New financial support measures announced

The Chancellor, Rishi Sunak, has delivered his third major statement to the House of Commons in less than a month. This followed the Winter Economy Plan on 24 September and further announcements on 9 October that expanded the scope of the Job Support Scheme and introduced new grants for businesses forced to close because of local or national lockdown measures.

In his third statement delivered on 22 October, the Chancellor has significantly revised previously announced measures to help protect jobs across the UK whilst the country faces a fresh spike of the virus and a winter of uncertainty.

These measures are intended to offer increased support through the existing Job Support and self-employed schemes and to expand the availability of business grants to support companies in Tier 2 areas of England.

1. Job Support Scheme

Under the original terms of the Job Support Scheme, due to start on 1 November 2020, employees would have had to work at least one-third of their hours, paid as normal, in order to qualify. The government and employer would then each have covered one-third of any remaining hours the employee is not working.

Under the revised scheme announced today, the employer contribution to those unworked hours has been reduced to just 5% (from 33%), and the minimum hours requirements for staff has been reduced to 20% (from 33%). The Government will now fund up to 61.67% of wages for hours not worked, up to a maximum payment to £1,541.75 per employee.

These changes mean an employee will need to work just one day a week to be eligible for the scheme. The use of the scheme will be available to businesses in all alert levels.

The previously announced Job Retention Bonus, allowing qualifying businesses to claim a £1,000 for each CJRS participating employee, will remain. Employers can claim both the Job Retention Bonus and funding through the Job Support Scheme.

The Job Support Scheme will replace the existing Coronavirus Job Retention Scheme (CJRS) which ends on 31 October.

2. Self-Employment Income Support Scheme Grant Extension

The Chancellor also announced that the grants for the self-employed are to be doubled to 40% (from 20%) of previous qualifying earnings.

The initial lump sum will cover three months of profits from 1 November 2020 calculated as 40% of average monthly profits, up to a maximum total of £3,750. 

The extended scheme will apply for 6 months from 1 November 2020 with an initial taxable grant made available to those who continue to trade and meet the eligibility requirements.

An additional second grant will be available from 1 February 2021 to 30 April 2021. The level of this second grant amount is subject to review and will be set in due course.

3. Business grants

The Chancellor also announced an extension to the business grant measures previously announced for businesses in England that are forced to shut as a result of lockdown measures.

This extension to the scheme could benefit some 150,000 businesses in the hospitality, accommodation and leisure sector who are not legally closed but who are severely impacted by Tier 2 restrictions in England. These grants can be backdated to August in affected areas.

These businesses will be eligible for cash grants of up to £2,100 per month. The grant figures are based on 70% of the grant amounts (up to £3,000) provided to businesses that are closed.  

The amount affected businesses will be able to claim from their local authority depends on their rateable value:

  • Small businesses with a rateable value of or below £15,000 will be able to claim £934 per month.
  • Medium-sized businesses with a rateable value between £15,000 and £51,000 will be able to claim £1,400 per month.
  • Larger businesses will be able to claim £2,100 per month.

It will be up to Local Authorities to decide exactly which businesses are eligible to receive the grants. Local Authorities will also receive a 5% top up to help other affected businesses.

Gaming behind the wheel?

Unbelievably, it has been illegal to make phone calls or text while driving a car, but not illegal to play games or take photos.

Clearly, this loophole is begging to be closed and new legislation proposed, 17 October 2020, will aim to do just that. A Government announcement says:

People using a hand-held mobile phone in all circumstances while driving will be breaking the law, under new Government plans unveiled by Roads Minister Baroness Vere today (17 October 2020) to close a legislation loophole and improve road safety.

It’s already a criminal offence to use a hand-held mobile phone to call or text while driving, but not for other actions such as taking photos. While still distracting, drivers have escaped punishment due to a legal loophole where such actions aren’t seen as ‘interactive communication’, and therefore do not fit the current definition of the offence.

