Self-Employed Income Support Scheme SEISS – January 2021 Update

On 26 March 2020, the Government announced a support package for those who are self-employed or a member of a partnership and have lost income due to the COVID-19 crisis. 

This is aimed at self-employed businesses that DO NOT trade through a limited company, that have generated profits and where those profits are your main or only source of income.

With the closure of the claims window for the 3rd grant and the details of the 4th grant potentially not being announced until the budget on the 3rd March, we have set out a summary of the Grants to date

SEISS grants currently cover the following periods

NameClaim periodClaim deadlineGrant size
Fourth grantFeb 2021-April 2021 TBATBA
Third grantNov 2020-Jan 202129 Jan 2021Up to £7,500
Second grant14 July – Oct 202019 Oct 2020Up to £6,570
First grantMarch – July 202013 July 2020Up to £7,500

The Self-Employed Income Support Scheme (the ‘scheme’) is open to those who have annual profits of less than £50,000 and receive at least half their income from self-employment.  Where the conditions outlined below are met, eligible individuals can apply for a grant payment under a total four rounds of the scheme. All payments are subject to income tax and Class 4NICs.

The first round of grants, for which claims closed on 13 July 2020, was worth:

  • up to 80% of average monthly trading profits,
  • for a period of three months,
  • capped at an overall maximum of £7,500.

The second round of grants, for which claims opened on 17 August 2020 and closed on 19 October, is worth:

  • up to 70% of average monthly trading profits,
  • for a period of three months,
  • capped at an overall maximum of £6,570.

On 24 September 2020 it was announced that the scheme would be extended further for self-employed individuals who were currently eligible for the SEISS and are actively continuing to trade, but facing reduced demand due to COVID-19.

This extension will be in the form of a further third and fourth round of grants. The third round of grants, for which applications opened on 30 November 2020 and will close on 29 January 2021, covers the period from the start of November 2020 until 29 January 2021 and is worth:

  • up to 80% of average monthly trading profits, 
  • for a period of three months,
  • capped at an overall maximum of £7,500.

The fourth round will cover a three-month period from the start of February until the end of April. The Government have indicated that they will review the level of the fourth round and set this in due course.

HMRC calculate how much eligible individuals will receive. Individuals therefore do not need to calculate the amount they are due, but they do need to make a claim to receive funds under the scheme. 

Below we have set out an outline of how HMRC determine eligibility, the amount receivable for both grants, and how the claims process works. 

Who is eligible for the Self-Employed Income Support Scheme (SEISS)?

For the first round of grants, HMRC provided a standalone online eligibility checker which allowed individuals, or their agents, to check if they were eligible for the scheme in advance of making a claim. This eligibility checker was withdrawn for the second round of grants onwards, where eligibility was confirmed as part of the application process.

You could claim under the first and second rounds of the scheme if you were a self-employed individual or member of a partnership and you:

  • carry on a trade which has been adversely affected by COVID-19 (for example because you’re unable to work, or you have had to scale down/stop trading);
  • traded in the tax years 2018-19 and 2019-20;
  • submitted your self-assessment return for the tax year 2018-19 on or before 23 April 2020;
  • intend to continue trading in 2020-21; and
  • meet the profits condition.

These eligibility criteria were the same for both the first and second grant. The one notable variation was in the timing of when a trade has to be adversely affected:

  • To claim the first grant, the trade must have been adversely affected by COVID-19 in the period up to and including 13 July 2020.
  • To claim the second grant, the trade must have been adversely affected on or after 14 July 2020.

The Treasury Direction dated 24 November sets out that, in order to be eligible for the third grant, all of the same conditions have to be met as for the first and second grants. However, there are two extra conditions which must also be met in order to be eligible for the third grant:

  • The trade must have suffered from reduced activity, capacity or demand in the period from 1 November 2020 to 29 January 2021 as a result of COVID-19; and
  • The claimant must reasonably believe they will suffer a significant reduction in trading profits for the basis period including those months as a result.
  • A claim cannot be made for the third grant if the reduced activity, capacity or demand is caused solely because a person is required to self-isolate, or care for someone required to self-isolate as a result of travelling to the UK.

Who isn’t eligible for the Self-Employed Income Support Scheme (SEISS)?

