COVID-19 round-up

Job Support Scheme

The Winter Economy Plan unveiled the Job Support Scheme (JSS), the successor to the current ‘furlough’ scheme (Coronavirus Job Retention Scheme), which ends on 31 October 2020. The new JSS opens on 1 November 2020 and runs to 30 April 2021.

The new scheme aims to protect ‘viable’ jobs in businesses with decreased demand because of COVID-19. Where an employee is on reduced hours because of lower demand, the JSS proposes a three-way split: the government and employer together cover a proportion of the wages for time not worked, and the employee suffers a wage reduction. This is intended to mean that employees keep their job. And it is a requirement of the scheme that employees cannot be made redundant or put on notice of redundancy while the employer claims JSS for them. 

To qualify, employees must work reduced hours: initially this will mean at least 33% of their usual hours. They must also have been on your PAYE payroll on or before 23 September 2020. You can claim if you are a small or medium business with a UK bank account and UK PAYE scheme. You don’t have to have used the furlough scheme before, either for employer or employee. Large businesses, however, will have to meet a financial test to assess the impact of Covid-19 on their turnover. There is also the expectation that they would not be making capital distributions, such as dividend payments, while accessing the scheme. 

As employer, you pay for hours worked. For time not worked, you and the government each pay a third of the usual hourly wage for that employee. The government contribution is capped at £697.92 a month. Employees should thus get at least 77% of the normal wage for every hour they don’t work (where the government contribution has not been capped). As employer, you also pay National Insurance and pension contributions. The new JSS will be paid in arrears, with claims made online from December 2020. Further information is here.

Job Retention Bonus

The Job Retention Bonus provides support for employers keeping furloughed employees ‘in meaningful employment’ after the furlough scheme ends on 31 October 2020. If you are eligible, you can claim this alongside the JSS. Claims for the Bonus can be made after Real Time Information payroll returns for January 2021 are filed.

The Bonus is a one-off payment to you as an employer, on which you are taxable. Payment will be made from February 2021, comprising £1,000 for every employee whom you previously claimed for under the furlough scheme, so long as they remain continuously employed through to 31 January 2021. Eligible employees must earn at least £520 per month on average between 1 November 2020 and 31 January 2021 (a total of at least £1,560 across the three months). It can be paid if you’re a company director or other office holder meeting the criteria. 

The Bonus is not payable for employees serving a contractual or statutory notice period that started before 1 February 2021 for the employer making a claim. HMRC advises that if there is any suggestion that claims under the furlough scheme have been fraudulently claimed or inflated, the Bonus will be withheld until the enquiry is completed. 

Employer tip

Further HMRC guidance is forthcoming, but employers planning to claim will find it useful to know that accurate record keeping for the furlough scheme, plus accurate, up to date payroll data are essential to receipt of the Bonus. Revisit claims now to double-check all is well.

COVID-19 grants: unders, overs and compliance

HMRC has published guidance on errors in claims for COVID-19 grants. Calculations for the furlough scheme have proved particularly complex, and there are details covering what to do if amounts have been under claimed or over claimed.

If you have received too much under the furlough scheme, you must notify HMRC and make repayment. Notification should be the later of 90 days after receiving payment you weren’t entitled to: 90 days after the day your circumstances changed, ending your entitlement to the grant: or 20 October 2020. Taking action before these deadlines means you should avoid the ensuing penalty regime. Overpayments can either be corrected in the next claim, or by contacting HMRC if you don’t expect to make a further claim under the scheme. 

HMRC is undertaking compliance activity and has powers to impose penalties in some circumstances, and to ‘name and shame’ defaulters. It advises that it ‘will not be actively looking for innocent errors’, but it is clearly important to make sure that any claims have been correctly calculated and can be substantiated with appropriate documentation. 

All records relating to the furlough scheme, for instance, should be kept for six years. For the new Job Support Scheme, the new short-time working arrangements must be agreed with staff, as must any changes to the employment contract, and employees must be notified in writing. Such agreement must be made available to HMRC on request.