Coronavirus Job Support Scheme and VAT

New COVID-19 support for viable jobs until 30 April 2021

As anticipated, in his Winter Economy Plan, the Chancellor has outlined the new scheme to replace the Coronavirus Job Retention Scheme (CJRS).

The headlines of the new Job Support Scheme (JSS) are:

  • Aimed at ‘viable’ jobs where the employee is fully employed for at least 1/3 of ‘normal’ hours
    • Government then supports 1/3 of the remaining 2/3
    • Employers also supports 1/3 of the remaining 2/3
  • Employers fund 55% of the gross pay for 33% of hours worked
  • Employees on the scheme cannot be made redundant
  • Capped at £697.92
  • For all SMEs
  • For larger employers whose turnover has fallen

There will be a lot of detail to follow, but it is worth noting:

  • No details on NIC or pension support that was in Phase 1 of furlough.
  • No details on measure of turnover or by how much it needs to have fallen to qualify.
  • No support for the many jobs still on full furlough where it may not be viable for them to work 1/3 of their normal hours and the businesses to support more than 50% of the payroll cost.
  • Open to all businesses subject to SME and large business tests, even if they didn’t furlough.
  • May need a PAYE scheme and employees on payroll notified to HMRC by 23rd September.

Other considerations

In general a ‘guaranteed’ 77% gross pay rate is close to the CJRS scheme, which effectively provided 80% of gross pay. There is however a big disparity between the level of government support; reducing to 60% under the CJRS scheme compared to a maximum of 22% under the new JSS.

This scheme does not necessarily protect jobs, as we have seen a number of businesses report a ‘bounce back’ albeit who may now find that the next 6 months could well be very different.

A measure based on how well they have weathered the storm so far may leave many employers not qualifying and having to make staff cuts where they project the next 6 months will not be as good as the last.

The jobs retention bonus will remain and this is welcome, though the JSS and the CJRS bonus are still focused on jobs retained and the idea of viable jobs. There are many employees still on full furlough who may not be able to be provided with 33% of their hours and so not qualify and possibly still lose their jobs. The government plan to review the minimum 33% working requirement after the first three months of the scheme with a view to increasing it, subject to the state of the economy at the time.

VAT deferral

VAT deferred by businesses earlier this year that was due to be repaid by March 31st 2021 can now be repaid in interest free instalments over 11 months. The details have not yet been published but it is probable that businesses will need to apply to get this time to pay agreement. This is great news for all of those worrying about how to pay back large bills in 6 months’ time.

The above guidance is provided for your information and is our summary of the latest position as we see it. Please also note that Government advice is being updated on a daily basis.

If you are concerned about being impacted financially due to the Coronavirus, we are here to support you. If you require more specific advice on your situation, please get in touch with our specialist team on 01903 234094.

A version of this blog originally appeared on the website of MHA member firm, MacIntyre Hudson.