This detail superseded on 5th November 2020
Last Thursday, 22 October 2020, the Government announced some refinements to its Coronavirus Business Support offering, as originally set out in the Winter Economy Plan in late September. The backdrop to this is, of course, the surge in Coronavirus Cases and the new restrictions from the Local Alert Levels.
There are three main changes:
- Tweaking of the Job Support Scheme to provide more generous support for closed businesses
- Uprating of the amount of the Third Self Employment Grant (SEISS)
- Additional Grant Funding
Job Support Scheme
The JSS was announced in the Winter Economic Plan as the successor to the Coronavirus Job Retention Scheme, CJRS, aka Furlough.
The basics were “this replaces the Furlough Scheme (Cornonavirus Job Retention Scheme) and runs from 1 November 2020 for six months. During this time where employees are short working, at least 33% of their contracted hours, for the hours not worked the government will contribute one third of the value of the reduced hours, with the employer contributing another third. The employer continues to pay for the hours worked. The Government contribution is capped at £697.92/m.”
JSS was criticised at the time of announcement as being considerably less generous than CJRS. JSS has now been tweaked into two separate, and more generous, schemes:
- JSS Open – for businesses still open but facing reduced demand (in essence any business)
- JSS Closed – for businesses who have had to close their premises due to Government restrictions. In Government’s words “if their business premises at one or more locations has been legally required to close as a direct result of coronavirus restrictions set by one or more of the four governments of the UK. This includes premises restricted to delivery or collection only services from their premises and those restricted to provision of food and/ or drink outdoors.”. Move back to JSS open when restrictions are lifted (eg moving from Tier 3 to Tier 2)
JSS Open – In essence any business can claim under JSS Open if employees are short working. Features are:
- Employee must work 20% of contracted hours – this is paid by employer
- For the hours not worked they will receive 66.67% of normal pay. 5% of this amount is funded by the employer, the balance of 61.67% by the Government
- Employer can pay more than 66.67% of normal pay for hours not worked, but the Government contribution will be based on 66.67% of normal pay as per above
- Employers NI and pension contributions paid on top by employer
- Cap – “The government will pay the remainder of 61.67%, of reference salary for the hours not worked, up to a maximum of £1,541.75 per month. This will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.”
JSS Closed – This is for businesses obliged to close, or to restrict services to delivery / collection only, as set out above. Features are:
- “Each employee who cannot work due to these restrictions will receive two thirds of their normal pay, paid by their employer and fully funded by the government, to a maximum of £2,083.33 per month, although their employer has discretion to pay more than this if they wish “
- Employers NI and pension contributions paid on top by employer
For both schemes:
- Open from 1 November 2020 and to run for 6 months, until 30 April 2021
- Do not have to have used CJRS before and/or have Furloughed the employee previously
- Employee must have been employed before 23 September 2020
- Claims can be made from 8 December 2020 (Happy Christmas!)
- No conflict with Job Retention Bonus (£1,000 for Employees Furloughed under CJRS and kept on till 31 January 2021 – Job Retention Bonus)
- There seems to be no restriction on this applying to company directors.
Read the Government JSS factsheet
Self Employment Income Support Scheme Grants
In the Winter Economic plan, it was announced that a third Self Employment Grant would be paid at a rate of 20% of average profits, and a fourth grant at a percentage to be determined. The dates these grants are to be released has not been announced; notionally they cover November 2020 to January 2021 and February to April 2021 respectively*1.
The third grant has now been doubled to 40% of average profits. The profit percentage of the fourth grant hasn’t been released yet.
This compares to 80% average profits for the first grant, and 70% for the second grant, both paid over recent months.
The qualification for the third and fourth grant, both objectively and subjectively is expected to be the same as the first two grants, meaning anyone starting Self Employment after April 2019 is excluded, and reference periods for average profits are 2016-17, 2017-18 and 2018-19. Compared to the earlier grants the only thing that changes is the percentage.
*1 – Other than dictating date of payment, its not clear what the relevance of November 2020 to January 2021 and February to April 2021 is, as the reference periods are historic
More detail:
- Our FAQs Self Employed Income Support Grants – Answering Some Common Questions (updated 22nd October 2020)
- Government help sheet Self-Employment Income Support Scheme Grant Extension
Additional Grant Funding
Its fair to say the information on grant funding is a bit muddled.
For Tier 3 (Very High Risk areas), where businesses are forced to close for at least three weeks, then grants are made available based on the Rateable Value (RV) of business premises as follows:
- RV less than £15k – £1,000 each 3 weeks
- RV over £15k – £1,500 each 3 weeks
In some Tier 3 areas this may be increased following negotiations between Local Authorities and Government.
Tier 3 Local Authorities also have discretionary funding to support businesses who do not pay Business Rates but have high fixed property costs.
Government Guidance – Local Restrictions Support Grant
However, if you are in Tier 3, check with your Local Authority as to what is available under the Local Restrictions Support Grant Scheme; there is a suggestion, see below, that the grants are being increased – the guidance is unclear and potentially out of date.
For Tier 2 (High Risk Areas) discretionary funding is being made available to Local Authorities to provide grants at notionally 70% of the Tier 3 levels. However the eligibility is set by the Local Authority so they will set their own eligibility rules, but presumably on similar principles.
NB The guidance on the Tier 2 discretionary funding suggests a different, and more generous, set of bandings and support for Tier 3 businesses than the Tier 3 Government Guidance referenced above. Due to the numerous and rapid changes in the business support environment, and the factor of bespoke settlements agreed with areas in Tier 3, its difficult to know what the precise situation is. Talk with your Local Authority if you are in Tier 2 or Tier 3.
Government Guidance on Local Restrictions Support Grant (Tier 2)