You will not be eligible for the first, second or third grants if any of the following apply:

  • You started your trade after 5 April 2019 (i.e. you did not trade in the tax 2018-19).
  • You did not submit your 2018-19 tax return by 23 April 2020.
  • Your trading income forms less than half of your total income (for example, your main income comes from employment, which you top up with a smaller amount from self-employment).
  • You traded in 2016-17 and 2018-19 but not 2017-18; and you do not meet the first test of the profit condition (i.e. in 2018-19 your trading profits were more than £50,000, or less than your non-trading income in that year).
  • You are a director of a limited company.
  • You operate a Furnished Holiday Letting business.
  • You are operating a trade through a trust.

Other points to note:

  • In calculating eligibility and the amount which can be claimed, HMRC will not take into account any self-assessment returns submitted after 23 April 2020.
  • Claims based on late returns submitted between 26 March and 23 April 2020 will be subject to additional anti-fraud checks.
  • If you amend a submitted return after 26 March 2020 any changes will not be taken into account when working out your eligibility or amount of the grant.
  • HMRC will only look at your original return if a tax return is under enquiry, or the subject of a contract settlement.
  • If you are taking a break from your trade due to having a baby or adoption, or have done so since 6 April 2019, you will still be eligible.  Claiming maternity allowance will not affect eligibility.

How much might I get?

The first grant was calculated as 80% of average trading profits for a three-month period, subject to an overall cap of £7,500.  The second grant is calculated as 70% of average trading profits for a three-month period, and capped at £6,570. The third grant will be calculated as 80% of average trading profits for a three-month period, and capped at £7,500. The Government have not yet confirmed how the fourth grant will be calculated.

There is no link between the amount of grant received and the level of income lost by the trade due to COVID-19.

You must keep a record of the amount claimed, your claim reference number and evidence that your business has been adversely affected by coronavirus.

Please note that claims will be dealt with through GOV.UK only – any texts, calls or emails purporting to be from HMRC asking you to click a link or provide personal information are likely to be a scam so please exercise caution.

COVID-19: Support for businesses that pay business rates 2021 update

Business Support Grants from January 2021 delivered by Local Authorities

From the 5th January 2021 onwards, Local Authorities will be delivering The Local Restrictions Support Grant (Closed), Closed Businesses Lockdown Payment and the Additional Restrictions Grant

Local Restrictions Support Grant (Closed) Addendum Scheme

For Businesses that were open as usual, but then required to close due to national restrictions imposed by government may be eligible for the LRSG (Closed) Addendum schemes:

  • from 5 January 2021 onwards
  • between 5 November and 2 December 2020

Eligible businesses may be entitled to a cash grant from their local council for each period under national restrictions.

When national restrictions are introduced and businesses are required to close, the LRSG (Closed) Addendum schemes supersede the LRSG (Closed)LRSG (Open) and LRSG (Sector) schemes.

Eligibility

Your business may be eligible if it:

  • is based in England
  • occupies property on which it pays business rates (and is the ratepayer)
  • has been required to close because of the national restrictions from 5 January 2021 onwards, or between 5 November and 2 December 2020
  • has been unable to provide its usual in-person customer service from its premises

For example, this could include non-essential retail, leisure, personal care, sports facilities, tourism and hospitality businesses. It could also include businesses that operate primarily as an in-person venue, but which have been forced to close those services and provide a takeaway-only service instead.

Eligible businesses can get one grant for each non-domestic property.

Coronavirus Closed Business Lockdown Payment

For The Closed Businesses Lockdown Payment (CBLP) supports businesses that have been required to close due to the national restrictions that began on 5 January 2021.

Eligible businesses may be entitled to a one-off cash grant of up to £9,000 from their local council.

Local councils will pay the same businesses that are eligible to receive the Local Restrictions Support Grant (Closed) Addendum for the national lockdown period that began on 5 January.

Eligibility

Your business may be eligible if it:

  • is based in England
  • occupies property on which it pays business rates (and is the ratepayer)
  • has been required to close because of the national restrictions from 5 January 2021 onwards
  • has been unable to provide its usual in-person customer service from its premises

This could include non-essential retail, leisure, personal care, sports facilities, tourism and hospitality businesses. It could also include businesses that operate primarily as an in-person venue, but which have been forced to close those services and provide a takeaway-only service instead.

Eligible businesses can get one grant for each non-domestic property.

Coronavirus Additional Restrictions Grant

For closed businesses that do not directly pay business rates as well as businesses that do not have to close but which are impacted. In addition, larger grants can be given than those made through LRSG (Closed).

