Last week HMRC announced the new Coronavirus Job Support Scheme that will help to support the wage costs of employees who are working reduced hours from 1 November.  It is intended to run for 6 months until 30 April.  We set out below further details of what we know so far about how this scheme will work although further guidance will be issued in coming weeks. 

Changes have also been introduced to other aspects of the Government’s support for businesses, which are in brief:

• the Self-Employed Income Support Scheme is extended to April 2021 and will provide two further grants which will be paid in two lump sum instalments each covering a three-month period,
• an online self-service system is being set up to allow additional time to pay self-assessment instalments that were due on 31 July 2020, giving automatic approval to spread debts of up to £30,000 over 12 months,
• businesses who deferred their VAT liability that was due between 20 March and 30 June 2020 now have the option to pay in smaller payments over a longer period.  Instead of paying the full amount by the end of March 2021, you can make smaller payments up to the end of March 2022, interest free.  Time to Pay arrangements are still available,
• the 5% reduced VAT rate for the hospitality sector and tourist attractions is extended to 31 March 2021 (the end date was originally 12 January 2021).

What is the Job Support Scheme?

From 1 November, the Government will contribute 33% of the normal hourly wage for hours that are not worked by the employee.  The employer will also pay 33% of the normal hourly wage for hours that are not worked, so the employee bears the final 33% as a drop in their income. 

The employer will also pay the employee’s normal wage for the hours that the employee works, plus all of the employer’s NIC and pension contributions on the employee’s total earnings; there is no grant support for employer’s NIC and pension contributions under this scheme.

Neither the employer or the employee needs to have previously been involved in a claim under the Coronavirus Job Retention furlough scheme. 

Financial assessment test for large businesses

There are no financial conditions for SMEs (broadly those with less than 250 employees).  However, large businesses will need to demonstrate that their turnover now is lower than it was before the covid pandemic began. 

Which employees can be included in a claim?

For the first three months of the scheme, the employee must work at least one third of their normal working hours to be included in a claim under this scheme.  This threshold will be reviewed after the first three months, and it is designed to ensure that the support is focussed on “viable” jobs. 

An employee must have been included in the employer’s RTI submission on or before 23 September, so we have a cut-off similar to that seen in the furlough scheme which will no doubt lead to familiar cases of winners and losers. 

Employees can cycle on and off the scheme and do not have to work the same pattern of hours each month.  A written short-time working agreement will need to be put in place as it was for flexible furlough, and each agreement must be at least one week in duration.  This means an employee’s working arrangements can be changed during a working month. 

Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee.

Amount of the JSS claim

For every hour not worked by the employee, the Government and employer will pay a third each of the usual hourly wage for that employee.  The Government contribution will be capped at £697.92 a month.

As regards the employer topping-up an employee’s pay, the published guidance currently says “Our expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.” 

Claims are payable in arrears – they cannot be made up to 2 weeks in advance of the wages payment date as they can under the furlough scheme. 

Self-employed income support scheme

To be eligible for the additional grants, self-employed individuals must have been eligible for the first SEISS even if they did not make a claim.  They must declare that they are still trading and intend to continue to trade, and that their business has been adversely affected by coronavirus. 

The first grant covers the three months from November to January and is calculated as 20% of the average monthly trading profits, paid in a single instalment for the three month claim period and is capped at £1,875.  As before, this income is taxable for income tax and NIC purposes but is not subject to VAT.

The second grant covers the three months from February to April although the amount of this grant has not yet been set and will be announced at a later date. 

New Self-Assessment self-service time to pay scheme

If you deferred paying your July 2020 self-assessment payment on account, the deferred amount plus any balancing payment and first 2020/21 Payment on Account, is payable by 31 January 2021.

If you are unable to pay your self-assessment bill in full by 31 January 2021, you can now set up a Time to Pay payment plan of up to 12 months online without speaking to HMRC.  If your SA tax debt is up to £30,000, you’ll able to access this Time to Pay facility through the HMRC website and will get automatic and immediate approval.  If your SA debts are over £30,000, or you need longer than 12 months to repay your debt in full, you will still be able to use the Time to Pay arrangement by calling HMRC. 

If you have any questions about the update above, please get in touch with us today and one of our advisers will get back to you soon.