Expansion of the Job Support Scheme

12 Oct 2020

On Friday the Chancellor of the Exchequer announced an extension to the Job Support Scheme (“JSS”) which opens on 1 November. This extension is intended to provide further support to businesses required to close as a result of tighter lockdown measures as a result of the Coronavirus pandemic.

The key features of the new scheme are below:

  • The extension of the scheme will be available for six months from 1 November in line with the main JSS. Claims will be able to be made from December 2020 onwards

  • Employers can use the extension to the JSS even if they have not previously claimed grants under the current Job Retention (Furlough) scheme

  • As the main JSS the scheme is open to all employers with a UK bank account and a PAYE scheme registered on or before 23 September 2020. Any employee for which the JSS is claimed must have had an Real Time Information submission made for them by the employer on or before that date

  • This scheme will cover businesses that, as a result of restrictions set by one or more of the four governments in the UK, are legally required to close their premises. This includes premises restricted to delivery or collection only services from their premises

  • Businesses required to close as a result of specific workplace outbreaks by local public health authorities are not eligible for this scheme

  • The scheme will pay a grant to the employer calculated on the number of eligible employees who have been instructed to and cease work at the relevant premises. Employers will only be able to use the scheme for employees who cannot work (paid or unpaid) for that employer

  • Employers must be instructed to and cease work for a minimum of 7 consecutive (or calendar) days. An employee can return to work at a later date

  • Claims must not overlap and must be made monthly in arrears.

  • While under the main JSS the employer is required to pay 1/3rd of the employee’s normal salary for hours not worked with a government grant for 1/3rd, under the extended JSS the Government will pay two-thirds of the employee’s normal pay up to a limit of £2100 per month with no contribution from the employer (unless they choose to top up the employee’s pay)

  • These payments will be taxable, and employers will be required to cover employer NICs and automatic enrolment pension contributions in full, where applicable

  • 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

  • The employer must use the scheme to cover their employees’ wages and pay relevant payroll taxes. The whole of the grant must be used to meet employee costs

  • HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. Grants can only be used as reimbursement for wage costs actually incurred

  • Employers must agree the new scheme with the relevant staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request

  • HMRC intend to publish the name of employers who have used the scheme, and employees will be able to find out if their employer has claimed for them under the scheme

WR Partners comment

Full details of the scheme are not yet available – we will provide further guidance as and when published. Whereas the main JSS is only available to small and medium sized entities and larger employers (as yet undefined) whose turnover has dropped, there is nothing to suggest similar restrictions for larger employers here (which seems entirely sensible). There remains a stipulation however that larger employers using the expanded scheme will be expected not to pay dividends or make share buy backs while using the scheme.

HMRC have clearly learned from experiences with the furlough scheme and will check claims before they are made. In addition employees will be able to check whether employers have claimed for them under the scheme, clearly an attempt to combat situations where employers have previously claimed under the furlough scheme for employees who have continued to work.

While clearly the additional government contribution is welcome there is already considerable pushback on the scheme with suggestions the scheme is not sufficiently generous. One particularly disappointing aspect is that the scheme applies only to those businesses forced to close but does not extend to businesses further up the supply chain who will suffer because their customers are forced to close but where there is no requirement for these supplier businesses to close. As with the original furlough scheme it is clear that this newly extended JSS has been put together in a very short time and it is to be hoped that issues such as this will be addressed as the guidance is developed.

Written by Paul Brown | Tax Partner

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