Local councils can determine which businesses to target and determine the amount of funding from the ARG.

Eligibility

Local councils have the freedom to determine the eligibility criteria for these grants. However, we expect the funding to help those businesses which – while not legally forced to close – are nonetheless severely impacted by the restrictions.

This could include:

  • businesses which supply the retail, hospitality, and leisure sectors
  • businesses in the tourism and events sectors
  • business required to close but which do not pay business rates

Useful links

Business Support Package for January Lockdown – Guidance for Local Authorities

Selby District Council – Additional Restrictions Grant Scheme

York City Council – Additional Restrictions Grant Scheme

Coronavirus Job Retention (Furlough) Scheme extended

March 2021 Update to Furlough Scheme

The CJRS has been extended until 30th September 2021 and the level of grant to employers will stay the same until 30th June 2021.

Changes to the level of grant from 1st July 2021 can be found here.


January 2021 Update to Furlough Scheme

The Coronavirus Job Retention Scheme has been extended until 30 April 2021.

Claims for furlough days in January 2021 must be made by 15 February 2021.

You can no longer submit claims for claim periods ending on or before 31 October 2020.


October 2020 Update to Furlough Scheme

On 31 October the CJRS was extended until December and the JSS that was due to commence on 1 November was postponed.

The new Job Support Scheme (JSS), which was the government’s replacement wage support scheme, had been set to launch on 1 November, with the government publishing 11 detailed guidance notes on the evening of 30 October to help employers in administering the same. This scheme has, however, now been postponed until the extended CJRS ends.

Below we summarise the key aspects of the extended CJRS and answer some of the key questions employers are likely to have.

Key points

  • The CJRS will now remain open until December and will not close, as originally planned, on 31 October. The exact end date is currently unknown but it is perhaps likely to coincide with the proposed ending of the new lockdown in England on 2 December. The government has confirmed that there will be no gap in eligibility for support between the previously announced end-date of the CJRS and this extension.
  • The introduction of the JSS (both the Open and Closed schemes) will be postponed until the CJRS ends.
  • The level of grant under the extended CJRS will mirror levels available to employers under the original CJRS in August. This means that the government will pay up to 80 per cent of an employee’s normal pay up to a cap of £2,500 and employers will be responsible only for National Insurance Contributions and pension contributions. As with the original CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
  • Given the previous scaling back of the CJRS (in October the government contribution was limited to 60 per cent of normal pay) and the acknowledged reduced level of support under both the JSS Open and Closed, the extended CJRS is significantly more generous to employers.
  • Importantly, to access the extended scheme, neither the employer nor the employee needs to have previously used the CJRS. To be eligible, employees merely need to have been on an employer’s PAYE payroll before midnight on 30 October (with a Real Time Information (RTI) submission notifying payment for that employee to HMRC having been made on or before 30 October). This is a significant change to the original CJRS, where the vast majority of employees had to have been furloughed for a period of at least 3 consecutive weeks ending on or before 30 June to enjoy continued access to the scheme through July to the end of October.
  • It is unclear whether the extended scheme will allow employers to rehire employees who have been made redundant and put them on furlough (as was the case in certain circumstances under the original CJRS). This will need to be clarified by the government in due course but given the requirement is that employees need to have been on an employer’s PAYE payroll before midnight on 30 October, this does theoretically mean that employees made redundant effective on 31 October (and the date the original CJRS was due to close) could be in scope under the extended scheme. However there are employment law implications to rehiring employees so employers considering this should give this careful thought.
  • Flexible furloughing will continue to be an option in addition to full-time furloughing so employees will be able to work some of their hours (and be paid for this by their employer) and receive furlough pay for unworked hours. Calculations determining usual hours and worked hours will broadly follow the same methodology as under the original CJRS.
  • The government expects that publicly funded organisations will not use the extended scheme, as was the case for the original CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements will continue to apply to these employers.
  • The extended CJRS will operate as the original CJRS did, with businesses being paid upfront (as opposed to in arrears under the JSS) to cover wage costs. The government has noted, however, that there will be a short period where the legal terms of the extended scheme are changed and systems updated in which businesses will be paid in arrears.
  • It is also unclear how the furlough extension will interact with the Job Retention bonus. Under the current rules of the Job Retention bonus scheme, the employee needs to be retained in employment and paid a minimum amount for November, December and January. It’s unclear if furlough pay will count towards the minimum (the government has confirmed that JSS pay counts so in principle it seems likely that furlough pay should also count) or if the government will now amend the bonus scheme.

