Remember the olden days when there were one, maybe two, fiscal announcements a year? 2020 has been a year like no other already and not least in the amount of financial legislation which has been issued, updated or withdrawn.

This week was no exception as Chancellor, Rishi Sunak, announced a range of broadened business support measures for businesses and workers on Thursday covering:

Whilst the changes to the JSS are welcomed (it is now much more attractive for employers than when it was first announced and it will often be more beneficial than the existing CJRS scheme), calculating the implications and administering the scheme(s) will be complex for many businesses.

The additional business and self-employed grants have been well-trailed and will be appreciated by those eligible. However, there will be many businesses who fall outside the eligibility criteria but which are nonetheless directly affected by the extra restrictions in the hospitality and leisure sector.

Although some businesses will undoubtedly still be forced to make difficult decisions on redundancies as difficult or impossible trading conditions continue, this extra support may help to protect some jobs and businesses over the coming months.

Changes to the Job Support Scheme (JSS)

The JSS comes into effect on 1 November and is due to run for 6 months (to be reviewed in January 2021). It replaces the Coronavirus Job Retention Scheme (CJRS) which closes at the end of October.

These recent changes mean that the JSS is now available to all businesses impacted by COVID where eligible employees work a minimum of 20% of their normal hours (it was originally set up to require a minimum working time of 33% of normal hours). There is also now an additional ‘JSS Closed’ scheme for businesses that are legally required to close some or all of their premises due to Government restrictions imposed at any time over the next 6 months.

How does it work?

Under both the open and closed JSS schemes, eligible employees must have been included on a Real-Time Information (RTI) payroll submission on or before 23 September 2020 and these temporary arrangements (which alter their employment contracts) must be agreed with the employees in writing. Under either version of the scheme, employees cannot be made redundant or put on notice for redundancy for the period that the grant is being claimed for in respect of that employee.

Other criteria are summarised below:

SchemeJSS openJSS closed
Working hours:Minimum of 20% of normal working hoursNo minimum requirement
Government pays:61.67% of hours not worked, up to a cap of £1,541.75 per month66.67% of an employee’s normal wage up to a limit of £2,083.33 per month
Employer pays:100% of hours worked

5% of hours not worked, up to a cap of £125 per month

Employer’s NI and employer’s pension contributions on all amounts paid

Any voluntary top-up of wages for non-working hours agreed with the employee

Employer’s NI and employer’s pension contributions on all amounts paid

Any voluntary top-up of wages for non-working hours agreed with the employee

Employee receives:An employee with a normal wage of less than £3,125 per month will receive a minimum of 73% of their monthly wage (including the 20% minimum hours actually worked)

Employer’s pension contributions at current % rate

66.67% of normal wage up to a cap of £2,083.33 per month

Employer’s pension contributions at current % rate

Top up of wages for non-working hours allowed?Yes (this is a change to the original JSS terms)Yes
Claims process:Monthly – paid in arrears

First claims from 8 December 2020

Monthly – paid in arrears

First claims from 8 December 2020

Other terms:Hours worked can be varied provided this is a minimum of 20% of normal working hours

Scheme can be stopped and restarted for any eligible employee

Employees must be unable to work for a minimum of 7 consecutive days

Scheme can be stopped and restarted for any eligible employee

What else is there to consider?

To take full advantage of the scheme from 1 November, businesses will need to act fast to fully assess the implications for their business and set up appropriate agreements with their employees.

It’s feasible that a single business could be claiming under both schemes at the same time (though not for the same employee on the same day!).  For example, if a hospitality business has one venue in a Tier 3 location which is required to close, and another venue in a Tier 1 or 2 location which can remain open.

It’s also worth noting that if you decide to utilise the JSS, you’ll still be able to claim the Job Retention Bonus of £1,000 in February next year for each eligible employee that was furloughed under the CJRS and remains employed by you until 31 January 2021.

Please get in touch with your usual Sagars team member if you have any queries about the Job Support Scheme, or contact our payroll manager Andrew Senior.

Business grants explained

In addition to the grants that are already available to businesses in Tier 3 areas which are legally required to close, the Chancellor announced additional funding for Local Authorities (LAs) to provide grants to support businesses in Tier 2 areas which are not legally closed, but which are nevertheless severely impacted by the restrictions on socialising.

The scheme will initially run until April 2021, with a review point in January. Those areas which have already been subject to restrictions on socialising for several months, before the tiering system was introduced, will have funding backdated to the point at which those restrictions began.

Funding will be provided to LAs based on the number of hospitality, hotel, B&B and leisure businesses in their area with businesses expected to receive grants equivalent to 70% of the grants for which legally closed businesses are eligible (based on their premises’ rateable value) – although the precise funding allocated to each business will be down to the LA.

Implied grant amounts

Rateable value of premisesTier 2Tier 3
£15k or under£934 per month£1,334 per month
Between £15k – £51k£1,400 per month£2,000 per month
£51k£2,100 per month£3,000 per month

LAs will also receive a 5% top-up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, but which may not be in the business rates system. Any businesses which believe they could be eligible for any of this funding should contact their LA directly as each LA has the freedom to determine the precise eligibility criteria for these grants and will have their own mechanisms for application and payment.
Contact your usual Sagars team member if you have any queries about the support that’s available for your business, or get in touch with Paul Lodder.

Self-employed grants

The self-employed have not been left out of the enhanced support if they either temporarily cannot trade or are experiencing reduced demand due to COVID-19. Only those who were eligible for the initial SEISS grant one and grant two can apply.

Grants will be paid in two lump sum instalments each covering 3 months with the first period running from the start of November 2020 until the end of January 2021. The first instalment will be a taxable grant calculated at 40% of three months’ average trading profits capped at £3,750. The level of the second instalment (covering the 3 months from February to the end of April 2021) will be reviewed by the Government and set in due course.

If you have any queries regarding the support available for the self-employed, check out our COVID Hub, contact your usual Sagars team member or get in touch with Helen Furniss.

Ali Jones
Ali Jones
Consulting & Corporate Finance Partner

Ali provides strategic planning, consulting and corporate finance solutions to help clients to deal effectively with problems and make the most of business opportunities.

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