On the 25th September 2020 the chancellor announced a new job support scheme and a self-employed grant extension. This announcement aims to help workers affected by corona virus by allowing a third grant for the self-employed and includes a new job support scheme to contribute toward employees’ wages.
Here are the key announcements:
- The Self-Employment Income Support Scheme has been extended for six months, covering the period from November 2020 to January 2021. Those who are eligible will be granted 20% of their average trading profits, capped at £1,875.
- The new Job Support Scheme will replace furlough as of the 1st November 2020 and will run for six months. In order to qualify, employees must work at least a third of their normal hours and be paid in full by their employer. Any ‘normal hours’ they don’t work, the cost is split three ways: The state pays a third, the employer pays a third and the employee will lose a third.
- Business Bounce Back Loans have been given longer to replay the loans. This is applicable to new and existing loans and can now be repaid over 10 years, with payment holidays and interest-only repayment periods.
- Self-Assessment taxpayers can delay payments further. Any tax due by the 31st January 2021 can now be paid over the following 12 months instead.
How will the Job Support Scheme work?
The aim of the Job Support Scheme is to help protect employee jobs after the current furlough scheme ends on the 31st October 2020. The scheme will begin on the 1st November 2020 and will run for six months, however it has not yet been announced whether the employers or employees will have to apply, but this will be published in due course. To qualify for the scheme, employees must be working at least a third of their normal hours. For any hours the employees can’t work, the cost will be split three ways. It is important to mention here that the state’s contribution is capped at just under £700 per month.
Here is an example of the proportion of normal salary you’d receive based on the number of hours worked:
33% Normal Hours Worked: Employer Pays 55%, The State Pays 22%, Total Received: 77%
50% Normal Hours Worked: Employer Pays 67%, The State Pays 17%, Total Received: 83%
70% Normal Hours Worked: Employer Pays 80%, The State Pays 10%, Total Received 90%
The treasury has also announced that the state will NOT cover the employers pension contributions or national insurance for staff who are being paid through the scheme.
The Scheme is UK-wide and open to many but not all employers can take part. A small to medium business is eligible (although no precise definition for this has been confirmed) Larger businesses can take part but must prove they’ve been adversely affected by coronavirus and can’t pay dividends while using the scheme.
Those on 0 hour contracts and irregular hours will be eligible. The guidance for calculating those with variable working patterns will be published in due course.
Employees will be able to cycle on and off scheme and do not have to be working the same pattern each month. Any short-time working arrangement must cover a minimum period of seven days.
How will the Self-Employed Extension Grant work?
The self-employed extension grant will start in November 2020 and last six months, covering the period of November 2020 to the end of January 2021. It will cover 20% of trading profits for three months, capped at £1,875 and will be paid in one single instalment.
The 20% will be calculated over three tax years. This is calculated by taking your average returns for 2016/17, 2017/18 and 2018/19. If you did not trade in 2017/18 then the amount is based on 2018/19 only.
It is important that only those eligible for the current SEISS can apply. In order to be eligible you must have filed a tax return for 2018/19 and must earn more than 50% of your total income from self-employment and your average trading profit must be no more than £50,000/year.
A fourth self-employed grant has also been announced by the chancellor to cover February 2021 – April 2021 however the government has not yet released the full details yet as it could be subject to change.
1-1 Business Support During COVID-19
If you are still unsure as to how this new announcement will affect your work or you personally then please don’t fret, I offer a personal online 1-1 service for anyone wanting some support/advice on your own situation. Please feel free to take a look here for more information and to book in your consultation if it looks of interest.