Now, following a review of the offence, a consultation has been launched on bringing the law into line with modern technology – meaning drivers caught taking photos, playing games or scrolling through a playlist behind the wheel will be clearly breaking the law on mobile phone use.

Recognising that mobile phones are commonly used as a method of payment – such as at drive-throughs – an exemption will apply under the new proposals set out by government today to contactless payments, if a vehicle is stationary, and if goods or services – such as a takeaway meal – are delivered immediately.

Job Support Scheme Expansion

On Friday 9 October, the Chancellor, Rishi Sunak announced an extension to the Job Support Scheme (JSS). The expanded scheme will include additional support for employees of businesses that are forced to close because of local or national lockdown measures. The extended scheme will run in parallel with the main JSS for 6 months from 1 November 2020. The scheme rules are due to be reviewed in January 2021.

Under the specific terms of the expanded scheme, the government will pay two-thirds (67%) of employees’ salaries, up to a maximum of £2,100 a month. Employees must be off work for at least 7 consecutive days to benefit from the expanded scheme. When premises re-open the regular JSS rules will apply, whereby employees must work at least one-third of their hours, paid as normal. The government and employer will then each cover one-third of any remaining hours the employee is not working. 

Businesses will only be able to claim the extended grant whilst they are subject to specific lockdown measures that require the closure of their business premises. The expanded scheme will also be available to businesses restricted to delivery or collection services from their premises. However, businesses required to close as a result of specific workplace outbreaks are not eligible for this scheme. 

In line with the main JSS, the grant will be paid in arrears, reimbursing the employer for the government’s contribution. The claim portal will be launched from December 2020 and claims will be paid on a monthly basis. This means that employers will have to use cash reserves or borrow money in order to pay their employees’ wages in advance of receiving the monthly grant. 

Employees of firms that are legally closed in the period before 1 November are eligible for the Coronavirus Job Retention Scheme (CJRS). Interestingly, the new JSS expansion is more generous than the current CJRS, which pays 60% of an employee’s salary up to £1,875 a month.

The JSS grant does not cover Class 1 National Insurance Contributions or pension contributions and employers will have to continue making these contributions. Employers will not be required to contribute towards wages whilst under lockdown measures but can make top up payments if they wish. 

To be eligible for the JSS or JSS expansion, employees must have been registered on their employers PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment in respect of that employee must have been made to HMRC on or before 23 September 2020.

The JSS scheme (including the expansion scheme) is available to businesses that meet the necessary criteria even if they had not previously participated in the CJRS. 

New cash grants

The Chancellor also announced that businesses in England that are forced to shut as a result of lockdown measures will be eligible for grants of up to £3,000 per month, payable every two weeks. Businesses will be eligible to claim after two weeks of closure.

The amount businesses will be able to claim from their local authority depends on their rateable value:

  • Small businesses with a rateable value of or below £15,000 will be able to claim £1,300 per month.
  • Medium-sized businesses with a rateable value between £15,000 and £51,000 will be able to claim £2,000 per month.
  • Larger businesses will be able to claim £3,000 per month.

The government is also extending the scheme to include businesses that have been forced to close on a national rather than a local basis. 

The devolved administrations in Scotland, Wales and Northern Ireland will receive an additional £1.3 billion in guaranteed funding in order to offer similar measures to affected businesses. This takes the additional funding to the devolved administrations this year to at least £14 billion.

Grants overclaimed?

Any business that has overclaimed a Coronavirus Job Retention Scheme (CJRS) grant must pay back the overpayment to HMRC. The rules outlined below for paying HMRC back an overclaim also apply to businesses that would like to make a voluntary repayment because they do not want or need the grant. 

Any overpayments can be corrected in your next claim. If you confirm that your business has been overpaid, the new claim amount will be reduced to reflect this overpayment. You will need to keep a record of this adjustment for six years.

Alternatively, if you are not making another claim under the CJRS then you can request a payment reference number and pay HMRC back within 30 days. This request needs to be made online.

