Yesterday the UK chancellor announced a new Job Support Scheme as part of the new financial measures which will be implemented in November.
The six-month scheme will replace furlough and means the government will pay part of workers’ wages who are working reduced hours. Under the scheme, the government will subsidise the pay of employees who are working fewer than normal hours due to lower demand.
How will it work?
The worker must do at least one-third of normal hours, in which the employer will page their staff for these hours. The government along with the employer will then pay a third each for the hours they cannot work.
Meaning someone working a third of their hours would receive 77% of their pay. The grant will be capped at £697.92 per month.
An example of this would be; for someone on £2,000 a month working 50% hours, they would get £1,000 normal pay plus £333 extra from their employer and £333 from the government.
Who is eligible?
- All small and medium sized businesses will be eligible for the scheme
- Larger business will be eligible if their turnover has fallen during the crisis
- It will be open to employers across the UK even if they have not previously used the furlough scheme
- It means the government will pay a maximum of 22% of someone’s wages, down from 80% at the start of the furlough policy
Further support for businesses announced…
Support for the self-employed
Sunak is also extending the self-employed grant on similar terms to the Job Support Scheme meaning;
- A grant will be available to those eligible for the Self Employment Income Support Scheme Grant
- The grant will cover three months’ worth of profits for the period from November to the end of January
- It will cover 20% of average monthly profits up to a total of £1,875
- A further grant may be available to the self-employed to cover February 2021 to the end of April, depending on circumstances
Business Loans
The chancellor discussed the extension of the following business loans;
- Bounce Back Loans will be extended from six years to 10, cutting monthly repayments by nearly half
- Coronavirus Business Interruption Loan Scheme lenders will also be able to extend the length of loans from the current maximum of six years to 10 years
- The chancellor is also extending the deadline for the government’s coronavirus loan schemes to the end of November
- Businesses struggling can choose to make interest only payments for six months and those “in real trouble” can apply to suspend repayments altogether for six months
Taxes
- The 15% emergency VAT cut for the tourism and hospitality industries will be extended from January 2021 to 31 March
- Businesses who deferred their VAT bills will be able to pay back their taxes in 11 smaller interest-free instalments
- Self-assessment income taxpayers who need to will be given more time to pay