The main headline from the Winter Economic Plan (WEP) announcement by the Chancellor of the Exchequer on Thursday was the new Jobs Support Scheme (JSS). This is similar to the schemes that operate in European countries such as Germany and France and was something that MTAS called for when we wrote to Mr Sunak last week.
We will return to this next week once the details have been published, but the highlights of the JSS are:
- It will cover employees working at least a third of their normal hours, who are being paid for that as normal.
- The government and employers will jointly increase their wages to cover two-thirds of their lost pay and the employee will keep their job.
- All small and medium-sized businesses are automatically eligible, but larger businesses must show their turnover has fallen during the crisis.
- As with the Job Retention Scheme, there is a cap in the grant payable of £697.92 per month.
- Employers can use it even if they have not previous used the furlough scheme it replaces.
- It will run for six months from November.
As a worked example of this, someone earning £2,000 per month but only working 50% of their “normal” hours would clearly get £1,000 of normal pay. On top of this, the employer would be expected to pay £333 for the hours not worked and this element would be matched by the Government. The employee would, therefore, receive £1,666 per month.
The other elements of the WEP include:
- The existing grant for self-employed people is being extended on similar terms to the Jobs Support Scheme.
- A “pay as you grow” scheme was announced for businesses, allowing them to extend their bounce back loans from six to 10 years, reducing their payments.
- Businesses can also move to interest-only payments or suspend repayments for six months if they are "in real trouble". Credit ratings will be unaffected.
- The government guarantee on Coronavirus Business Interruption Loans (CBIL) will be extended to 10 years and a new successor loan guarantee programme will be announced in January. Note that the existing CBIL scheme closes for applications at the end of September (see https://www.mta.org.uk/resources/coronavirus-business-interruption-loan-scheme-cbil) and it is not clear if the gap to January will be covered by an extension of the existing deadline.
- The government will give businesses which deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021-2022 so that rather than paying in full at the end of March 2021, businesses will be able to choose to make 11 equal instalments over 2021-22. All businesses which took advantage of the VAT deferral can use the New Payment Scheme and while they will need to opt in, all are eligible. HMRC will put in place an opt-in process in early 2021.
On the final topic, the temporary reduction of VAT from 20% to 5% for some sectors was extended until 31st March 2021 although this only applies for the hospitality and tourism industry.
The various announcements can be found at https://www.gov.uk/government/topical-events/winter-economic-plan and we assume that this will be the portal for links to the various elements as they are confirmed - it already hosts a link for more details about the extension of the Self-Employment Income Support Scheme.