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Finance Update October 2020

The Government has previously announced several financial support measures including the Job Support Scheme and the Job Retention Bonus. On Friday, Rishi Sunak announced an effective extension to the Job Support Scheme to apply to businesses that are legally required to close as a result of local lockdown requirements.

Due to the constant ongoing financial changes and forthcoming changes to local lockdown measures we thought it would be a good idea to set out what measures may be available to businesses.

Job Support Scheme (JSS)

The intention of the JSS is to protect viable jobs in businesses that will face lower than normal demand in winter due to Covid-19.

Eligibility

The scheme will run from 1 November 2020 until April 2021 and will be open to all employers with a UK bank account and UK PAYE scheme. Prior use of the Coronavirus Job Retention Scheme is not a requirement.

While there is no financial test for small and medium businesses, large businesses will be required to meet a financial assessment test to demonstrate the effect of Covid-19 on the business.

In order to be eligible for the scheme, employees must have been on the employer’s PAYE payroll on or before 23 September 2020. i.e. an RTI submission must have been made in respect of the employee by 23 September 2020.

For the first three months, employees must work a minimum of 33% of their usual hours. The Government may increase this threshold after three months. Employees can, however, cycle on and off the scheme, and do not have to work the same pattern each month, but each working arrangement must cover a minimum of 7 days.

The new working arrangements must be agreed with employees and changes to employment contracts notified in writing. HMRC may request to see these agreements.

Employees cannot be made redundant or put on notice of redundancy during the period for which a claim is being made.

What you can claim

Employees must work a minimum of 33% of their usual hours and must be paid at their normal contracted wage for hours worked.

For hours not worked, both the Government and the employer will pay a third each of the usual hourly wage for the employee, with the Government contribution capped at £697.92 per month.

The grant will be paid in arrears, after the employee has been paid and the RTI submission made, with first claim being made in December 2020.

Employer NI and pension contributions remain payable by the employer.

Job Support Scheme (JSS) – Expansion

The expansion of the JSS will apply to businesses whose premises have been legally required to close as a direct result of Coronavirus restrictions, including premises restricted to delivery or collection only services from their premises.

Eligibility

Eligibility requirements are the same as detailed above, with the following further requirements.

Employers can only use the scheme for employees who cannot work (paid or unpaid) for that employer.

Employers must be instructed to and cease work for a minimum of 7 consecutive (calendar) days.

Claims cannot overlap and will be made monthly in arrears, the payments will be taxable, and employers will cover NI and pension contributions.

Employers are not required to make further contributions to wage costs but may top up employee pay if they choose to.

The new working arrangements must be agreed with employees and changes to employment contracts notified in writing. HMRC may request to see these agreements.

Businesses required to close by local public health authorities as a result of specific workplace outbreaks are not eligible for the scheme.

What you can claim

The grant will cover two-thirds of eligible employees normal pay up to £2,100 per month, and employers must use the whole of the grant to cover the wages and pay relevant payroll taxes.

Employers NI and pension contributions remain payable by the employer.

Local Lockdown Property Grants

In September the Government announced that businesses that have been required to close due to coronavirus local interventions may be able to claim up to £1,500 per property every three weeks.

To be eligible for the grant, the business must have been required to close due to local Covid-19 restrictions.

The grants do not apply to businesses that have remained closed at national level.

£1,000 grant per property will be payable every three weeks to a business occupying premises with a rateable value less than £51,000, or subject to an annual rent or mortgage payment of less than £51,000.

£1,500 grant per property will be payable every three weeks to a business occupying premises with a rateable value of £51,000 or more, or subject to an annual rent or mortgage payment of £51,000 or more.

The grants received will be treated as taxable income.

Additional local authority funding is also available to help any other small businesses which may not be on the business rates list but are affected by local interventions. These discretionary payments may be less than £1,000 in some cases and further eligibility criteria may be determined by local authorities.

Job Retention Bonus

The Job Retention Bonus, announced in July, provides a one-off taxable payment of £1,000 per employee that was furloughed, kept continuously employed until 31 January 2021 and meets the minimum income threshold.

Claims for this bonus can only be made between 15 February 2021 and 31 March 2021. The bonus does not have to be paid to the employee.

Although you may be aware of this bonus and may well be expecting to claim for a number of employees, you must make sure that each employee will meet the following eligibility requirements.

Who can you claim for?

You can claim for employees that:

  • an eligible claim has made for under the Coronavirus Job Retention Scheme
  • have been kept continuously employed from the end of the period of your last CJRS claim until 31 January 2021
  • are not serving a contractual or statutory notice period (including notice of retirement) for you on 31 January 2021
  • have been paid at least the Minimum Income Threshold

Minimum Income Threshold

The minimum income threshold requires that you pay your employee a total of at least £1,560 throughout the tax months:

  • 6 November to 5 December 2020
  • 6 December 2020 – 5 January 2021
  • 6 January – 5 February 2021

Employees must receive at least one payment of taxable earnings (of any amount) in each of the relevant periods.

Note – only payments recorded as taxable pay will count towards the minimum income threshold.

HMRC provide examples of how the minimum income threshold will work at

https://www.gov.uk/government/publications/find-an-example-of-employees-and-the-minimum-income-threshold-for-the-job-retention-bonus/example-of-employer-deciding-which-employees-will-meet-the-minimum-income-threshold-for-the-job-retention-bonus

 

If you would like to speak to someone regarding any of these measures and to see how we can help you, please get in touch with your usual contact at Rayner Essex or fill out the form below and we will get back to you.

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