2020 the Chancellor introduced a new Job Support Scheme (JSS) to open on 1st November 2020 to help businesses and employees for 6 months through to 30th April 2021. Here is what you need to know, but please get in touch as it is vitally important to get it right.
The Job Support Scheme is designed to protect viable jobs – where employees work at least 1/3rd of their usual working hours
The new scheme is open to all SMEs and to larger firms whose turnover has been significantly impacted by COVID-19
The hours they work will be paid by their employers at their full salary
The burden of non-worked hours will be split between the employer 33.3%, the Government through wage support 33.3% (capped at £697.92 per month) and the employee through a wage reduction 33.3%
Employers will not be permitted to make employees redundant whilst covered by the JSS
Business do not need to have made any claims under the previous furlough schemes – it is unclear from which date they need to have been employed from
Employers can claim the JSS in addition to the Job Retention bonus Scheme
Business owners will still need to have a plan in place to prepare them for the immediate time and the upcoming months. The scheme is welcomed, but it does transfer a larger obligation to the employer and leaves the employee with a higher percentage unpaid.
Job Retention Bonus
This is a one-off payment to employers of £1,000 for every employee who they previously claimed for under the scheme and who remains continuously employed through to 31st January 2021.
Eligible employees must earn at least an average of £520 a month on average between the 1st November 2020 and 31st January 2021 (a total of at least £1,560 across the 3 months)
Employers will be able to claim the Job Retention Bonus after they have filed PAYE for January 2021 and payments will be made to employers from February 2021.
Employers will be able to claim for any employees that were eligible for the Coronavirus Job Retention Scheme and they have claimed a grant for (not eligible for the bonus if the claim for an employee was incorrectly made)
Have up to date RTI records for the period to the end of January 2021
The employee is not serving a contractual or statutory notice period, that started before 1st February 2021, for the employer to make a claim
HMRC will check claims, payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information
Employers must agree the new short time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.
Other Measures Announced
The extension of the Self-Employment Income Support Scheme (SEISS)
The initial lump sum will cover three months’ worth of profits for the period from 1st November 2020 to 31st January 2020. A grant of 20% on normal monthly profits, capped at £1,875
An additional second grant, which may be adjusted to respond to changing circumstances to cover the period from February to April 2021.
Tax cuts and deferrals – The reduced VAT rate of 5% for the Hospitality and Tourism sector has been extended from 13th January to 31st March 2021
Deferred VAT liabilities from last summer due to be paid in March 2021 can have the option to pay back in smaller 11 interest free instalments during the 2021-22 financial year.
Increased flexibility on Bounce Back Loans with an extension of the repayment period from 6 to 10 years – this will cut monthly debt repayments. Interest only periods for up to 6 months and payment holidays will also be available to businesses
Coronavirus Business Interruption Loan Scheme (CBILS) lenders will be able to extend the length of loans to businesses from 6 to 10 years.
If you have staff who are currently furloughed, and are unsure what to do next, it is essential that you take proper advice and carefully consider your HR plans and the financial impact of the additional payroll costs of this new scheme. If you don’t currently have an advise or wish to discuss your options and cash flow support measures to know where to put the focus in your business, I’m more than happy to help, please contact firstname.lastname@example.org to arrange a free consultation.
Fiscal Business Services Ltd