TAX CORNER: Further help for businesses with the Job Support Scheme
Q: Can you please explain how the new Job Support Scheme will work? I run a small business based in a town centre and it has been impacted by Covid.
A: The Job Support Scheme (JSS) is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19. The scheme will open on November 1 2020 and run for six months and replaces the Coronavirus Job Retention Scheme.
Initially, when the JSS was announced, the business will continue to pay its employee for time worked, but the cost of hours not worked will be split between the employer, the UK Government (through wage support) and the employee (through a wage reduction). The aim is to ensure that as many workers keep their job.
Under new changes to the scheme, you'll now only need to work at least 20 per cent of your hours. Previously, the Government had said employees would need to work a third of their usual hours. As before, you'll be paid in full by your employer for the time you work.
For the hours you don't work, the cost will still be split three ways – but your employer will now contribute much less. When the Government originally announced the scheme, it said your pay for the hours you don't work would be split three ways – a third would be covered by the state, a third by your employer and you would lose a third.
However, that's now changed – your employer will only need to cover 5 per cent of your wage for the hours you don't work, and 62 per cent will be covered by the state. You as an employee will still lose a third.
In total, those on the scheme will now earn at least 73 per cent of their usual pay – unless they earn enough to hit the Government's contribution cap of £1,541.75 per month.
The new JSS scheme will also work for those businesses required to close as a result of coronavirus restrictions. The government will support eligible businesses (mainly those in the hospitality, accommodation and leisure sectors) by paying two thirds of each employees' salary (or 67 per cent), up to a maximum of £2,100 per month.
Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
All employers with a UK bank account and UK PAYE schemes can claim the grant and it should be noted that neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme.
Another important point to note is that large businesses will have to meet a financial assessment test, so the scheme is only available to those whose turnover is lower now than before experiencing difficulties from Covid-19. There will be no financial assessment test for small and medium enterprises (SMEs).
In relation to employees, they must be on an employer's PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before September 23 2020.
There will be flexibility with the scheme and employees will be able to register on and off the scheme and they 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.
“Usual wages” calculations will follow a similar methodology as for the Coronavirus Job Retention Scheme. Employees who have previously been furloughed, will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.
The scheme will be open for claims from 1 November 2020 to the end of April 2021. Employers will be able to make a claim online through gov.uk from December 2020 and they will be paid on a monthly basis. The grants will be payable in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.
Employers must agree the new short-time working arrangements with their 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.
Feargal McCormack (email@example.com) is managing director of PKF-FPM Accountants (www.pkffpm.com). The advice in this column is specific to the facts surrounding the question posed. Neither the Irish News nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.