Under increasing pressure from business groups, local authority leaders and the public, the Government has decided to extend several of its existing support measures to help businesses across the UK – regardless of whether they are forced to close or remain open.
Speaking to Parliament, the Chancellor Rishi Sunak announced three new steps that he claimed would help businesses and communities through the “difficult days and weeks ahead”.
Recognising that “even businesses who stay open have profound challenges” he has committed additional support to “reach many more people and protect many more jobs”.
Job Support Scheme (JSS) Extension
The new JSS is due to come into effect on 1 November 2020, once the previous furlough scheme comes to an end this month.
Originally it required employers to pay around a third of their employees’ wages for hours not worked and required employees to work at least 33 per cent of their normal hours.
In recognition of the difficulties businesses are facing, particularly in some adversely affected sectors, the JSS will now only require employers to make a five per cent financial contribution towards unworked hours, while the Government will contribute 61.67 per cent (capped at £1,541.75).
The latest change will also see the minimum hours requirements for employees cut to just 20 per cent of their regular working time.
As an example, under the new scheme if an employee is usually paid £600 for working 40 hours in a week, but their hours are cut by their employer to 20 per cent of their normal time (8 hours), they will be paid £120 for their time worked, plus £24 in employer contributions and £296 in Government support for the time not worked. This would mean that they still receive weekly gross pay of £440.
The Chancellor confirmed that the extended version of the JSS can still be used alongside the £1,000 Job Retention Bonus and did not affect the other elements of the JSS for businesses legally required to close, which cover around two-thirds of an employee’s wage.
Self Employed Income Support Scheme increased
In his earlier Winter Economy Plan, the Chancellor had confirmed that the Self-Employed Income Support Scheme (SEISS) would be extended into 2021 with the payment of two new taxable grants.
He has now confirmed that the first of the extended grants, which will cover the three months from November to January will increase from 20 per cent of previous trading profits, capped at £1,875 to 40 per cent of previous trading profits capped at £3,750.
The second of the new SEISS grants will cover three months from the start of February until the end of April 2021. The level of the second grant will be set by the Government in due course.
The Government is providing additional funding to allow Local Authorities (LAs) to support businesses in high-alert (tier 2) level areas, which are not legally closed but that have been severely impacted by the restrictions on socialising.
The cash grants, worth up to £2,100 per month, are primarily aimed at businesses in the hospitality, accommodation and leisure sector.
The amount of funding received by each LA will, therefore, be based on the number of hospitality, hotel, B&B, and leisure businesses in each area.
As a guide, LAs will receive a funding amount that will be the equivalent of:
- £934 per month for premises with a rateable value of £15,000 or under;
- £1,400 per month for premises with a rateable value of between £15,000-£51,000; and
- £2,100 per month for premises with a rateable value of £51,000 or more.
It will be down to the discretion of each LA to determine which businesses are eligible for grant funding and what level of funding to allocate to each business.
LAs will also receive an additional five per cent top-up to cover other businesses that might be affected by the local restrictions, but which do not fit into these categories.
Businesses in Very High alert level areas will qualify for greater support of up to £3,000/month whether closed or open.
These new grants will be available retrospectively for areas who have already been subject to previous local restrictions and backdated, in some cases, to August.
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While we await further details of these schemes in the days and weeks to come, you must prepare your business for these changes.
If you would like support implementing these new measures or have questions about how they may affect your business, please contact our experienced team.