Points for employers to consider

  • Most businesses will have been planning workforce changes to dovetail with the original 31 October end date for the CJRS and the introduction of the JSS from 1 November. These plans will need to be revised given the extension of the CJRS and in most cases, urgent communications will be required with employees. The nature of this communication will vary depending on what plans and communications the employer had already put in place.
  • Employers with staff still on furlough and/ or flexible furlough may simply want to extend these existing furlough arrangements through until December. Many existing furlough agreements will be drafted to come to an end either on the expiry of the CJRS or on 31 October. Given previous issues under the original CJRS as to how to obtain and document employee agreement to CJRS terms, it would be sensible to get relevant employees to return signed letters indicating their agreement to an extension (or an appropriate collective agreement with any recognised trade union) or, at least, to respond by email confirming their agreement to remain on furlough until December on existing furlough terms. This will be easier if the extension to furlough is on the same terms as up to 31 October.
  • Employers who have topped up pay throughout any previous furlough arrangements may want to extend furlough arrangements but may need to scale back or remove the top up. In this instance, employee consent to any such changes may be required, depending on the wording of the furlough agreement – in which case employers should seek the employee’s consent to the change urgently.
  • Some employers may have already put in place appropriate JSS (Open) temporary working agreements with their employees to commence on 1 November. In such cases, employers should now communicate with their employees about the extension of the CJRS (and that the JSS has been postponed) and, if appropriate, ask them to agree to be furloughed until December instead. Any such communication could confirm any flexible furlough arrangements that might be put in place (if there is some work you want the employees to perform) and point out that the arrangements will be more generous through November than they would have been under the JSS (subject to any top that you may have planned to offer under the JSS). As per the above, employers should seek, obtain and record employee agreement to this change (whether that be in writing, through collective agreement or by email).
  • There may be other cases where employees have not been on furlough and are not signed up to a JSS temporary working agreement. This might be, for example, where an employee was precluded from being furloughed between July to October as they had not been furloughed for 3 consecutive weeks by the end of June. If you are now considering furloughing any such employees up until December, it will be important to enter into the more detailed furlough agreement that you have used for other furloughed employees.

Guidance

Claim for wages through the Coronavirus Job Retention Scheme

So, what changes on 1 January 2021?

Deal or no deal, the way people live and work will be different.

  • People planning to move between the UK and EU to live, work, or retire will no longer be automatically allowed to do so
  • The UK will apply a points-based immigration system to EU citizens
  • Travel rules are changing, so check your passport is still valid, that you have health insurance and the right driving documents
  • The UK will no longer make big annual payments towards the EU’s budget
  • Arrivals from the UK will stand in a different queue at passport control in EU countries
  • Businesses trading with the EU will face a lot more paperwork

Transition

Importing Goods into the UK from the EU

Exporting Goods to the EU from the UK

Virtual Christmas parties will qualify for tax exemption

HMRC has confirmed that they will accept a virtual Christmas party as an event which is capable of falling within the tax exemption rules for annual functions.

‘Having considered the scope of section 264 ITEPA03 (annual parties exemption), we are pleased to confirm that the exemption will apply to the costs associated with virtual parties in the same way that it would for traditionally held parties.

‘Therefore, the cost of providing food, entertainment, equipment and other expenses which may be incurred in hosting a virtual event, will be exempt, subject to the normal conditions of the exemption being met.

‘It is important to note that the intention of the exemption is to allow for costs of provision which are generally incurred for the purposes of the event itself, and that the event, along with any associated provision, is available to employees generally. We will be updating our GOV.UK guidance shortly.’

The rules allow employers to spend up to £150 per head (including VAT) towards the costs of an annual function such as a seasonal party, without creating a tax liability.

To qualify the party must be an annual event which is open to all staff generally, or all staff at a specific location, if the employer has more than one location. If the employer has more than one annual event in a tax year, for all the events to be tax-free the combined cost per head must be no more than £150

Gifts to employees can be tax-free

Some employers may wish to give a small gift to their employees. As long as the employer meets the relevant conditions, no tax charge will arise on the employee.

