Updated Covid guidance as of October 2020
Posted on 29th October 2020
The last few months have been unlike anything else we've had to face in our lifetime, and, as business owners, we're likely to find the coming months just as tough.
As always, we are doing our very best to keep you updated, and with that said, are the latest coronavirus updates for October...
Job Support Scheme
While the Coronavirus Job Retention Scheme is ending on 31 October 2020, the Chancellor has announced a new scheme – The Job Support Scheme - which will run from 1 November 2020 for six months. This has been updated since it’s original announcement and below are the latest details.
Employers are expected to provide a minimum of 20% of normal working hours to protect as many jobs as possible. Businesses will continue to pay its employees for the hours worked, however; part payment for the hours not worked will be shared between the Government and the employer.
The Employer will pay 5% of the normal salary for the hours not worked up to a maximum of £125 per month, with a discretion to pay more if they wish.
The Government will pay 61.67% of the normal salary for the hours not worked up to a maximum of £1,541.75 per month.
This will ensure that employees receive at least 73% of their normal salary where they earn £3,125 per month or less.
Additionally, Class 1 employer NICs and pension contributions will have to be paid by the employer and are not covered.
For example, if an employee has a normal monthly salary of £2,400 but from 1 November, they work 40% of their normal hours, they will receive the following amount under the new scheme.
|
Actual work paid by the employer (40% of £2,400) |
£960 |
|---|---|
|
Remainder of normal salary for hours not worked |
£1,440 |
|
Contribution paid by the employer (5% of £1,440) |
£72 |
|
Contribution paid by the Government (61.67% of £1,440) |
£888 |
|
Employee’s total taxable earnings received |
£1,920 |
As a result:
Employee’s payslip will show a gross pay of £1,920
Government will fund £888
Employer will pay £72 plus all the ERs NIC and pension contributions on £1,920
Please bear in mind that normal monthly salary will be calculated in the similar manner as that for Coronavirus Job Retention Scheme.
However, for employees who have been on furlough, the calculation will be based on their underlying usual pay/hours and not the amount paid during the furlough.
Employers who have been legally required to close their premises as a direct result of Coronavirus restrictions will be able to pay staff two-thirds of their normal salary, up to a maximum of £2,083.33 per month, and reclaim this in full.
Employers can claim under the Job Support Scheme online from 8 December 2020.
They will be paid monthly in arrears and will be reimbursed for the Government’s contribution.
Eligibility criteria
Employers with a UK bank account and UK PAYE schemes are eligible for this scheme. However, large businesses must:
Demonstrate that COVID-19 has affected their business negatively
Not make capital distributions, like dividend payments, whilst using the scheme
It is important to add that employers can still claim the Job Retention Bonus if eligible
For employees to be eligible for this scheme, they must be on an employer’s PAYE payroll on or before 23 September 2020.
It does not matter if neither the employer nor the employee used the Coronavirus Job Retention Scheme previously. Employees do not need to work in the same pattern each month and will be free to move on and off the scheme. With that said, each short term working arrangement must cover at least seven days. Please note that the employee must work at least 20% of their usual hours and be paid their standard contracted wage for those hours. During the time an employer is claiming under the scheme, employees cannot be made redundant or put on notice of redundancy.
Please note: It has not been confirmed yet if Directors are eligible. We hope to receive clarity on this in due course.
Further information about the extended Self-Employment Income Support Scheme
The last date for submission of claims for the second Self-Employment Income Support Scheme (SEISS) was 19 October 2020.
The SEISS is set to be extended but only for those currently eligible for SEISS and who are continuing to actively trade but face reduced demand because of the pandemic, as announced by the Chancellor. While the details on what is meant by these terms has not been published, they will mean that businesses that had to close during COVID-19 will not be able to claim in case they did not restart during the qualifying period. The third lump sum payment will cover the three months from November to the end of January 2021 and will be worth 20% of average monthly profits up to a total of £1,875; capping average monthly profits at £3,125 (£3,125 x 20% x 3 months = £1,875).
The Government will also review the level of the second grant and set it in due course. At the same time, the Chancellor has also announced a fourth grant which will cover the period from February to April 2021. It is believed that the individuals will be contacted directly by the HMRC as with the previous grants. However, HMRC has not yet announced details of how to apply. When they do, we will update our resources.
Next steps and further information
We have a comprehensive guide about the latest updates and coronavirus here - and please feel free to join our dedicated coronavirus Facebook support group here. This is free for both clients and non-clients.
You can also access our coronavirus support hub on the website here, which has heaps of free resources and information which we update regularly.
Written by
Nicola J Sorrell -
Effective Accounting
Founder | Xero Champion | IR35 Expert
Tagged as: Coronavirus
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