HMRC’s guidance states that if you have overclaimed a grant and have not repaid it, you must notify HMRC by the latest of either:

  • 90 days after the date you received the grant you were not entitled to
  • 90 days after the date you received the grant that you were no longer entitled to keep because your circumstances changed
  • 20 October 2020

Note that the deadline of 20 October 2020 is fast approaching. Late notifications of overclaimed grants could trigger the imposition of penalties. Any claims based on inaccurate information can be recovered by HMRC. However, HMRC has stated that they will not be actively looking for innocent errors in their compliance approach.

Having to repay HMRC is unlikely to be a cost that employers will have thought about, so it is important to ensure that all claims made for furloughed employees are accurate. Employers are required to keep full records relating to any CJRS claims (including adjustments) for a period of six years. 

Claiming the Job Retention Bonus

New guidance has been published on claiming the Job Retention Bonus. The Job Retention Bonus provides for a £1,000 bonus payment to employers that bring back an employee that was furloughed under the Coronavirus Job Retention Scheme, and continuously employs them for at least 3 months after the furlough scheme ends.

The £1,000 Government bonus will be payable for every employee retained under the stated terms. The bonus must be claimed between 15 February 2021 and 31 March 2021. No further claims will be accepted by HMRC after 31 March 2021. 

Employers will still be able to claim the Job Retention Bonus even if they are receiving support from the recently announced Job Support Scheme.

In order to make a claim the employer must have:

  • made an eligible claim for the employee under the Coronavirus Job Retention Scheme
  • kept the employee continuously employed from the end of the claim period of their last Coronavirus Job Retention Scheme claim for them, until 31 January 2021
  • ensured their employee is not serving a contractual or statutory notice period on 31 January 2021 (this includes people serving notice of retirement)
  • paid the employee an amount in each relevant tax month and enough to meet the Job Retention Bonus minimum income threshold. To meet the minimum income threshold the employer must have paid the employee a total of at least £1,560 (gross) between 6 November 2020 and 5 February 2021.

Employers may be able to claim for employees who have transferred to them under TUPE or due to a change of ownership.  To claim the bonus for these employees the employer must have furloughed and successfully claimed for them under the CJRS, as their new employer.

Employers will not be able to claim for employees who transferred after the CJRS closes on 31 October 2020. HMRC’s guidance is due to be updated by the end of January 2021 with details of how to access the online claim service.

COVID review of salary sacrifice arrangements

The tax and NIC advantages of certain benefits provided as part of a salary sacrifice arrangement were removed from 6 April 2017. The change effectively removed the Income Tax and employer NIC advantages of certain benefits provided as part of salary sacrifice arrangements such as mobile phones and workplace parking.

Where these benefit valuation rules apply, the value of the benefit for tax and NIC purposes is the higher of the amount of cash pay given up and the taxable value of the benefit in kind. This is known as optional remuneration arrangements (OpRA).

However, under a transitional plan the old salary sacrifice rules continue until 6 April 2021 for:

  • the provision of a car with emissions of more than 75g CO2/km
  • provided living accommodation
  • the payment of school fees

The new rules will not apply to these types of benefits until 6 April 2021, unless employees vary or renew their arrangements.

An arrangement is not regarded as being varied if the variation of the arrangement is only directly in connection with coronavirus.

Kickstart scheme who can apply

The new £2 billion Kickstart scheme will enable employers to offer young people on Universal Credit – and at risk of long-term unemployment – state-subsidised work placements for six months. The Kickstart scheme is available to qualifying 16 – 24 year olds in England, Scotland and Wales.

The government will fully fund each “Kickstart” job by paying 100% of the age-relevant National Minimum Wage, National Insurance and pension contributions for 25 hours a week. Employers will be able to top up this wage and offer Kickstarters training and support to find a permanent job. The government will also help by paying employers £1,500 to set up support and training for people on a Kickstart placement.

Any employers, regardless of size, can apply for funding. The application process is already open and the first jobs under the scheme should be available from November. It is important to note that the job placements created with Kickstart funding must be new jobs. They must not replace existing or planned vacancies or cause existing employees or contractors to lose or reduce their employment.