A tax exemption is available which should help employers ensure that the benefits provided are exempt and do not result in a reportable employee benefit in kind. In order for the benefit to be exempt it must satisfy the following conditions:

  • the cost of providing the benefit does not exceed £50 per employee (or on average when gifts are made to multiple employees)
  • the benefit is not cash or a cash voucher
  • the employee is not entitled to the benefit as part of a contractual arrangement (including salary sacrifice)
  • the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties
  • where the employer is a ‘close’ company and the benefit is provided to an individual who is a director, an office holder or a member of their household or their family, then the exemption is capped at a total cost of £300 in a tax year.

If any of these conditions are not met then the benefit will be taxed in the normal way subject to any other exemptions or allowable deductions.

No more than £50

One of the main conditions is that the cost of the benefit does not exceed £50. If the cost is above £50 the full amount is taxable, not just the excess over £50. The cost of providing the benefit to each employee and not the overall cost to the employer determines whether the benefit can be treated as a trivial benefit. So, a benefit costing up to £50 per employee whether provided to one or more employees can be treated as trivial. Where the individual cost for each employee cannot be established, an average could be used. HMRC examples consider various gifts including turkeys, bottles of wine and gift vouchers

New Grant Announced for businesses forced to close in second lockdown

Please note: This information has been updated and you may be eligible for further support – please click here to find out more about the support available for businesses who pay business rates.

Businesses who are forced to close under the second national lockdown, which comes into force on Thursday, will be entitled to a new tiered grant of up to £3,000 per month

Those forced to closed their doors will receive grants worth up to £3,000 per month under the Local Restrictions Support Grant (LRSG).

Effected businesses will be eligible for the following:

  • For properties with a rateable value of £15,000 or under, grants to be £1,334 per month – or £667 per 2 weeks
  • For properties with a rateable value of between £15,000-£51,000 grants to be £2,000 per month, or £1,000 per 2 weeks
  • For properties with a rateable value of £51,000 or over grants to be £3,000 per month, or £1,500 per 2 weeks

Grant will be distributed by local authorities so you should keep an eye on your local council website to see what information is available – currently this is very little.

Local Business Support and Advice

Self-employment Income Support Scheme (SEISS) Grant extended

Please note: This scheme has been updated and you may be eligible to claim further Self-employment Income Support Grants – please click here to find out more.

The government is increasing its support to the self-employed over the coming months and ensuring people get paid faster than previously planned, it was announced 2nd November 2020.

  • As SEISS grants are calculated over three months, the November boost to 80 per cent, along with the 40 per cent level of trading profits for December and January, increases the total level of the third grant to 55 per cent of trading profits. That means the maximum grant will increase to £5,160.
  • The online service for the next grant will be available from 30 November 2020. HMRC will provide full details about claiming and applications in guidance on GOV.UK in due course.

Brief Guidance

Self-Employment Income Support Scheme Grant Extension

COVID-19: Arrangements for continued provision of services by CGA

We know that this is a time of unprecedented uncertainty for businesses across all sectors and we at CGA will continue to work with all clients to update, advise and provide support during this time.

We are sending out regular updates via email, sign up here.

The team are currently working from home, with Chelle and Claire working from the office.  All team members can be reached by email and the office landline is the first point of telephone contact.

The office is closed to visitors. We are contacting clients to rearrange meetings to either an alternative communication option or a revised date – we apologise for any inconvenience that this may cause but are fairly sure you will be 100% supportive of this action.

Business support: new Government website

A full range of business support measures have been made available to UK businesses and employees. With frequent updates and information in different places, it can feel overwhelming at this time. A new government website has launched to help businesses find out how to access the support that has been made available, who is eligible, when the schemes open and how to apply.

The Chancellor has set out various packages of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19 and continues to do so.

Financial support for businesses during coronavirus (COVID-19)

We have therefore taken the guidance as published by the government and added more specific detail to each section and will continue to update each section as more information is provided with regard to how the package of support offered by the Government will be distributed/accessed. 
 
The links below will take you to the relevant pages on our website, which we will keep updated on a regular basis: 

To receive regular government updates as they are issued, sign up here.

Job Support Scheme (JSS) – what we know so far….

Second lockdown update 03/11/20: The new Job Support Scheme (JSS), which was the government’s replacement wage support scheme, had been set to launch on 1 November, with the government publishing 11 detailed guidance notes on the evening of 30 October to help employers in administering the same. This scheme has, however, now been postponed until the extended CJRS ends.

This is based on guidance we have available as at 26/10/2020 – further guidance and full details of the calculations are expected to be issued by the end of October for when the scheme commences on 1st November.  As soon as we know more we will issue an update.

