AVA Update – Job Support Scheme

Chancellor of the Exchequer announcement 24th September 2020

Further to what you will have seen and heard already yesterday from the Chancellor – here is some more detail about his statement to the House.

The Job Support Scheme: “The government will directly support the wages of people in work giving businesses who face depressed demand the option of keeping employees in a job on shorter hours rather than making them redundant.”

From 1st November 2020, the Job Support Scheme will operate for six months. This will apply to small and medium sized enterprises. Larger employers will only be covered if their turnover has gone down, subject to a financial assessment test. All employers will be allowed to apply, even if they did not use the furlough scheme.

Essentially, if someone is reduced to working part-time on the Job Support Scheme:

 The employer pays for the hours an employee works

The employer also has to pay for 1/3 of the hours they don’t work

The government pays for an additional 1/3 of the hours they don’t work

An employee receiving at least 77% of their normal wage is not much change from the 80% they received under CJRS Furlough.

Examples of how this will apply can be found in the Government Job Support Scheme documents.

Follow the link at the bottom of the page.

However, it will be a big change for an employer who currently has employees on full furlough and is paying 20% of their wages but will now need to employ them on 1/3 of their original hours and pay 55% of their wages.

Other measures announced

Extension of the VAT cut to 5 per cent for the tourism and hospitality sectors to the end of March 2021. This includes Vending as previously established with HMRC (https://the-ava.com/downloads/AVA%20VAT%20Reduction%20Notice%2006-08-20.pdf).

Extension of Bounce Back Loans, Coronavirus Business Interruption Loans, Coronavirus Large Business Interruption Loans and the Future Fund until the 30 November 2020.

Launch of a new Pay as You Grow system which gives flexibility to businesses in repaying Bounce Back Loans. All borrowers will now have the option to repay their loans over a period of up to 10 years, reducing their average monthly repayments on the average loan by almost half.

Businesses will also have the option to move temporarily to interest-only repayments for periods of up to six months, and to pause their repayments entirely for up to six months (after they have made their first six payments)

New payment scheme for deferred VAT. Businesses who deferred will no longer have to pay a lump sum at the end of March 2021. They can instead split it into smaller interest free payments over the course of 11 months.

Extension of the Self Employment Income Support Scheme to cover 20 percent of average monthly trading profits via a government grant.

You can find the UK Government’s full plan HERE and accompanying statement HERE.


 Chief Executive

 25th September 2020