As the furlough scheme ends, the government have announced new measures to help businesses and individuals as we move into Autumn and Winter.
Job Support Scheme
At the end of October, the furlough scheme will end and be replaced by the Job Support Scheme. The aim of the scheme is to try and support businesses and employees who are working reduced hours due to Covid-19.
As long as an employee works a minimum of 33% of their normal hours, the government and employer will each pay one-third of the employee’s wages. This means that employees working 33% of their hours will receive at least 77% of their overall pay.
The grant is capped at £697.92 per month meaning that this will benefit workers up to £38,068 per annum. It is set to run for 6 months.
In practice, this is how it will work on a monthly basis…
Salary £2,000 per month (£24,000 per annum) working 33% of their hours
Employer pays – £1,100 (33% of salary plus an additional 22%)
Government Grant – £440 (22% of salary)
Total gross pay – £1,540 per month
The scheme is open to all small and medium businesses. However, large businesses will have to demonstrate a loss of revenue during the pandemic. If employers use the scheme they will still be eligible for the £1,000 job retention bonus for bringing staff back from furlough.
Self-employed Income Support
The treasury have also announced an extension to the self-employed income support scheme. Those previously eligible will be able to claim a grant covering 20% of average monthly trading profits covering November to January. This is capped at £1,875. There will be a second grant to cover February to April, however, the level of this grant will be set “in due course”.
The first grant will cover 20% of average monthly trading profits covering November to January. It will be capped at £1,875. The second grant will cover the months from February to April and the government will ‘review the level of the second grant and set this in due course’.
The Bounce Back Loan scheme is being amended so borrowers can have up to 10 years to repay the loan rather than six. There will be options to move to interest-only options for periods of up to six months or pause payments for six months.
There is also an extension to apply for some government loans.
Self-employed workers with up to £30,000 of tax to pay, will be able to defer their tax repayment until January 2022 if needed.
There was good news for businesses that deferred their VAT due in March to June this year, the government is giving them then option to spread their payments over 11 equal instalments over 2021-22. In order to take advantage of this, businesses will need to opt in.
The treasury have extended the VAT cut from 20% to 5% for the hospitality sector until the end of March 2021.
If you have any questions about any of these announcements, or anything else related to finance at this time, please do get in contact.