There will be 2 different types of JSS depending on whether you need to reduce hours (JSS Open) or are legally required to close your premises as a direct result of coronavirus restrictions set by one or more of the four governments of the UK (JSS Closed).

Read GOV.UK documentation on the Job Support Scheme

JSS Open

The employee will need to work a minimum of 20% of their usual hours and the employer will continue to pay them as normal for the hours worked.

Alongside this, the employee will receive 66.67% of their normal pay for the hours not worked – this will be made up of contributions from the employer and from the government.

The employer will pay 5% of reference salary for the hours not worked (based on usual hours calculations), up to a maximum of £125 per month, with the discretion to pay more than this if they wish.

The government will pay the remainder of 61.67%, of reference salary for the hours not worked, up to a maximum of £1,541.75 per month.

This will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.

JSS Closed

Each employee who cannot work due to these restrictions will receive two thirds of their normal pay, paid by their employer and fully funded by the government, to a maximum of £2,083.33 per month, although their employer has discretion to pay more than this if they wish.

Employers are eligible to claim JSS Closed if their business premises at one or more locations has been legally required to close as a direct result of coronavirus restrictions set by one or more of the four governments of the UK. This includes premises restricted to delivery or collection only services from their premises and those restricted to provision of food and/ or drink outdoors.

Businesses premises required to close by local public health authorities as a result of specific workplace outbreaks are not eligible for this scheme

Eligible employers will be able to claim the JSS Closed grant for employees:

  • whose primary work place is at the premises that have been legally required to close as a direct result of coronavirus restrictions set by one or more of the four governments of the UK
  • that the employer has instructed to and who cease work for a minimum period of at least 7 consecutive calendar days

This is not a complete list of all the conditions for eligibility for JSS Closed and further guidance will be published by the end of October.

Important Information for both schemes

  • Although the scheme starts on 1st November 2020 Employers will be able to claim from 8 December, covering salary for pay periods ending and paid in November. Subsequent months will follow a similar pattern, with the final claims for April being made from early May.

If grant payments are made in 6 working days, like the current scheme, employers will need to cover the full cost of the wages for monthly employees for a period of 2-3 weeks before getting the grant income – for more frequently paid employees this will be much longer.

  • Neither the employer nor the employee needs to have benefitted from the Coronavirus Job Retention Scheme to be eligible for the Job Support Scheme.
  • Only employees who were on payroll and a valid RTI (Real Time Information) submission between 6th April 2019 and 23rd September 2020 will be eligible – if you employed someone who was paid for the first time in September and the RTI submissions were made after 23rd September – they will NOT be eligible for JSS Open and JSS Closed.
  • Employers can only claim for employees that were in their employment on 23 September 2020. If employees ceased employment after 23 of September 2020 and were subsequently rehired, then employers can claim for them
  • Employees can be on any type of contract, including zero hours or temporary contracts.
  • Employees will be able to undertake training voluntarily in non-working hours. Where time spent on training attracts a minimum wage entitlement in excess of the grant payment, employers will need to pay the additional wages.
  • Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.
  • The Job Support Scheme grant will not cover National Insurance contributions (NICs) or pension contributions. These contributions remain payable by the employer.
  • Like the CJRS – Employers must deduct and pay to HMRC income tax and employee NICs on the full amount that is paid to the employee, including any amounts subsequently met by a scheme grant.
  • Employers must have paid the full amount claimed for an employee’s wages to the employee before each claim is made. They should also pay the associated employee tax and employee and employer National Insurance contributions to HMRC, even if the company is in administration.
  • Employees will be able to check if their employer has made a Job Support Scheme claim relating to them via their Personal Tax Account.

Reference Salary

The reference salary amounts are the same as those used for the CJRS – however the reference period has changed.

Claims should commence from the later of the date that the employee starts working reduced hours or the date when working reduced hours is confirmed in writing, not when the decision is made. Claim periods can start from 1 November 2020 onwards. Claims are subject to a maximum reference salary of £3,125 per calendar month.

