Job Support Scheme: new programme will help small businesses support staff

All small companies are eligible for the Job Support Scheme, the Treasury’s latest employment programme.

All small and medium-sized enterprises (SMEs) may take part in the Job Support Scheme, the latest government initiative, when it begins on 1 November. It replaces the Job Retention Scheme. The Treasury plans to keep the new programme in place for at least six months. 

Ministers haven’t yet said how they will define SMEs, but are likely to adopt the standard definition: a turnover of less than £25m, fewer than 250 employees and assets of less than £12.5m.

Meeting the state halfway

The Job Retention Scheme has enabled employers to claim up to 90% of the cost of workers’ pay, including employers’ national insurance and pension contributions. Its replacement will require employers to meet more than half of these costs.

Each member of staff enrolled in the scheme must work at least a third of their normal hours, with employers responsible for paying wages for this time. 

For hours not worked, employees are entitled to two-thirds of their normal wages; the cost of this will be split equally between employers and the government, though the scheme caps the taxpayer’s contribution at £697.92 per month. That cap effectively means that workers earning up to around £38,000 a year are fully covered by the scheme. Employers also remain responsible for paying employers’ national insurance and pension contributions.

This means an employee working 33% of their normal hours and earning less than the £38,000 cap will receive 77% of their normal pay. Employers will be on the hook for 55% of normal pay (plus national insurance and pension contributions), with the state paying the other 22%.

The scheme can be used for any member of staff employed on 23 September. Staff are entitled to work more than a third of their hours and still be eligible, and there is no requirement to have previously been on furlough. Employers can vary their use of the scheme over time, but each working arrangement must cover a minimum pay period of at least seven days. The arrangements also have to be agreed in writing with staff.

You can’t put staff on notice of redundancy while they’re in the Job Support Scheme, a significant change from its predecessor. But employers can still claim the £1,000 bonus for staff who have previously been furloughed but remain on the payroll on 31 January 2021. 

For SMEs with enough work to provide staff with at least some hours, the new scheme could be an important stopgap until business recovers. But firms still in real difficulty may now need to consider job losses when the furlough scheme comes to an end.

More help for the self-employed

For self-employed workers, further support comes in the form of two more rounds of the Self-Employment Income Support Scheme (SEISS), albeit with much less generous payouts. 

The government will offer a third SEISS grant to cover the time from the start of November to the end of January, and a fourth payment for February to April. The third grant will be worth 20% of your trading profits for three months, up to a maximum of £1,875. That is much less than in the first two rounds, which capped payouts at £7,500 and £6,570. Nor has the Treasury announced what the fourth grant will be worth.

What you get will depend on your individual circumstances, but these extra rounds of the SEISS will work in the same way as before. Your grant is based on an average of your profits over the past three tax years, or your 2018-19 profits if you have been self-employed for less than three years.

Only those eligible for the current SEISS will be able to apply for the next two rounds. The basic eligibility criteria are that you must have filed a tax return for the 2018-19 financial year; you must earn more than 50% of your total income from self-employment; and your average annual profit must not exceed £50,000. You also need to have been adversely affected by Covid-19. The government hasn’t yet said when applications for the new SEISS rounds will open.

Recommended

Early repayment charges: should you abandon your fixed-rate mortgage for a new deal now?
Mortgages

Early repayment charges: should you abandon your fixed-rate mortgage for a new deal now?

Increasing numbers of homeowners are paying an early repayment charge to leave their fixed-rate mortgage deal early, and lock in a new deal now. Shoul…
30 Sep 2022
Energy meter reading day: why you need submit your gas and electricity readings now
Personal finance

Energy meter reading day: why you need submit your gas and electricity readings now

Energy meter reading day - you need to submit your gas and electricity readings as soon as possible ahead of the October energy price increase
30 Sep 2022
Should you fix your mortgage? Here are the best rates available now
Mortgages

Should you fix your mortgage? Here are the best rates available now

Rising interest rates look set to spring a nasty surprise on millions of homeowners next year. You need to take steps today to protect yourself from a…
30 Sep 2022
Why the Bank of England intervened in the bond market
Government bonds

Why the Bank of England intervened in the bond market

A sudden crisis for pension funds exposed to rapidly rising bond yields meant the Bank of England had to act. Cris Sholto Heaton looks at the lessons …
30 Sep 2022

Most Popular

Why everyone is over-reacting to the mini-Budget
Budget

Why everyone is over-reacting to the mini-Budget

Most analyses of the chancellor’s mini-Budget speech have failed to grasp its purpose and significance, says Max King
29 Sep 2022
How the end of cheap money could spark a house price crash
House prices

How the end of cheap money could spark a house price crash

Rock bottom interest rates drove property prices to unaffordable levels. But with rates set to climb and cheap money off the table, we could see house…
28 Sep 2022
Why UK firms should start buying French companies
UK stockmarkets

Why UK firms should start buying French companies

The French are on a buying spree, snapping up British companies. We should turn the tables, says Matthew Lynn, and start buying French companies. Here…
28 Sep 2022