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Financial Support Packages

Financial Support Packages

On the 24th September, the Chancellor announced that the Coronavirus Job Retention Scheme (CJRS) would still draw to a close on 31st October 2020, as planned. However, he revealed how a new initiative to help protect jobs – the Job Support Scheme (JJS) – would be introduced from 1st November 2020.

In the following FAQs you will find detail on changes to the CJRS scheme as it draws to a close, an overview of the new JSS and information on the Job Retention Bonus initiative and other government financial support packages.

 

What is the Job Support Scheme?

The JSS is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce. The scheme will open on 1st November 2020 and run for six months.

The company will continue to pay its employee for time worked, but the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.

Employees must work at least a third of their normal hours and be paid for the work as normal by their employer. For the hours not worked, the Government will pay a third of hours not worked up to a cap of £697.92 per month, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.

Are all UK companies eligible for the Job Support Scheme?

The Government’s intention is that the JSS will help support those businesses which need it the most. Currently, all small and medium sized business are eligible. For larger businesses, eligibility will depend on how much their turnover has fallen through the crisis. As of 25th September, we are still awaiting further details on the situation for larger businesses.

The JSS will be open to all eligible employers across the UK, even if they have not previously used the CJRS.

Will the Job Support Scheme be based on the same principles as the Coronavirus Job Retention Scheme?

As stated above, the JSS will target support at those businesses which need it the most. What we know about the scheme as of 25th September 2020:

– Employees must work at least a third of their normal hours and be paid for the work as normal by their employer. For the hours not worked, the Government will pay a third of hours not worked up to a cap of £697.92 per month, with the employer also contributing a third;

– The JSS grant cannot be claimed if the employee is on notice of redundancy;

– To be eligible, the employee must have been on the employer’s Real Time Information submission on or before the 23rd September 2020;

– Working patterns can vary but each short-time working arrangement must cover a minimum period of seven days;

– Usual wages will have the same meaning as that adopted under the CRJS. It’s thought the JSS grant will not cover Class 1 employer NIC or pension contributions, but they remain payable by the employer;

– Employers keeping furloughed staff can claim both the JSS and Job Retention Bonus;

– The existing self-employed scheme will be extended on similar terms and conditions to the new JJS.

When is the Coronavirus Job Retention Scheme ending?

The CJRS will come to a close on 31st October 2020, with the following changes made in September and October:

– From 1st September, the Government will pay 70% of wages up to a maximum cap of £2,187.50 for the hours the employee is on furlough. Employers will top up employees’ wages to ensure they receive 80% (up to £2,500). The caps are proportional to the hours not worked.

– From 1st October, the Government has outlined that it will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.

Please note, employers will continue to able to choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked.

For more information, click here to visit the government’s dedicated CJRS page

What is the Job Retention Bonus?

The Government has introduced a new Job Retention Bonus to reward and incentivise employers who keep on their furloughed employees after the CJRS comes to a close at the end of October.

The bonus is a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021.

It is believed that payments will be made from February 2021. Further detail about the scheme is expected during September 2020, in the interim an overview is provided on the government’s website – click here.

Can both the Job Support Scheme and the Job Retention Bonus be claimed?

Employers keeping furloughed staff can claim both the JSS and Job Retention Bonus.

What measures can I access to help with cash flow pressures?

Earlier in the year, the Government launched five temporary schemes to help to support businesses across the UK who may need to respond to cash flow pressures as a result of the impact of COVID-19 by seeking additional finance:

– COVID-19 Corporate Financing Facility (CCFF)

– Coronavirus Business Interruption Loan Scheme

– Coronavirus Large Business Interruption Loan Scheme

– Bounce Back Loan Scheme

– Future Fund

For Bounce Back Loans, the Government have introduced “pay as your grow” which means loans can be extended to allow for lower monthly repayments. In addition:

– Business who are struggling can choose to make interest only payments; AND

– For businesses really struggling, they can apply to suspend payments for up to six months.

The Government have said that there will be no risk to credit ratings being adversely affected if a business needs to use one of the above options. The Chancellor is also changing the terms of other loan schemes, including the Business Interruption Loan. For businesses who have taken out the Business Interruption Loans, the Government guarantee will be extended for up to 10 years.

The deadline for all loan schemes will be extended to the end of 2020 with a new successor loan scheme set to begin in January 2021.

For more information on the loans available, click here.

Is there any help available if I am struggling to meet payments for outstanding tax liabilities?

HMRC launched Time to Pay to support businesses and individuals who have outstanding tax liabilities and are in financial difficulty as a result of COVID-19. It was revealed on 24th September businesses will be given more time in respect of deferred tax bills by allowing them to spread the cost of their VAT payments due by the 2021 March over 11 smaller repayments with no interest to pay.

For more information, click here. 

What is the Test & Trace Support Payment?

The Test & Trace Support payment is a one-off payment of £500 that will be available to those on lower incomes who are required to self-isolate and cannot work from home and have lost income as a result. The Government are yet to release full details (as of 28th September) but it’s planned that the Test & Trace Support Payment should be in place by 12th October.

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