Reference salary for employees with fixed pay

For employees who are paid a fixed salary, the Reference Salary is the greater of:

  • the wages payable to the employee in the last pay period ending on or before 23 September 2020
  • the wages payable to the employee in the last pay period ending on or before 19 March 2020, this may be the same salary calculated under the CJRS scheme

Reference salary for employees with variable pay

For employees whose pay is variable the Reference Salary is the greater of:

  • the wages earned in the same calendar period in the tax year 2019 to 2020
  • the average wages payable in the tax year 2019 to 2020
  • the average wages payable from 1 February 2020 (or the employee’s start date if later) until 23 September 2020

So we will definitely have some more calculations to undertake for the JSS.

Usual Hours

Employees who work fixed hours

For employees contracted for a fixed number of hours and whose pay does not vary according to the number of hours they work, usual hours are calculated based upon the greater of:

  • the hours that the employee was contracted for at the end of the last full pay period ending on or before 23 September 2020
  • the hours that the employee was contracted for at the end of the last full pay period ending on or before 19 March 2020, this may be the same number of hours calculated under the Coronavirus Job Retention scheme (NB. if employees moved to part time working, this may be varied full details will be included in forthcoming Guidance)

This should include hours paid as annual leave and statutory leave.

Employees who work variable hours

The variable hours calculation applies if either:

  • the employee is not contracted to a fixed number of hours
  • the employee’s pay depends on the number of hours they work

For employees whose number of hours varies and/or whose pay depends on the number of hours they work, the number of usual hours is calculated based on the higher of:

  • the number of hours worked in the same calendar period in the tax year 2019 to 2020
  • the average number of hours worked in the tax year 2019 to 2020
  • the average number of hours worked from 1 February 2020 (or the employee’s start date if later) until 23 September 2020

This should include hours paid as annual leave and statutory leave.

The calculation of usual hours is not and cannot be altered if the employee is expecting to work more or fewer hours than this in the future.

Links to examples:

Calculation example 1: fixed hours and fixed salary employee

Calculation example 2: employee with variable hours and variable pay

Temporary working agreements

To be eligible for the grant, employers must have reached written agreement with their employee that they have been offered either a temporary working agreement (JSS Open) or that they have been instructed to and agree to stop working for a minimum of 7 consecutive calendar days (JSS Closed).

The agreement must be available for view by HMRC on request.

This temporary working agreement must cover at least seven consecutive days.

The employee must agree to the new arrangement.

HMRC will publish further guidance on what to include in the written agreement by the end of October.

Any previous letter issued under the Coronavirus Job Retention Scheme will NOT be relevant and new letters much be issued to all employees for whom you want to claim under the Job Support Scheme.

Read GOV.UK documentation on the Job Support Scheme

Reduced rate of 5% VAT for hospitality, holiday accommodation and attractions

The hospitality and leisure industries as we all know, have been severely affected by the Coronavirus pandemic. To help businesses in these sectors to get back on their feet, the Government has reduced the rate of VAT to 5% rather than the standard rate of 20%.  This applies to certain supplies and has now been extended until 31st March 2021.

Hospitality

Food and drink supplied for consumption in the premises, for example by a restaurant or a bar, and hot takeaway food and beverages are normally liable for VAT at the standard rate of 20%. During the support period, the 5% rate will apply instead to:

  • hot and cold food for consumption on the premises on which they are supplied;
  • hot and cold non-alcoholic beverages for consumption on the premises on which they are supplied;
  • hot takeaway food for consumption off the premises on which it is supplied;
  • hot takeaway non-alcoholic beverages for consumption off the premises on which they are supplied.
  •  

Hotel and holiday accommodation

For businesses supplying hotel and holiday accommodation, the 5% rate VAT applies during the support period to:

  • supplies of sleeping accommodation in a hotel or similar establishment;
  • certain supplies of holiday accommodation;
  • charge fees for caravan pitches and associated facilities;
  • charge fees for tent pitches and camping facilities.
  • Meals provided to guests in long-term holiday accommodation (more than 28 days) will also benefit from the reduced rate, but the hire of motor caravans will not.

Admission to attractions

The reduced rate of 5% also applies during the support period in respect of admission to certain attractions which would normally be liable for VAT at the standard rate. However, if the admission fee is exempt from VAT, this will take precedence over the 5% charge and the admission charge will remain exempt.

The temporary reduction will apply to admissions to shows, theatre, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events where these are not included in the existing cultural exemption.

Impact on flat rate scheme

VAT registered businesses using the flat rate scheme should note that some of the flat rate percentages have been reduced to take account of the temporary reduction in the rate of VAT.

Firms can choose whether or not to pass on the reduction to consumers by lowering prices, although this is not mandatory.