Treasury details new winter job support measures

The government has published its plans to continue supporting jobs through the winter.

Chancellor Rishi Sunak yesterday announced the new measures in parliament. Now the Treasury has set out the details of the new Jobs Support Scheme, continued help for the self employed and measures on VAT and government loans.

The  Job Support Scheme which will start on 1st November when the furlough scheme ends. It will run for six months. Employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one third of their equivalent salary.

Sunak says this means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work.

He added that in order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on an employee’s usual salary, capped at £697.92 per month. The Treasury says this means workers will get 77% of their usual pay.

The Job Support Scheme will be open to SME businesses across the UK even if they have not previously used the furlough scheme and to larger companies if their turnover has fallen by a third. Employers can also claim the previously announced £1000 Job Retention Bonus for employers who bring workers back from furlough.

Bounce back

Nigel Morris, tax director at accounting firm MHA MacIntyre Hudson, said the scheme could exclude larger employers who need support. He said: “We’ve seen some businesses ‘bounce back’ and may find they match last year’s performance or experience just a small drop in turnover. But in such a volatile economic environment this may not last; the next six months could be very different. A measure based on how they’ve weathered the storm so far may exclude many businesses from support, forcing them to make staff cuts if they predict tougher times ahead.”

He added that there were also concerns that the scheme does not apply to employers who can’t provide any work to employees, such as events organisations. He said: “A targeted scheme for employers who can’t provide a ‘base’ level of work should potentially also be considered.”

Kate Palmer from HR experts Peninsula said the new scheme was “a very different beast” to furlough. She highlighted the fact that employees on the scheme could not be made redundant, a key difference to the furlough scheme. She stated: “It might be just enough to help businesses to retain more employees as we face the prospect of a challenging winter. As it’s impossible to predict what position we will be in by May 2021, it remains to be seen what will happen when this scheme comes to an end.”

Mike Cherry, chairman of the Federation of Small Businesses, highlighted the continuing lack of support for some self-employed people. He said: “The Chancellor had nothing to say for those left out of the first round of support measures – not least the newly self-employed and company directors.”

Self employed support

The Government is extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.

An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April.

As part of the package, the government also announced it will extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year.  And up to half a million businesses who deferred their VAT bills will be given the option to pay back in smaller instalments.

The Chancellor also said that around 11 million self-assessment taxpayers will benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility. Payments deferred from July 2020, and those due in January 2021 will now not need to be paid until January 2022.

In addition, there was news of greater flexibility for firms with regard to repayment of Bounce Back Loans through a new Pay as You Grow flexible repayment system. This includes extending the length of the loan from six years to 10. Applications for other governments coronavirus loan schemes will also be extended.

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