Government announces further expansion of Job Support Scheme

The government has announced that the Job Support Scheme (JSS) will be expanded to provide further financial assistance to businesses facing reduced demand due to the coronavirus pandemic. To provide further financial support to the self-employed, the government has also announced an expansion of the Self-Employed Income Support Scheme (SEISS).

What is the Job Support Scheme?

The Job Support Scheme will replace the Coronavirus Job Retention Scheme and will run for six months from 1st November 2020. The scheme will provide support for businesses with employees whose working hours are reduced as a result of decreased demand. The support will differ for businesses that remain open and for businesses that are legally obliged to close.

Support for businesses that remain open

Under the new rules, businesses that remain open can reclaim wages for hours not worked by employees who work a minimum of 20% of their normal hours. Employers will pay each employee as normal for the hours that they are able to work and a minimum of 66.67% of their usual pay for hours that the employee would normally have worked but were unable to do so because of reduced demand. The employer will then be able to reclaim 61.67% of the wages paid for hours not worked from the government, up to a maximum of £1,541.75 per month.

Employers can choose to pay their employees more than the minimum of 66.67% but won’t be able to reclaim more than 61.67% from the government. The employer should also continue to pay National Insurance and pension contributions, which the JSS doesn’t cover.

Support for businesses legally required to close

The Job Support Scheme for businesses that are legally obliged to close due to local or national coronavirus restrictions has not been affected by this announcement. Employers will continue to pay at least 66.67% of each employee’s normal salary and will be able to reclaim that amount from the government up to a maximum of £2,083.33 per month. Employers will continue to be required to pay employer National Insurance contributions and auto-enrolment pension contributions in full, where applicable.

An employer can choose to pay their employees more than 66.67% of their normal pay but will only be able to reclaim this amount.

Additional support for the self-employed

The Self-Employment Income Support Scheme (SEISS), designed to support self-employed business owners, will also be expanded. Under the scheme, for the period from 1st November 2020 to 31st January 2021, self-employed business owners will now be able to receive a maximum grant of 40% of average monthly trading profits, rather than the previously announced 20%. This new grant is capped at £3,750, which is twice the previously announced maximum. Grants provided through the SEISS are treated as taxable income and are also subject to National Insurance contributions.

A second grant will cover the period 1st February 2021 to 30th April 2021 and the government has said that it will provide more details on this in due course.

For the latest news about the coronavirus crisis and its impact on small businesses, take a look at our small business coronavirus hub.

Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.

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