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Government announces new Job Support Scheme

The new scheme will see wage top-ups for staff returning to work part-time after being furloughed.

Last updated: 24 Sep 2020 3 min read

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Chancellor Rishi Sunak today announced a raft of new measures aimed at supporting jobs and the economy throughout the winter period.

The Job Support Scheme at a glance

In response to concerns about the phasing out of the Coronavirus Job Retention Scheme (CJRS) in October, and following prime minister Boris Johnson’s announcement of new restrictions, Sunak announced the creation of a new Job Support Scheme, which will commence from 1 November and last six months.

Sunak said the scheme will give businesses that have faced depressed demand the option of keeping employees in a job on shorter hours, rather than making them redundant. In order to support only “viable” jobs, employees must work at least 33% (a third) of their normal hours, with the employer meeting the cost of this. The government and the employer will then each pay one third of the wages for the remaining hours not worked. Workers will receive 77% of their usual monthly wage, with the government paying 22%, capped at a maximum of £697.92 a month. The employer will foot the bill for 55% of the monthly wage.

Support will be targeted at “firms that need it the most”, meaning all SMEs will be eligible but that larger businesses will only be eligible for support if their turnover has fallen during the coronavirus crisis.

The scheme will be open to businesses across the UK, even if they have not previously used the CJRS – and employers retaining furloughed staff on shorter hours can claim both the Job Support Scheme and the Jobs Retention Bonus, a £1,000 one-off payment to employers for every previously furloughed employee who remains continuously employed through to 31 January 2021.

The government will also extend the Self Employment Income Support Scheme (SEISS). An initial taxable grant will be given to self-employed workers who are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover 20% of profits for the period from November to the end of January 2021, up to a total of £1,875.

VAT reprieve for tourism and hospitality businesses

Sunak announced that, in an effort to help businesses in hospitality and tourism – two sectors that have been hit hard during the pandemic – the government will extend the temporary 15% VAT cut (from 20% to 5%) until 31 March 2021. The standard rate of 20% was originally planned to be reinstated on 13 January 2021.

Sunak also unveiled the New Payment Scheme, which will give up to 500,000 businesses that have deferred their VAT bills the option to pay back in 11 smaller, interest-free payments during the 2021/22 financial year, rather than paying a lump sum in full at the end of March 2021. Self-assessment taxpayers, of which there are around 11m, will also benefit from a separate 12-month extension from HMRC.

Coronavirus loan schemes extended

The application for all coronavirus-related loan schemes will be extended to 30 November, including the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund.

Flexibility will also be provided around the repayment of Bounce Back Loans; under Sunak’s Pay as You Grow repayment system, the length of the loan will be extended from six years to 10. Sunak said this will cut monthly repayments by nearly half. The same extension will be made available to Coronavirus Business Interruption Loan Scheme lenders to help businesses repay the loan.

For more information on the chancellor’s announcement, visit GOV.uk.

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