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Enhancement of Job Retention Support Package

26th October 2020

The Chancellor has recently announced changes to the governments job support scheme that will be introduced in November 2020 (this is the replacement to the furlough scheme).

This is aimed at businesses who have not been legally required to close but are suffering the impact of tier two restrictions. However, it is our understanding this has been rolled out UK wide.

It was the case that to be eligible for this relief an employee would have had to at least work 33% of their normal original hours. The employer would have to fund 33% of the hours not worked and the government would also fund 33% of the hours not worked.

Per the announcement employees of firms suffering the effects of tier two restrictions will now only need their staff to work at least 20% of their original hours to be eligible for the scheme.

Also the contribution the employer is required to make under this scheme for hours not worked will fall from 33% to 5% (up to a cap of £125 per month).

The government will provide for 61.67% of the wages of hours not worked and this could be up to £1,541.75 per month (this is more than double the original maximum payment of £697.92 per month as per the original rules).

For example, an individual on a salary of £1,400 per month, who works 20% of their hours will receive £280 for the hours worked, which is paid for by their employer.

In addition, for the 80% of time not working £746.66 (66.67%) of their remaining pay will be funded. Of this total £56 (5% of unworked hours) will come from the employer and the remaining £690.66 will be funded by the government.

This leaves the employee with total taxable pay for the month of £1,026.66, which is just over 73% of their normal pay.

The employer will be obliged to fund the employer NIC and pension contributions on the payment.

It is worth remembering that employers using this scheme will still be eligible to claim the job retention bonus (£1,000 per employee).

Large business (those with over 250) employees will have to meet a financial assessment test to be eligible for the scheme. No such test is required for firms with less than 250 employees.

Doubling of the Self Employed Income Support Scheme (SEISS)

Initially this scheme covered 20% of average monthly profits with a limit of £1,875 per total grant.

The grant awarded in November will now cover 40% of average monthly profits with a payment cap of £3,750. This payment will be paid in a single instalment and will cover three months.

The same eligibility conditions are in place as before. I.E. an individual needs to receive at least half of their taxable income from their self-employment. Plus their total income in 2018/19, or their average income for the previous three tax years needs to be below £50,000

This grant covers the months from November 2020 to January 2021. The totals for the second grant which will run from February 2021 to April 2021 have yet to been announced.

Other Announcements

The government announced an additional support scheme for businesses in tier two areas. This will be primarily aimed at businesses in the leisure, accommodation and hospitality sectors.

The local authorities in these areas will be given the funding to distribute the grants and the funding received will be based on the eligible businesses in their area

It is important to note that these payments will apply retrospectively to any business that have been under these rules since August 2020.

It is understood the payments will be awarded as follows:

  • Firms with a premises which has rateable value of £15,000 or less will be allocated grants of £934 a month.
  • Businesses that have premises rateable value between £15,000 – £51,000, will be allocated grants of £1,400 a month.
  • Businesses who have a premises rateable value in excess of £51,000 or more will receive £2,100 per month.

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