Increased support for business and the self employed

Published on October 22, 2020 by Nick Donohoe

The Chancellor has today announced changes to the Job Support Scheme Open (“JSS”), the Self Employed Grant and Grants that are available to businesses. All of these measures are designed to help those businesses finding themselves in high alert levels which has had a detrimental effect on their business but have not been legally required to close. Support for closed businesses remains unchanged.

Job Support Scheme Open (JSS)

Recognising the pressure that businesses in some sectors and areas are facing, today’s announcement lightens the burden of keeping on staff for businesses that remain open and have not been required to close due to local restrictions.

When originally announced, the JSS  (which will come into effect on 1 November) required employers to pay a third of their employees’ wages for hours not worked and required employees to be working at least 33% of their normal hours.

Today’s announcement reduces the employer contribution to those unworked hours to 5% of the unworked hours and reduces the minimum working hours requirements to 20% of their normal hours. Anyone working just one day a week will now be eligible.

Today’s changes mean the government will now provide up to 61.67% of wages for hours not worked (an increase from the previous 33%), up to a maximum of £1541.75 per month.

What this means in financial terms is that anyone earning £1,100 a month will be paid at least £807 per month if they only work 20% of their normal hours. The employer would pay £264 and the government £543.

For an employee earning £1,100 per month who only works  20% of their time the payment will be split as follows:

20% of hours worked (paid in full by employer)  £220
Employer payment for hours not worked (5% of unworked hours)  £44
Government contribution (61.67% of unworked hours)  £543
Total income  £807

 

The scheme will run for 6 months from 1st November 2020, claims can be made on-line from 8th December 2020. The scheme is open to all employers with a UK bank account and UK PAYE schemes. Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme (CJRS) to qualify.  Large employers (those with 250 or more employees) will have to meet a financial impact test, so the scheme is only available to those whose turnover has stayed level or is lower now than before experiencing difficulties from Covid-19. There will be no financial impact test for small and medium enterprises (SMEs) and charities.

Employers will continue to receive the £1,000 Job Retention Bonus.

The government will continue to pay two thirds of each employees’ salary, up to a maximum of £2,100 a month for businesses that have been required to close.

We appreciate that keeping abreast of the ongoing changes can be a challenge for people preparing a company payroll and we would be delighted to have a conversation with you about how we may be able to help.

Self-employed grant

Today’s announcement also increases the amount of profits covered by the two forthcoming self-employed grants from 20 per cent to 40 per cent, meaning the maximum grant available will increase from £1,875 to £3,750. It will be available to anyone who was previously eligible for the SEISS grant one and grant two and meets the eligibility criteria.

Grants will be paid in two lump sum instalments each covering 3 months. The first grant will cover a three-month period from the start of November 2020 until the end of January 2021. The taxable grant will be calculated based on 40% of three months’ average trading profits, paid out in a single instalment and capped at £3,750.

The second grant will cover a three-month period from the start of February until the end of April 2021. The government will review the level of the second grant and set this amount in due course.

Business Grants

The Chancellor has also announced additional funding to support cash grants of up to £2,100 per month primarily for businesses in the hospitality, accommodation and leisure sector who may be adversely impacted by the restrictions in high-alert level areas. These grants will be available retrospectively for areas who have already been subject to restrictions, and come on top of higher levels of additional business support for Local Authorities moving into Tier 3.

These grants are expected to benefit around 150,000 businesses in England, including hotels, restaurants, B&Bs and many more who aren’t legally required to close but have been adversely affected by local restrictions nonetheless.

Local Authorities will receive a funding amount that will be the equivalent of:

  • For properties with a rateable value of £15,000 or under, grants of £934 per month.
  • For properties with a rateable value of between £15,000-£51,000, grants of £1,400 per month.
  • For properties with a rateable value greater than £51,000, grants of £2,100 per month.

This is equivalent to 70% of the grant amounts given to legally closed businesses (worth up to £3,000 per month).

Local Authorities will also receive a 5% top up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, but which do not neatly fit into these categories.

It will be up to Local Authorities to determine which businesses are eligible for grant funding in their local areas, and what precise funding to allocate to each business – the above levels are an approximate guide.

Businesses in Very High alert level areas will qualify for greater support whether closed (up to £3,000 per month) or open. In the latter case, support is being provided through business support packages provided to Local Authorities as they move into the alert level.

If you have any questions on any of the above please do not hesitate to contact your usual RPG contact.

Written by Nick Donohoe

Nick’s experience covers all major areas of taxation, but his particular areas of technical expertise include remuneration planning, employee share schemes, R&D tax credit claims, dealing with HMRC enquiries and helping shareholders realise value through company reorganisations, disposals and longer term exit planning.

View all posts by Nick Donohoe

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