Each application for funding by an employer should include details of help the participants will receive to develop their skills and experience, including:

  • support to look for long-term work, including career advice and setting goals
  • support with CV and interview preparations
  • supporting the participant with basic skills, such as attendance, timekeeping and teamwork

Once a job placement is created, it can be taken up by a second person once the first successful applicant has completed their 6-month term.

SEISS – claims deadline 19 October 2020

The deadline for making a claim under the second round of the Self-Employment Income Support Scheme (SEISS) is 19 October 2020. The second grant covers the quarter to 31 August 2020. This grant will provide up to £6,570 for the quarter (£2,190 per month) paid in a single instalment. These figures are based on 70% of eligible earnings (previous quarter 80%). Claims for the first grant have now been closed.

The following are some of the most important eligibility criteria for the scheme:

  • The applicant must have been adversely affected by coronavirus on or after 14 July 2020.
  • Applicants must be self-employed or a member of a trading partnership, voluntary work, or duties as an armed forces reservist.
  • Have filed a tax return for 2018-19.
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020-21,
  • Have trading profits of less than £50,000 and more than half of total income from self-employment.
  • Individuals can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.

It is possible for a qualifying self-employed person to qualify and claim for the second grant even if they had not claimed / qualified for the first grant. Claims are usually paid within six working days of submission.

The scheme in its current form has now ended but a SEISS extension will apply for 6 months from 1 November 2020 with an initial taxable grant made available to those who continue to trade and are currently eligible for the SEISS. The initial lump sum will cover three months of profits from 1 November 2020 calculated as 20% of average monthly profits, up to a total of £1,875. An additional second grant will be available to qualifying applicants from 1 February 2021 to 30 April 2021.

UK beef exporters given USA boost

The first shipments of UK beef departed for the USA last week. 30th September 2020, marking an historic moment for UK farmers and food producers.

Following the USA’s longstanding ban on EU beef – introduced in the wake of the BSE outbreak in 1996 – market access for UK beef was granted in March 2020. Welsh beef producers now have access to the US market for the first time in over 20 years.

The news means the sector can now begin to reap the economic benefits of trade with the US – with industry estimating beef exports will be worth £66 million over the next five years.

The first four UK food businesses, based in Wales and Northern Ireland, have now been officially listed by the US Department of Agriculture’s Food Safety Inspection Service as eligible to export UK beef to the USA. 

It is expected that in the coming months, more food businesses across Wales and the rest of the UK will be able to take advantage of this exciting new export opportunity.

The US Food Safety and Inspection Service (FSIS) Audit Report, a crucial step leading to British exporters being able to sell to the US, was published in March 2020, and confirmed that UK meat hygiene systems and controls are of a suitable, equivalent standard for products to be imported to the USA. The report noted that the whole of the UK meets the US’s production requirements, therefore beef from England, Wales, Scotland and Northern Ireland is eligible for export.

Employee eligibility for Job Support Scheme

The new Job Support Scheme will be introduced on 1 November 2020 as part of the government drive to help protect jobs where businesses are facing lower demand over the winter months due to coronavirus.

This scheme has been designed to support viable jobs and employees must work at least one-third of their hours, paid as normal, in order to qualify for the scheme.

The government and employer will then each cover one-third of any remaining hours the employee is not working. Employees will therefore forego one-third of their pay for the hours that they have not been working. The maximum amount of the government contribution to the scheme will be capped at £697.92 per employee per month. 

To be eligible, employees must meet the following conditions:  

  • Be registered on their employers PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment in respect of that employee must have been made to HMRC on or before 23 September 2020.
  • For the first three months of the scheme, from 1 November 2020 – 31 January 2021, the employee must work at least 33% of their usual hours. After the first 3 months of the scheme, the government will consider whether to increase this minimum hour's threshold.
  • Employees will be able to cycle on and off the scheme and do not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven days. Any changes to the employment contract must be made by agreement and notified in writing.