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Chancellor announces further support

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In a further package of support measures for businesses struggling through the covid-19 restrictions, the chancellor has announced changes to the job support scheme (JSS), a doubling of the self-employed income support scheme (SEISS) grant and a new cash grant for businesses.

The JSS starts on 1 November 2020. Under the revised version of the scheme the employer contribution to unworked hours is reduced to 5% (addressing the flaw in the original proposal where furloughed workers could cost the employer more per hour than those retained full time). The minimum hours requirement is reduced to 20% (down from 33%) so employees working just one day a week will be eligible.

These changes leave the employee in the same position as under the original version of the scheme (receiving 2/3rds of their pay for their furloughed time) but shifts the burden of the time not worked from the employer to the government.

The JSS for businesses legally required to close remains unchanged. As Chris Sanger, EY’s head of tax policy, points out: ‘One area unaddressed today is the treatment of workers who are unable to work at all, due to the closure of their premises. In this situation, the worker will still only receive two thirds of their wages. This will put them at a disadvantage to fulltime workers who are able to work one day and would receive almost three quarters of their usual wages.’ (For more on the JSS, see article by John Chaplin and Sarah Hewson (EY).)

The first grant of the extended SEISS covering the period from 1 November 2020 to 31 January 2021 is increased to 40% of average monthly trading profits, capped at £3,750. Previously, this was to have been 20% of average monthly trading profits capped at £1,875. The amount of the grant covering the period from 1 February 2021 to the end of April 2021 has not yet been announced.

Cash grants of up to £2,100 per month will be available primarily for businesses in the hospitality, accommodation and leisure sector which are adversely impacted by the restrictions in high alert level areas but which have not been required to close. These grants will be available retrospectively for areas which have already been subject to restrictions, and are in addition to higher levels of business support for local authorities moving into tier 3.

‘Rishi Sunak has once again demonstrated his agility in the face of the changing demands of the pandemic and his desire to limit the economic impact on all UK businesses,’ Sanger said. ‘He has shown his ability to adapt, changing the new system amended earlier this month, even before its implementation. However, the question on many commentators’ lips will be whether yet another iteration of the furlough will be needed in the near future.’

Issue: 1507
Categories: News