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Job Retention Plan - The Facts & What Business Thinks
We have a Job Retention Scheme Factsheet and responses from business groups to the Chancellor's latest plans to keep the economy upright in the...
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Chancellor's Job Plan Deals Blow To Self-Employed
Rishi Sunak has unveiled his support for businesses over the coming months. Central to the plan is a new Job Support Scheme; and an extension of Self Employment Income Support Scheme - but only at 20%.
The package also includes a 15% VAT cut for the hospitality and tourism sectors and help for businesses in repaying government-backed loans.
Delivering a speech in Parliament, the Chancellor announced a package of measures that will continue to protect jobs and help businesses through the uncertain months ahead as the UK continues to tackle the spread of the coronavirus.
The announcement comes after the Prime Minster set out further measures to combat the spread of the virus.
“The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery.”
– Rishi Sunak
MP, Chancellor of the Exchequer
The package of measures, which applies to all regions and nations of the UK, includes:
Self Employment Income Support Scheme Grant
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.
Support for workers
A new Job Support Scheme will be introduced from 1 November to protect viable jobs in businesses that are facing lower demand over the winter months due to coronavirus.
Under the scheme, which will run for six months and help keep employees attached to the workforce, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.
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.
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.
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 employee’s usual salary, capped at £697.92 per month.
The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course.
It is designed to sit alongside the Jobs Retention Bonus and could be worth over 60% of average wages of workers who have been furloughed – and are kept on until the start of February 2021. Businesses can benefit from both schemes.
Tax cuts and deferrals
Up to half a million business that deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
Tax payers
On top of this, around 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the 'Time to Pay' self-service facility, meaning payments deferred from July 2020 and those due in January 2021, will now not need to be paid until January 2022.
Giving businesses flexibility to pay back loans
More than a million businesses that took out a Bounce Back Loan will benefit through a new Pay as You Grow flexible repayment system. This will provide flexibility for firms repaying a Bounce Back Loan. This includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses. These measures will further protect jobs by helping businesses recover from the pandemic.
CBIL
The Chancellor also intends to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
The deadline to apply for government backed loans will be extended. As a result, more businesses will now be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund.
Picture: Rishi Sunak, Chancellor of the Exchequer.
Article written by Cathryn Ellis
25th September 2020