Editorial team AccountingWEB.co.uk
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Sunak tweaks Job Support Scheme for second spike

The Chancellor is aiming to calm fears of a second spike by expanding the Job Support Scheme for areas and businesses forced to close their doors as part of local or national restrictions. Rebecca Cave and Richard Hattersley report. 

9th Oct 2020
Editorial team AccountingWEB.co.uk
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Rishi Sunak prepares to announce further measures

Under the latest variation to its job support initiative for businesses required to close temporarily due to Covid-19 protective measures, the government will pay two thirds of each employee’s salary.

This re-worked job retention scheme is more generous than the job support scheme (JSS), but the employer will still have to pay the employee’s wage upfront plus any employer’s NIC and the minimum employer’s pension contributions on those wages.

In addition to the expansion, the Chancellor also rolled out further local lockdown grants for businesses.

Rishi Sunak confirmed a restricted furlough 3.0 scheme in a Friday afternoon announcement as the rate of infections creep back on a steep incline.

“Our economic priority is simple: we need to protect jobs. The way we do that needs to evolve as the crisis and our health response evolves,” he said.  

“That doesn’t mean announcing a new package every time the health measures change. Instead we’ve developed an economic toolkit to give businesses the right the support at the right time, for their situation.”

However, the Chancellor’s decision breaks from his previous refusals to revise the furlough scheme. Blick Rothenberg’s Nimesh Shah criticised the Chancellor’s “lack of foresight” for not acting sooner.  “[I]t was clear a few weeks ago that lockdown measures would need to be tightened,” he said.

“There has been a stubbornness and insistence from the Chancellor that the furlough scheme had to end.  It would appear that the Rishi Sunak has had to backtrack somewhat.”


To be eligible, the employee must be furloughed for periods of at least 7 days at a time, during which they will receive 66% of his wages. Employees are only eligible for this support if they were on the payroll of the employer an included on an RTI return before 23 September 2020.

The employer will have to pay the employee’s wage upfront plus any employer’s NIC and the minimum employer’s pension contributions on those wages. The employer will then claim back the cost of the wages paid from HMRC (capped at £2,100 per month), but not the NIC or pension contributions.

Who will bear the cost?

Under the expanded JSS, the cost of keeping the staff on the payroll is split between the government, the employer and the employee, with the employer bearing a relatively small amount of employer’s NIC and pension contributions.

The employee must give up one third of their wages, and will have to agree to that change in their employment contract in writing if they are not already on a zero hours contract.

The government is effectively covering all of the employee’s pay, (at 67% of the usual rate) just as it did under the original furlough scheme when it covered 80% reducing to 60% in October.

Will the employer pay nothing?

The government thinks that around half the employees covered by the extended JSS will not be paid enough to trigger an employer NIC liability, or minimum employer pension contributions to a workplace pension.  

Employer’s NIC kicks in at £732 per month (£8,784 per year), so an employee who normally earns more than £13,176 per year will create a national insurance liability for the employer when furloughed under the expanded JSS on two thirds of pay.

Workplace pension contributions will depend on whether the individual has been auto-enrolled in the pension scheme or has opted out. Those aged between 22 and state pension age have to be auto-enrolled if they earn £10,000 of more per year. Once in the pension scheme the extent of the employer’s contributions will depend on the rules of the scheme, but a minimum of 3% of the employee’s earnings between £6,240 and £50,000 per year will be typical. 

When will employers get the refund?

The online portal to claim under the expended JSS will not open until 1 December 2020, so employers will have to use cash reserves, or borrow, to pay their employees’ wages.

The employer will have to prove that the wages have been paid, by submitting an RTI return, before HMRC will provide a refund of those costs. This is to avoid the instances of fraud and abuse which were apparent under the CJRS.      

The scheme will run for six months from 1 November to 31 March, and will be reviewed by the government in January 2020. It will also be available throughout the UK where businesses are close by regulation. Thus, decisions by the devolved governments to close certain hospitality businesses by law for short periods, will rely on the UK government to support the wages of the employees of those businesses.

Job support scheme

The local furlough scheme comes just a month after the Chancellor announced his replacement for the CJRS, which also comes into effect on 1 November. Unlike the local version, the government only contributes 22% of usual wages and £697.22 per month towards JSS.

As the Chancellor announced in his summer statement, businesses that brought back furloughed employees are also eligible to receive a £1,000 job retention bonus.   

Local lockdown grants

The Chancellor has also boosted local lockdown grants, which were announced in early September. The grants enabled businesses forced to close to claim up to £1,500 every three weeks. The revised local lockdown grants now allow businesses to claim up to £3,000 per month payable every two weeks.

However, small businesses with a rateable value of or below £15,000 can now claim £1,300 per month, while medium sized businesses with a rateable value between £15,000 and £51,000 can claim £2,000 per month.

