How does the Coronavirus Job Support Scheme work?
Yesterday, Chancellor Rishi Sunak announced a new scheme to increase the wages of workers who have had to cut their hours due to the COVID-19 pandemic.
The Job Support Scheme will help to protect viable jobs in businesses that are likely to face a lower demand as we head into the winter months as opposed to all job roles which were supported as part of the initial furlough scheme.
The new scheme will start in November replacing the existing furlough scheme which ends on October 31 2020.
How will the new Job Support Scheme work?
The six-month government scheme will support businesses to keep employees as part of their workforce by contributing to the wages of those who are working less than their regular, contracted hours.
For the next six-months, employers and The Government will work together to pay two-thirds of employees wages. The employees must work at least a third of their usual hours and be paid at their contracted hourly rate to be eligible for the scheme.
This means employees only working one-third of their hours will receive payment for two-thirds of their usual pay and be able to keep their position at their workplace.
The government will pay a third of the hours not worked up to a cap, calculating the grant based on an employee’s usual salary, capped at £697.92 per month.
For example, if an employee earns £2,000pcm working 40 hours a week, but now works for only 20 hours a week, they would receive £1,000 in usual pay plus an additional £333 from their employer and £333 from the government.
Businesses will still be able to claim the £1,000 job retention bonus for eligible employees still on the payroll in January 2021.
Are you working a third of your usual hours?
Are you working half of your usual hours?
The Job Support Scheme will be open to all businesses across the UK, whether they have previously taken advantage of the furlough scheme or not.
Further support announced for businesses
- The Chancellor unveiled a new Pay As You Grow scheme in which the Coronavirus Business Interruption Loan Scheme (CBILS) will be paid back, extending loans by four years. Bounce Back Loans (BBLS), which have given £38bn to small businesses, will also be paid back through the scheme.
- Businesses who are struggling can now make interest-only payments or suspend payments entirely for six months.
- The government is also extending the deadline to all loan schemes to November 30, while a successor will be revealed in January 2021.
- Deferred VAT bills are currently due in March 2021. However, businesses have been given flexibility on their tax deferrals. VAT payments can now be spread over 11 smaller payments with no interest.
Update on Self Employment Income Support Scheme Grant (SEISS)
The government will be continuing to support those who are self-employed by extending the Self Employment Income Support Scheme (SEISS).
A grant will be provided to those who are self-employed, continuing to trade actively but facing a reduced demand due to coronavirus. The taxable grant will provide three months’ worth of profits for the period of November to the end of January 2021. This is worth 20% of average monthly profits, up to £1,875.
An additional second grant will be available to cover the period from February 2021 to the end of April 2021.