Government Grants & Scheme – November 2020

A – Job Support Scheme – JSS replaces Furlough

Since March 2020, there are several financial aid measures declared by the UK Government.  On 22 October 2020, UK Chancellor has announced a revised financial aid package for businesses.  Here is a quick simplified summary.

On 31 October 2020, the current “Furlough” scheme ends and a new initiative called “Job Support Scheme” starts.  Initially, we were informed that Furlough is a very simple scheme but in fact, it was complex and needed expert knowledge and the tools to deliver.  From 01 July 2020, it became more complex by adding “flexible Furlough” and changes to National Insurance & Pension contribution.  If this is not enough, the additional changes in government contribution from 80% to 70% to 60% made it more difficult to cope with.  If we include the additional element of Statutory Sick Pay, Holiday and Maternity Pay, we will need a Mathematical degree to understand all complications.

As an Accountant, we have managed to deliver our client’s support during this most difficult economic condition.  We know that all small businesses are battling to survive. We invested in additional resources, staff, and processes to maintain excellence in delivering the essential support to our clients. Now the Government has announced a replacement scheme “Job Support Scheme (JSS) you are once again informed, “It is simple”.  So let’s understand.

Key elements of JSS:

1. The scheme starts on 01 November 2020 and ends on 30 April 2021.
2. The scheme is for those businesses whose income will reduce because there is less demand for their product or services during this Covid-19 related period.
3. Example: Sam normally works for 5 days a week and earns £350 a week (i.e. £70 per day).  Her employer suffers reduced sales and instead of making her redundant, the employer puts Sam on the Job Support Scheme. Now she works for 2 days per week.
4. Employers will pay National Insurance.
5. Employers will pay Pension contributions.
6. Eligible employees must have been on payroll and have been included in a full payment submission made on or before 23 September 2020.
7. During the first three months of the scheme, 1 November 2020 to 31 January 2021, employees must work at least 33% of their usual hours.
8. Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee.
9. Job Retention Bonus:
   9.1 – £1,000 for every previously furloughed employee if they are still employed at the end of January 2021 to be paid to the employer.
   9.2 – Employees must earn at least £520 (the National Insurance lower earnings limit) a month on average between the beginning of November and the end of January 2021.

This is how the calculation works

Sam’s Pay

£70      No of days worked (1 day @ £70 per day)                                        £ 140

£280    No of days not worked (4 days @ £70 per day)

£350    Normal pay

 

£280 Not worked pay will be split into 3 parts

50% of  £280 = £140 will be paid by Government*                                        £ 140*

5% of   £280 = £14 will be paid by Employer                                                 £  14

Sam will receive                                                        £294

Sam will lose                                                             £126

 

*Government is capped at £1,541.75 per month

*Government is capped at £2.083.33 per month for those businesses which are closed.

The example above can be easily understood by the diagram below.

 

B – Self Employed

1. Self Employed Income Support grant will increase from 20% to 40% of 3 months’ average profit.
2. Based on 3 months’ average profit.
3. Maximum limit £3,750
4. Applicable period November 2020, December 2020 & January 2021

C – Local Restriction Support Grant – Tier 2 (England only)

Businesses affected in Tier-2 locked down will be eligible to claim a Local Restriction Support Grant.

1. Up to £2,100 per month.
2. 70% of £2,100 per month for those businesses which are closed.
3. Rateable values.
   3.1   £15,000 or less           £934 per month
   3.2   £15,000 to £51,000     £1,400 per month
   3.3   £51,000 or more         £2,100 per month

For more assistance on this matter contact Sterling Finance and we will be able to help. Our contact details are:

Sterling Finance UK Limited

Website: www.sterlingfinance.net

Email: info@sterlingfinance.net

Tel: 0161 339 4989