The Winter Support Scheme has been extended, with the government pledging more support to those businesses and individuals hardest hit by the coronavirus pandemic, falling demand and restrictions to trade.
There are three areas of focus to the financial support outlined in yesterday’s extended winter support scheme:
- Job Support Scheme for open businesses
- Local restrictions grant support for Tier 2
- Self Employed Income Support Scheme
1. Job Support Scheme (JSS) for open businesses
To add to confusion, there are now two levels of JSS in place throughout the UK, for six months from 1 November, for businesses facing different challenges:
- Job Support Scheme Open
- Job Support Scheme Closed
The JSS Open is in place to support those businesses which are still operating, but are facing decreased demand, whereas the JSS Closed is in place to support those businesses which are legally required to close as a direct result of coronavirus restrictions imposed by government.
The extended winter support scheme announcement of 22 October 2020 announced that the government would increase the amount of financial support to those businesses facing increased pressure to try to protect more jobs through the winter months.
So, what are the rules?
- Employees must work a minimum of 20% of their usual hours
- Usual hours being as per pre Covid situation, not usual hours during flexible furlough
- Employees will be paid in full by their employer for the hours worked
- Employees will receive 66.67% of their normal pay for the hours not worked
- The employer must pay 7.5% of this balance, which is 5% of the normal pay amount for hours not worked
- The government will then pay the remaining 92.5% of the balance, or 61.67% of the normal pay amount for hours not worked
- An employee therefore working 20% of usual hours will receive 73% of their usual salary, with 67% of this pay coming from the government and 33% coming from their employer
- The maximum amount which can be claimed is £1,541.75.
- And the maximum which the employer must contribute to hours not worked is £125 per month
- This means that the monthly gross salary cap is £3,125 per month.
Let’s look at the second scheme:
This is for employers who have been legally required to close their businesses because of government restrictions.
It also includes premises restricted to delivery or collection only services, as well as those restricted to provision of food and/or drink outdoors even if they are not required to close completely
What are the rules?
- Employers must be instructed to close their premises for a minimum of seven consecutive days
- The government will pay two thirds of usual (pre Covid) wages to a maximum of £2,083.33
- This means that the monthly gross salary cap under this scheme is £2,100
- Businesses required to close because of workplace outbreaks ARE NOT ELIGIBLE for support
For both schemes:
- The scheme is due to open from 8 December 2020
- Claims can only be made monthly in arrears, not in advance of payday as is presently the case
- Employers CAN now top up salaries if they choose to do so
- Neither employee nor employer needs to have taken advantage of the Coronavirus Job Retention Scheme (JRS)
- Employers must have registered a PAYE Scheme on or before 23 September 2020
- An RTI (Real Time Information) submission must have been submitted to HMRC on or before this date for any employee for whom a claim is to be made
- Employers are required to cover employer NICs and auto-enrolment pension contributions in full for and period claimed for
- Employees can not be made redundant or put on notice of redundancy while being claimed for under this scheme
- Schemes must be agreed with staff members
- Changes to employment contracts must be made by agreement and employees must be notified in writing
- Agreements must cover at least 7 consecutive days
- Agreements must be made available to HMRC on request
- HMRC are intending to publish names of employers using the schemes
- HMRC will continue to operate a hotline for employees to report fraudulent claims
- Employees can be on any type of contract including zero hours and agency workers
- Employees are allowed to undertake training during non working hours
- Employees can cycle on and off the scheme so long as each short time working arrangement covers a minimum of seven days. No regular work pattern is required
- Employees will still be able to access working tax credits and child tax credits while on the scheme where applicable
- Households entitled to Universal Credit (and have neither children nor disabilities) will have an increase in entitlement if their earnings fall
- The schemes will be reviewed in January 2021
- More details will be published by 31 October 2020
- Parental pay legislation is to be reviewed and introduced to ensure employees are protected
You can read the full policy paper on the Job Support Scheme here, including details of financial checks for larger businesses:
2. Local restrictions grant support for Tier 2
Additional funding is to be allocated to local authorities to support businesses in Tier 2 areas which are not legally required to close, but which are being seriously impacted by restrictions on socialising.
There is no mention of whether this also applies to businesses in Tier 3 areas, but one would assume it should. (Remember though, never assume anything – you’ll make an ASS out of U and ME…)
Local authorities will determine how the grants will be allocated and have been given guide amounts from the government which I have outlined below. As the funding allocation has been calculated based on number of hospitality and leisure businesses in each local authority area, it is my best guess that it will be businesses in those sectors who will have access to the bulk of the support.
Grants are assumed at this stage to be roughly equivalent to 70% of the value of the grants which legally closed businesses will be able to access. Again at the local authority’s discretion:
For properties with a ratable value (RV) of:
- £15,000 or less – grants of ca £934 per month
- £15,000-£51,000 – grants of ca £1,400 per month
- £51,000 – grants of £2,100 per month
For businesses which are not in the business rates system:
- Local authorities will have access to a 5% ‘Top Up’ grant fund to allocate at their discretion
- The scheme is planned to run until April, and will be reviewed in January
- Each local authority will determine the timings and payment schedule
- Businesses will need to apply via their local authority for support – these grants will not be given automatically
- Funding for areas which faced local restrictions before the tiering system was introduced – which I should think would apply to all the Greater Manchester LAs – should have funding backdated to the point when the restrictions began
- Grants as always will be treated as income for tax purposes
3. Self Employed Income Support Scheme Extension
We’re almost there… for now at least! Congratulations if you have read this far.
What’s covered and who can claim?
There will be two lump sum grant payments, each covering a three month period from November 2020 to April 2021.
For the period from 1 November 2020 to 31 January 2021:
- The government will provide a taxable grant to the value equivalent to 40% of average monthly trading profits
- The maximum grant will be £3,750 in total
- All grants will be treated as taxable income and are subject to National Insurance Contributions
- Anyone who was eligible for the first and second SEISS grants can claim for this third round of funding, regardless of whether they have claimed previously or not
- You must also declare that you intend to continue to trade and
- are currently actively trading but have seen reduced demand due to coronavirus
- or are temporarily unable to trade due to coronavirus
The second grant will cover the three month period from 1 February 2021 to 30 April 2021. The levels of this have not yet been set.
I think this covers everything for now – any questions, as always the IN Team will be happy to help.