Coronavirus (COVID-19) & Furloughed Employees
THIS UPDATE IS SUBJECT TO CHANGE AT SHORT NOTICE AS THE GOVERNMENT RELEASES ITS OWN UPDATES – THIS GUIDANCE WAS LAST UPDATED WEDNESDAY 28 OCTOBER 2020

Job Support Scheme (JSS):

At a glance guide to current and upcoming changes
The government has announced a Job Support Scheme and it is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19.  The intention is to help protect jobs by helping the employer through wage support. It picks up where the Coronavirus Job Retention Scheme or furlough scheme ends. Although, there is no need for the employee or the employer to have benefitted from the furlough scheme in order to take part.

Here are a few Questions and Answers to help explain how the scheme will work:

When does it start?

1 November 2020

How long is the scheme expected to run for?

6 months to 30 April 2021

How many variants of the scheme are there?

Two.  One where the employee is able to work and therefore must work at least 20% of their usual hours (this is the variant that we explain under the next question heading).

The second variation is where the employer has had to close their business on instruction from the government.  Employees who cannot  work due to these restrictions will be entitled to 2/3 of their usual pay and this will be paid by their employer and refunded to their employer by the government up to a maximum of £2,083.33/month.

What is the minimum number of hours that an employee needs to work for in order to qualify?

Where the business is not required to close by the government the answer is: 20% of their normal hours for the first 3 months and the government will review the position thereafter.

Further information will be published shortly as to the definition of ‘normal’ hours.  This will follow a similar definition as that used for the Coronavirus Job Retention Scheme (also known as the furlough scheme)

Who tops up the payment to the employee?

The employee will need to work a minimum of 20% of their usual hours and they will be paid for these in the normal way by their employer.

In addition, the government will pay 61.67% of their reference salary for the hours ‘not worked’ up to a maximum of £1,541.75/month.

The employer will pay a further 5% of the employees reference salary for the hours ‘not worked’ up to a maximum of £125/month with discretion to pay more if they wish.

Can the employer top up the wages to 100%?

Yes

Does the employee or employer need to have participated in the Coronavirus Job Retention Scheme (CJRS)?

In a word, no.

Does the size of the employer matter?

The scheme will be open to all UK employers that have a UK bank account.

However, large businesses will face a ‘financial assessment test’, under which they will need to demonstrate that their turnover is lower than it was as a result of Covid-19.

As part of this test, it is expected that in order to be eligible, large businesses must not be paying dividends or undertaking a buyback of shares for example.  We expect further detail regarding this shortly.

There will be no financial assessment test for small and medium sized businesses (SMEs).

Eligible employees

The employee must have been on the employer’s PAYE payroll on or before 11:59pm on 23 September 2020 and a RTI submission must have been made to HMRC showing a payment as having been made to that employee on or before 23 September too.

Employers can only claim for employees that were in their employment on 23 September 2020

Can an employee be made redundant?

An employee cannot be made redundant during the period for which the employer claims the grant.

When will the grants be paid?

They will be paid in arrears and a claim can be made once the relevant RTI submission has been submitted.

Will this mean that employers cannot claim the job retention bonus?

No, claiming the Job Support Scheme will not have an impact on the eligibility for the £1,000 Jogb Retention Bonus.

NICs and Pension contributions

The grant will not cover Class 1 NICs or pension contributions, although these will remain payable by the employer.

Are the payments taxable?

Yes if they are referable to business.  In most cases this will be a simple yes.  Section 106 and Schedule 16 of Finance Act 2020 provides for the taxation of coronavirus support payments.

When can employers claim?

From 8 December 2020


FOR ANY CORONAVIRUS QUERIES, PLEASE CONTACT OUR HR, TAX OR PAYROLL TEAM HERE: http://bit.ly/TaxVATAdvice 


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Tax Advice Consultant
0844 892 2470

Pras has over 15 years’ experience in practice having worked for PwC and then Grant Thornton UK LLP immediately prior to joining the team. He is able to advise on a wide range of taxation matters and in particular issues relating to corporation tax and the challenges that owner-managed businesses face.

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