This is an increase on the £1,000 local lockdown grants that were restricted to small business properties rateable values less than £51,000.

Previously the local lockdown grant was not designed to support businesses closed by national policies, such as nightclubs. But the new grants will extend to businesses closed on a national level including nightclubs, restaurants, pubs and bowling alleys.

Unlike furlough 3.0, which covers the four governments in the UK, the local lockdown grant is only available in England. However, the devolved administrations will receive a minimum of £12.7bn to support businesses in Scotland, Wales and Northern Ireland. 

The profession reacts

The chancellor’s announcement has divided the tax community. Chris Sanger, EY’s head of tax policy, praised the Chancellor’s agility in responding to the “ever-changing demands of the pandemic brings and supports his mantra of doing whatever it takes to support the economy”.

“Whilst we may not have a Budget this autumn, with all these incremental policy announcements the Chancellor may well end up delivering far more change in this half year than a Budget would normally deliver,” he added.

Meanwhile, Blick Rothenberg’s Shah said, “The Chancellor has not got much wrong in his actions during the Coronavirus pandemic, but today’s announcement is an acknowledgement that he should have acted sooner with a revised furlough scheme when it was clear a few weeks ago that lockdown measures would need to be tightened.”

For the AccountingWEB community, the news is a further blow for those who are struggling to get their head around the job support scheme and the never-ending government guidance.

“It seems like any time Rishi Sunak opens his mouth, we get put back two weeks in our schedule of work… I estimate we're at least a month behind in our compliance work, and I'm already dreading January,” said one anonymous member.

AccountingWEB’s Drookit Dug is being asked on a daily basis about the various permutations of their workings for the job support scheme, without having much information to share. The reader is already getting stressed by the scheme before its even started.

“Really wish all this coronavirus and government job scheme stuff would just disappear,” the reader said.  

Replies (10)

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Kirsty image
By Kirsty McGregor
09th Oct 2020 21:00

Waiting to see how they’ll decide upon eligibility eg - what if a business is registered in an area which isn’t in lockdown but with staff employed in outlets in lockdown towns?

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By SXGuy
10th Oct 2020 10:06

What happens if the business owners home town is in lockdown but the place of work isn't? I'm guessing they can't travel to work, so are they covered?

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By AWeb72
10th Oct 2020 17:21

Details on the initial scheme would be nice, never mind the tweak

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By quintodc
12th Oct 2020 10:18

Tests are producing massive false positives. it does not test for the virus as the virus has never been isolated and purified. There is no pandemic, it is all a control system. Another term for State funded employment in the commercial sector is communism. Let's rise up and take this country back for the freedom of the people. #stopbeingduped.

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Replying to quintodc:
By cfield
12th Oct 2020 11:13

Shouldn't you be on the American site?

Thanks (5)
By bendybod
12th Oct 2020 10:19

One of those occasions when I'm glad that I live in the south and have very few clients for whom I will need to figure out the permutations, at least until they are well bedded down.

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Replying to bendybod:
12th Oct 2020 11:24

I'm with you there. Heartily grateful most of my clients can't be further South or they would be in the sea! And like you, should the worst happen "down here" we will at least have had the time to get our head round it all.

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By Ian McTernan CTA
12th Oct 2020 11:40

Blick Rothenberg’s Shah said ' should have acted sooner'...typical garbage. No understanding of how long it takes civil servants to get anything done, even if it's a complete emergency.

Redesigning or making a new scheme necessarily takes time- it's not something you can think of on Monday and have up and running Tuesday. A few weeks is operating at breakneck speed for the Treasury (anyone who has dealt with them will tell you).

The Govt are coping as well as expected- they aren't perfect, and are totally reliant on civil servants to get things done. All the constant moaning and sniping and perfect 20/20 hindsight just highlights what a miserable lot the country is becoming- with nothing of any use coming from those that moan.

The scheme has been designed to help people- it's not going to be perfect and will have flaws, but let's concentrate for once on how many the schemes HAVE helped rather than picking faults and saying 'what if' and coming up with outliers...

It's a bit like testing and track and trace. Here's some stats: https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

We are now testing 600k+ people a week, and track and trace are finding 74% of those testing positive , almost 70% of contacts were reached- which are pretty good statistics given how people tend to behave and the attitude of certain sectors of society who seem to think it's OK to have huge parties and then moan when they get isolated!

Try and have at least one positive moment a day, you will live longer (and be less annoying too).

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Replying to Ian McTernan CTA:
12th Oct 2020 11:57

And to be fair after The Treasury its passed down to HMRC and then on to the payroll software providers who are themselves struggling.
What would have made it easier is that it reverted to 80% as per original Furlough where everything is in place other than revised calculations on "normal average"

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By petestar1969
12th Oct 2020 13:01

This is all very well but I believe its about time all this lockdown nonsense is kicked into the long grass and everyone should get back to work...

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