Job Support Scheme
Furlough came in very quickly as a response to lockdown, with the result that it had numerous amendments in the first weeks after its announcement.
The Job Support Scheme since first announced has had various changes made to it - we are now on Version 3 of the Scheme (and HMRC say that the first claim cannot be made till the 8th December), so it may change again.
Job Support Scheme - Basic Differences to Furlough:
1. Claming JSS
JSS may only be claimed after the wages have been paid.
2. There are two schemes
One standard (JSS Open) and one for businesses in Tier 3 (JSS Closed).
3. JSS is intended for “viable” businesses
Employees must work at least 20% of the time – unless prohibited by COVID imposed lockdowns ie Tier 3.
JSS Open will provide support to businesses that are open where employees are working shorter hours due to reduced demand. Employees will need to work at least 20% of their usual hours. Employers will continue to pay employees for the hours they work, and the UK government will pay a contribution of 61.67% of the usual pay for hours not worked, up to a maximum of £1,541.75 per month. Employers will pay 5% of the usual pay for hours not worked, up to a maximum of £125 per month, and can top this up further. This means employees should receive at least two thirds of their usual pay for hours not worked.
The caps are reduced according to the proportion of hours not worked.
You will need to cover all employer National Insurance and pension contributions.
JSS Closed will provide support to businesses whose premises are legally required to close as a direct result of coronavirus restrictions set by one of the four governments of the UK. This includes premises restricted to delivery or collection-only services from their premises, and those restricted to providing food and/or drinks outdoors.
For JSS Closed, the UK government will fund two thirds of employees' usual wages for time not worked, up to a maximum of £2,083.33 per month. Employers will not be required to contribute but can top up the government’s contribution if they choose to. Employers will still need to cover all employer National Insurance and pension contributions.
Other Aid for
Businesses in Tier 3 Lock Down Areas
The Chancellor has announced Local Restrictions Support Grants for businesses with premises shut in local lockdowns. The objective is to help cover fixed costs.
- Grants are linked to rateable values ie
- Rateable value less than £51k - £1,000 grant for each 3-week period.
- Rateable value over £51k - £1,500 grant for each 3-week period.
- Discretionary Funding aspect – A potential discretionary grant of up to £1,500 at the discretion of your local council.
- Eligible if you occupy a property with business rates
- In a local lockdown area and been required to close following local restrictions after 9 September
- Required to close for at least 3 weeks
- Unable to provide a usual in-person service from its premises
Not applicable to:
- Businesses subject to national lockdowns, eg nightclubs
- Businesses that have reached the state aid limit (usually Euro 800,000)
- Businesses that have chosen to close but are not required to close by a local lockdown
- Businesses which are able to continue to operate as they do not depend on providing direct in-person services from their premises.
JSS In Detail
As stated, there are two types of the JSS, one for businesses that are open and one for businesses that are closed due to a Tier 3 lockdown or similar. JSS Open and JSS Closed have some similarities but are effectively two different schemes. Both schemes represent a change to the employees working conditions and thus need to be agreed to in writing between the employer and the employee. Both schemes come into force on 1st November 2020 and run until 30th April 2021.
JSS Closed is for employees who are not working due to Tier 3 Restrictions and pays 2/3rds of normal wages up to a cap of £2,083.33 per calendar month – effectively the same as the later Furlough version. The employer is responsible for the employer’s NIC and minimum pension contributions. The employer can pay a top-up amount.
The business premises must have been legally required to close by a Tier 3 restriction or similar. NB: If the premises interiors are closed to the public, but available for delivery or collection services or to serving food outdoors then they still count as closed.
Business premises shut down by public health authorities are not eligible.
JSS Open is for employees who are working a minimum of 20% of their normal hours and the JSS Grant pays 2/3rds of the hours not worked up to a cap of £1,541.75 per calendar month. The employer pays for the hours worked and pays 5% of the hours not worked up to a cap of £125 per calendar month. The employer can pay a top-up amount.
The employer pays the employer’s NIC and minimum pension contributions. Employers cannot claim JSS for any time their employees are working.
Reference salary - Both schemes refer to a reference salary as being their normal wages. That is the amount of wages you are contractually obliged to pay including basic pay plus non-discretionary payments e.g. overtime, commission. It excludes discretionary amounts such as tips and bonuses.
For employees on a fixed salary, this is the higher of either the last pay period ending on or before 23/9/20, or the last pay period before 19/3/2020. If you are monthly paid this would be the higher of your February 2020 and August 2020 salaries.
For employees with variable pay, this is the greater of 1) Pay in same period last year, 2) Average wages for 2019/20, or 3) Average wages from 1/2/20 to 23/9/20.
Usual hours – for employees contracted to a fixed number of hours, the usual hours worked are the greater of contracted hours for the last pay period before 23/9/20 or for the last pay period before 19/3/20.
For employees who work variable hours the usual hours calculation is based on the greater of 1) average hours for the same period last year, 2) average hours for 2019/20 or 3) average hours from 1/2/20 to 23/9/20.
Claims are made - via HMRC’s online portal in a similar way to the CJRS furlough scheme. The portal will be available from 8 December 2020. Claims must be made for a minimum period of seven-days, but employees can work very flexibly and come in and out of the JSS Open across a month. As stated, claims cannot be made until the relevant RTI return has been made and the net pay paid to the employee.
Penalties – As with the Furlough scheme, the guidance says not only do you have to repay incorrectly claimed grants, but that you will get a penalty of up to 100%. The phrase ‘up to’ implies some discretion by HMRC and suggests that any errors need to be promptly reported and rectified to minimise the potential for penalties.
HMRC’s current guidance on JSS can be found at https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme
HMRC’s Worked Example
HMRC’s website shows an example of an employee whose standard wage is £2,250 Gross per Calendar Month. He normally works a 37.5 hour/5-day week, but in November only works 15 hours in 2 days per week.
Normal Monthly Gross
Payable by Employer under JSS Open
Recoverable by HMRC under JSS Open
Total Employee Salary November - Gross
Please note the employer must pay the £1,763.59 before it can recover the £757.20 from HMRC.
This scheme will change again and HMRC say they will publish final guidance by end of October 2020 – unless the Scheme changes again.
The Budget 2021
The Chancellor Rishi Sunak presented his second Budget on Wednesday 3 March 2021. In his speech he stated his Budget ‘meets the moment with a three-part plan to protect the jobs and livelihoods of the British people’.
Self Employment Grant 3
HMRC have now published the qualification rules for the 3rd Self Employed Support Grant which can be applied for via HMRC’s website as from the 30th November ie next Monday. Applications must be submitted by the 29th January 2021. The rules as to who can apply are the same as for the 1st two grants…