The current furlough scheme which was introduced back in March will come to an end in October, which had left companies and employees uncertain about job security as we enter the winter months.
Today, the chancellor Rishi Sunak announced a brand new Job Support Scheme (JSS) which will run from November 1st for a 6 month period, enabling businesses to continue to support staff who aren’t working full-time. The new initiative will ensure that workers will receive three quarters of their usual salary for the duration of the scheme, and has been introduced in order to avoid mass unemployment across the country in the absence of the furlough scheme. Around 12% (3 million) of the UK’s workforce currently remain on partial or full furlough leave, with the scheme set to end next month.
How will the scheme work?
All small and medium sized businesses will be eligible for the scheme, as will large business if their turnover has decreased as a result of the coronavirus outbreak. In order to be eligible employees must work a minimum of 33% of their usual contracted hours, paid by the employer, and for the hours that the employee is unable to work due to reduced demand the government and employer will each pay a third of the remainder.
What this means is that 22% of the employees total pay will come through the scheme, with the employer paying 55% to give a total of 77% that the worker will receive. Rishi Sunak also confirmed that the JSS can be used alongside the previously announced ‘job retention bonus’, which sees employers awarded £1,000 for every furloughed worker that returns to work.
‘Pay as you grow’ scheme
The government have also announced a new ‘Pay as you grow’ scheme designed to give businesses who have borrowed money a longer time to repay and more flexible repayment methods. The repayment terms on loans may be extended for up to 10 years, including Bounce Back Loans (BBL) and Coronavirus Business Interruption Loan Scheme (CBILS), and the new scheme will also allow businesses to suspend payments altogether should they face severe financial difficulties.
Over 1 million Bounce Back Loans have been issued to businesses impacted by the pandemic since May, 100% backed by the state worth up to £50,000 and no interest or payments in the first year.
The repayments for Bounce Back Loans have now been extended from six to ten years, bringing the average monthly payment down by almost 50%, and you can still apply for the BBL scheme by contacting your bank directly and filling out a short online application.
Support for the self-employed has also been outlined, with the Self-Employment Income Support Scheme (SEISS) being extended for the same time period. The full details of the SEISS extension have yet to be announced, however the first grant is set to be significantly lower than the original level, covering 20% of trading profits for three months to a maximum of £1,875. To qualify you must have been eligible for the current scheme and have been adversely impacted by the coronavirus outbreak.
The announcement included the extension of reduced VAT (5%) for the hospitality and tourism industries for the next six months, and VAT payments have been deferred for the same time period and can be paid in 11 monthly instalments interest-free. The same will also apply to deferred self-assessment payments due by the end of January.
We help businesses of all sizes to manage their finances and keep them informed of any economic changes and how they will be impacted. If you would like more information about the new Job Support Scheme and how it can help you and your business, call us today on 0333 202 7198 or email firstname.lastname@example.org.