Coronavirus Job Support Scheme (CJSS) and VAT support

24 September 2020

24 September 2020 by Nigel Morris

New COVID-19 support for viable jobs until 30 April 2021

As anticipated, the Chancellor has outlined the new scheme to replace the Coronavirus Job Retention Scheme (CJRS) furlough scheme.

The headlines are:

  • Aimed at ‘viable’ jobs where the employee is fully employed for at least 1/3 of ‘normal’ hours
    • Government then supports 1/3 of the remaining 2/3
    • Employers also supports 1/3 of the remaining 2/3
  • Employers fund 55% of the Gross pay for 33% of hours worked
  • Employees on the scheme cannot be made redundant
  • Capped at £697.92
  • For all SMEs
  • For larger employers whose turnover has fallen

There will be a lot of detail to follow, but it is worth noting:

  • No details on NIC or Pension support that was in Phase 1 of furlough
  • No details on measure of Turnover or by how much it needs to have fallen to qualify
  • No support for the many jobs still on full furlough where it may not be viable for them to work 1/3 of their normal hours and the businesses to support more than 50% of the payroll cost.
  • Open to all businesses subject to SME and large business tests, even if they didn’t furlough, but no clarity on qualifying dates like CJRS
  • May need a PAYE scheme and employees on payroll notified to HMRC by 23rd September?

In general a ‘guaranteed’ 77% Gross pay rate would seem generous against the CJRS scheme, which is reducing to 60%. This level of support could however help employees and businesses to better plan rotas and finances for the next 6 months.

This scheme does not necessarily protect jobs, as we have seen a number of businesses report a ‘bounce back’ albeit who may now find that the next 6 months could well be very different.

A measure based on how well they have weathered the storm so far may leave many employers not qualifying and having to make staff cuts where they project the next 6 months will not be as good as the last.

The jobs retention bonus will remain and this is welcome, though the JSS and the CJRS bonus are still focused on jobs retained and the idea of viable jobs. There are many employees still on full furlough who may not be able to be provided with 33% of their hours and so not qualify and possibly still lose their jobs.

VAT deferred by businesses earlier this year that was due to be repaid by March 31st 2021 can now be repaid in interest free instalments over 11 months. The details have not yet been published but it is probable that businesses will need to apply to get this time to pay agreement. We will keep you updated – but great news for all of those worrying about how to pay back large bills in 6 months’ time.

We will provide a full update when more details are known and our Government Loans update will be issued separately, but please get in touch if you have queries in the meantime please contact:

Nigel Morris, Employment Tax Director, nigel.morris@mhllp.co.uk, Tel: 07718 340634

Glyn Edwards, VAT Director, glyn.edwards@mhllp.co.uk,Tel: 07889 537549

The above guidance is provided for your information and is our summary of the latest position as we see it. Please also note that Government advice is being updated on a daily basis.

If you are concerned about being impacted financially due to the Coronavirus, we are here to support you or if you require more specific advice on your situation and how the COVID-19 pandemic may affect your business. Reach out to discuss how we can help or read our latest advice here