In light of the recent announcements on employment and further COVID-19 restrictions made by Chancellor Rishi Sunak, Exmouth based Chartered Accountants Thompson Jenner LLP have put together a handy guide for working people.

End of Furlough Scheme

This scheme is coming to an end in October 2020. By way of a reminder this scheme paid 80% of the wages of workers placed on furlough up to a maximum of £2,500 a month.

From October 1, 2020, the employer will be required to pay 20% of the total wage cost of all staff that have been furloughed. The government will pay the remaining 60% of the monthly wage cost of a furloughed staff member (this will be capped at £1,875.00 per employee).

Job Support Scheme

Following the end of the furlough scheme the Chancellor announced the creation of the Job Support Scheme, which will commence from November 1, 2020. This scheme will last for six months and will be available to businesses irrespective of whether or not they used the furlough scheme that is being replaced.

To be eligible for this scheme an employee must work a minimum of 33% of their normal working hours. For the hours not worked the government and the employer will each pay 1/3 of the wages. It is important to note that businesses will not be able to issue redundancy notices to employees on this scheme.

It is our understanding that this scheme will be capped at £697.92 per month for an employee

So if an employee worked 33% of their normal wages they would in total receive 77% of their normal pay. Of this total 55% would be paid by the employer, whilst the remaining 22% would be paid by the government. So if an employee had a monthly salary of £1,500, they would get £495 for their hours worked, plus an additional £335 from the government and an additional £335 from their employer.

Alternatively, If an employee worked 50% of their normal hours they would receive 83% of their normal pay. For example an employee of £1,500 per month would get £750 of their normal pay, plus £250 from their employer and £250 from the government.

This scheme is aimed at small and medium businesses. Large businesses (which do not meet the criteria of an SME) will need to show they have been adversely affected in order to benefit from this scheme I.E. their turnover has decreased during the crisis.

Larger companies will also face restrictions on capital distributions to shareholders if they are in receipt of monies from this scheme.

Extension of Self-Employment Income Support Scheme

The Chancellor announced that the self-employment scheme will also be extended. The extension is expected to be on similar terms to the job retention scheme.

Pay as You Grow for Businesses

This scheme is available for all businesses that took government guaranteed loans during the crisis.

It was announced that these loans can now be extended from six to ten years. This will mean the monthly average repayment made by businesses will almost be halved.

The Chancellor also announced a new loan scheme will be introduced in January 2021.

Loan Application Extension

The deadline for applying for all coronavirus business loans has now been extended. The deadline is now 30 November 2020.

VAT Changes

VAT Increase Cancelled – Hospitality and Tourism Sectors

The planned increase of VAT in these sectors that was due to take place in January will now come into effect from 1 April 2021 instead.

VAT Deferral Changes

Lots of businesses benefited from being able to defer their VAT bill and pay it in March 2021 instead (as one lump sum payment). Instead, these business will have the choice to split the repayment into smaller interest free repayments over the course of eleven months.

Budget Cancellation

Finally, the Chancellor announced that the budget that was planned for November this year has been called off due to the current crisis.

If have come across any problems with the new rules or need advice click here for more information on Thompson Jenner LLP Chartered Accountants.