Covid-19 news
TheWinter Economy Plan FACED WITH the emerging threat of a second wave of coronavirus, on Thursday
24 September the chancellor of the exchequer, Rishi Sunak, announced the government’s action plan for jobs over what will inevitably be a challenging winter. (The plan can be read here: https://bit. ly/3i1KZKe.) The government’s plans have changed significantly since March, when the coronavirus job retention scheme (CJRS) was announced, and must adapt to the changing effects that COVID-19 has had both on our lives and the economy. Sunak stated: “Our approach to the next phase of support must be different to that which came before. The primary goal of our economic policy remains unchanged – to support people’s jobs – but the way we achieve that must evolve.” ● Job support scheme – As widely anticipated, the decision to close the CJRS at the end of October 2020 remains unchanged. However, from 1 November 2020 the CJRS will be replaced by the job support scheme (JSS) for a period of six months. The intention behind the new scheme is to protect viable jobs within organisations that are seeing a drop in demand due to the pandemic. The main principles of the scheme are as follows: ❍ In order to support only viable jobs, to be eligible for the scheme, employees must be working at least a third of their usual hours. Employers must pay for those hours worked. ❍ For hours not worked, the government and the employer will each pay one third of the employee’s equivalent salary. ❍ The level of the grant from the government will be calculated on the basis of the employee’s standard salary but capped at £697.92 per month. ❍ The scheme is available to many organisations in the UK, and there is no requirement for them to have previously used the CJRS to be deemed eligible.
❍ The scheme is aimed at only businesses that need it the most – all small- and medium-size firms will be eligible, but larger companies can only claim if their turnover has fallen by a third. ❍ Businesses can utilise both the JSS and the jobs retention bonus. ● Self-employment income support scheme – The government has also confirmed that it will continue to support the self-employed by extending the self- employment income support scheme (SEISS). An additional grant will be given to those currently eligible for SEISS and are continuing to actively trade but are seeing less demand due to the pandemic. The first lump sum will relate to the period November 2020 to January 2021 and be worth 20% of average monthly profits up to a maximum of £1,875. A fourth grant will be made available but will be tailored to respond to the ever- changing situation with the pandemic and cover the period from February 2021 to April 2021. ● Additional measures – Several additional measures were announced in order to help the UK return from the economic turbulence created by the pandemic, including the following. ❍ A pay-as-you-grow flexible repayment system will allow those businesses that took out a bounce back loan a longer
period in which to repay the loan. The length of the loan period will be extended from six to ten years. Interest- only periods and payment holidays will also be offered to help businesses that may struggle to repay. ❍ Coronavirus business interruption loan lenders are able to extend the maximum length of loans from six years to ten years, to help businesses repay their loans. ❍ The duration of the temporary value added tax (VAT) cut to 5% is extended. Businesses in the tourism and hospitality sectors – which are the sectors most impacted by the pandemic – will see the temporary 15% VAT cut extended until the end of March 2021. ❍ A new payment scheme will give businesses that deferred their VAT bills the option to settle the amounts due in smaller instalments. As opposed to paying a lump sum at the end of March 2020, they will be able to make eleven smaller interest-free payments in the financial year 2021/22. ❍ Self-assessment taxpayers will be given a separate additional twelve- month extension from HM Revenue & Custom via the ‘time to pay’ facility. This means that payments deferred from July 2020, and any due in January 2021, will now not be payable until January 2022.
Concerns The announcement quickly prompted comments from many businesses and sectors:
● Musab Hemsi, partner at LexLeyton, said: “Many features of the scheme also require a great deal of clarity before it goes live. At present we do not know which companies qualify and the meaning of ‘viable jobs’ and the qualifying criteria for a ‘large employer’.” ● Anne-Marie Winton, partner at Arc Pensions Law, said: “These new changes have the results to generate significant additional confusion amongst already stressed and confused employees and employers about how to correctly operate automatic enrolment.”
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| Professional in Payroll, Pensions and Reward |
Issue 64 | October 2020
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