The Chancellor of the Exchequer, Rishi Sunak, has today announced additional support for businesses in response to the COVID-19 pandemic:
Jobs Support Scheme – as the Furlough Scheme ends on 31st October 2020, the new Jobs Support Scheme will start. This scheme will be open to employers which employ staff for at least 33% of their normal hours. For the remaining 66% of the hours not worked, the Government and the employer will each pay one-third of the 66%. This is of course very welcome additional support, albeit the maths is a little confusing – but here is an explanation:
- Billy works 33% of his normal full-time hours – which the employer pays
- That leaves 66% of his normal full-time hours which he doesn’t work. The Government and the employer both pay one-third of the 66%.
- The result is Billy receives seven-ninths of his normal salary – five-ninths paid by the employer and two-ninths paid by the Government.
The level of grant will be calculated based on the employee’s usual salary, and will be capped at £697.92 per month.
This Scheme is open to all SMEs, regardless of whether they previously used the Furlough scheme, as long as the job for which they are claiming is a viable job. Larger businesses can also claim, but only if their turnover has fallen.
This Scheme will start from 1st November 2020 and will run for six months. Businesses will still be able to claim the Job Retention Bonus.
Additional Support for Self-Employed – there will be an additional grant available which will be similar to the Jobs Support Scheme. 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 2021. 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 2021.
Bounce Back Loan – a pay as you grow scheme will be introduced, extending the payment terms from six to ten years. Where a business is particularly struggling they can request to pay interest only for a period, or they can suspend repayments for six months. The Loan scheme will also be extended until the end of 2020; and a successor scheme will start in January 2021.
CBILS Loan – the Government guarantee will be extended to ten years.
VAT Deferrals – businesses which deferred their VAT payment earlier in the year, will no longer have to pay a lump sum at the end of March 2021. They will now have the option of splitting it into smaller, interest free payments over the course of 11 months.
Self Assessment Deferrals – individuals that deferred their Self Assessment payment in July, will be able to split that payment over 12 months from January 2021.
Hospitality & Tourism Businesses – the 5% VAT rate was due to revert to 20% in January 2021. The 5% rate has now been extended until 31st March 2021.
We expect that the Government will issue additional guidance on the above, particularly the Jobs Support Scheme, over the coming hours, days and weeks. We will keep you updated as we learn more.