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Government expands Job Support Scheme and help for self-employed

Government expands Job Support Scheme and help for self-employed

The Government's Job Support Scheme will be extended and the next self-employed income support grant doubled, Chancellor Rishi Sunak announced today, while businesses in England affected by 'tier two' restrictions will be given access to new cash grants.

Amid calls for more support for firms and employees affected by tightening coronavirus restrictions, the Chancellor announced the following new measures:

  • The Job Support Scheme will be extended – you'll now only need to work 20% of your hours to be eligible. For the hours you don't work, employers must only contribute 5% of your salary rather than the 33% previously. See full detail on the Job Support Scheme changes below.

  • The next Self-Employment Income Support Scheme grant will be doubled, and will now be worth up to £3,750 – but crucially you'll need to have been affected by reduced demand to claim. This is a significant change – with previous grants there were broader criteria and you could claim for any "adverse impact". See full detail on additional help for the self-employed below.

  • Businesses in England affected by 'tier two' restrictions can apply for new grants likely worth up to £2,100/month. See full detail on 'tier two' business grants below.

See our Coronavirus Employees' Help and Coronavirus Self-Employed & Small Limited Company Help guides for a full rundown of the different support schemes available.

How is the Job Support Scheme changing?

The Job Support Scheme is due to replace the furlough scheme after it ends on Saturday 31 October, and will run for six months. But important changes to the way it'll work were announced today. Here's what you need to know:

  • To qualify for the scheme, you'll now only need to work at least 20% 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% of your wage for the hours you don't work, and 62% 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% of their usual pay – unless they earn enough to hit the Government's contribution cap. The state's contribution here is capped at £1,541.75 per month (up from the maximum £697.92 per month originally). The Government says this equates to a cap on wages of about £3,125/mth, or £37,500/year, though we're double-checking this figure with the Government. What this means in practice is:

    - If you're NOT affected by the cap (so earn LESS than around £37,500/yr)...
     then if you're on the Job Support Scheme and work at least 20% of your hours, you should get at least 73% of your usual pay. (This is slightly down on the minimum 77% you'd have got working a minimum 33% of your hours under the original version of the scheme). Some 24% of your pay will come from your employer and about 49% from the state – the rest you won't get.

    - If you ARE affected by the cap (so earn MORE than around £37,500/yr)... 
    you could get less than the 73% – though how much less will depend not only on how much you earn, but whether employers' contributions are also capped. We're checking this and will update this story when we know what the rules are.

    Here's a table showing how earnings can vary depending on how many hours you work:

How much of your normal pay you'll get

% of normal hours worked Your employer pays... The Government pays... Total you receive
20% 24% 49% 73%
33% 36% 41% 77%
50% 52% 31% 83%
70% 71% 19% 90%

Based on someone earning up to around £37,500/yr.

  • These changes apply UK-wide – but not all employers can take part. As before, only certain employers can participate.

    Small and medium-sized businesses are eligible (the Government hasn't given a precise definition for this, but the usual definition of a 'small and medium enterprise' is one which has at least two of the following – turnover of less than £25 million, under 250 employees and gross assets of less than £12.5 million). Larger businesses can take part, but must prove they've been adversely affected by coronavirus and can't pay dividends while using the scheme.

    Employers can take part regardless of whether they used the furlough scheme – those retaining furloughed staff on shorter hours can be part of the scheme and still get the job retention bonus announced earlier this summer. Employees cannot be on a redundancy notice while taking part.
  • Other eligibility requirements and rules seem to be unchanged – though we're checking. There doesn't seem to be any change to other rules governing the scheme, so:

    - To be eligible, you must have been on your employer's PAYE payroll on or before 23 September 2020. 
    - Those on zero-hours contracts and irregular hours WILL be eligible. The Government says there will be "calculations for those with variable working patterns", but it's not yet given details – it says it'll publish guidance in due course.
    - You can go on and off the scheme. The Government says 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-term working arrangement must cover a minimum period of seven days.

For more details on the Job Support Scheme, see our Coronavirus Employees' Help guide.

What additional help will the self-employed get?

The Government's also announced changes to the Self-Employment Income Support Scheme (SEISS) – here are the key details about what support's available:

  • As previously announced, there will be two more taxable SEISS grants (the scheme's third and fourth). The third will cover the period from the start of November to the end of January, and the fourth from the start of February to the end of April. We still don't yet know when applications will open or when money will start reaching people's bank accounts – the Government says this'll be confirmed in due course.

  • The third grant will now cover 40% of trading profits for three months, capped at £3,750. This is an increase from the 20%, capped at £1,875, that was due to be paid – though notably it's still just half of the 80% up to £7,500 offered by the first grant. The level of the fourth grant has yet to be set – the Government says this will happen "in due course".

  • You'll need to declare you've been affected since Sunday 1 November by reduced demand due to coronavirus in order to claim. This is an important change – with previous grants, you only had to declare that you'd been "adversely affected", which in addition to a reduction in trade could, for example, have covered staff illness, extra PPE costs or if you were shielding or self-isolating.

    The Government says it's made the change as its priority is now to support self-employed people who were actively trading to help them during the winter months. There's no detail yet on exactly how reduced demand will be defined – the Government says guidance is still being worked on.

  • You must be actively trading in order to claim. And you must be intending to continue to trade.
     
  • Only those who were already eligible for the previous SEISS grants can apply. So unfortunately there's no extension of eligibility requirements to help those who were excluded from help previously. To be eligible you must have filed a tax return for 2018/19, earn more than 50% of your total income from self-employment and your average trading profit must be no more than £50,000/yr. See the full SEISS eligibility requirements. You DON'T need to have applied for the previous SEISS grants though.

    It's worth noting the Government has reserved the right to adjust the eligibility criteria for the fourth grant "to respond to changing circumstances".

What extra cash will businesses in 'tier two' areas get?

The Government's also announced that grants likely to be worth up to £2,100/mth will be made available to firms in 'tier two' areas in England – for example, in London and Birmingham currently. Here are the need-to-knows:

  • Firms in 'tier two' areas which aren't legally required to close but have been adversely affected by local restrictions can apply, such as hotels and restaurants. The Government says about 150,000 businesses in total could benefit. The funds will be administered by local authorities, and it's likely businesses will need to apply to their local authority to get one.

  • Grants are likely to be worth up to £2,100/mth – though the exact amounts will be set by local authorities. The Government says it's providing money to local authorities "to support cash grants of up to £2,100/mth", but it will ultimately be up to local authorities to determine what businesses can get.

    However, as a guide the Government says it's giving local authorities funding equivalent to £934/mth for properties with a rateable value of up to £15,000; £1,400/mth for properties with a rateable value of between £15,001 and £51,000; and £2,100/mth for properties with a rateable value of over £51,000. Local authorities will also get an extra 5% to cover businesses that may not be in the rates system.
  • The grants will initially run until April. However, there will be a "review point" in January.

  • Businesses which have already been subject to restrictions can apply retrospectively. The Treasury says firms can apply "back to the point when the restrictions began". However, Mr Sunak said that any area which has been under enhanced restrictions can backdate grants to August, so we're checking the exact cut-off point.

These grants are in addition to higher levels of additional business support given to local authorities moving into tier three, and also the local lockdown grants worth up to £3,000/mth that are available to businesses which are forced to close. The grants are only available in England, as business support is fully devolved. For more on what's available in Scotland, Wales and Northern Ireland, see our Coronavirus Self-Employed Help guide.