Rishi Sunak has set up the Job Support Scheme that will cover two thirds of the cost of keeping an employer in a job as long as they are working at least on third of their normal hours.
Between them, the government and the employer will then cover part of their salary for the remaining hours not worked. The government will cover a third of this sum, capped at £697.92 per month, while firms cover a further third.
It means workers on the scheme will not get their full salary but should get at least 77%.
The scheme will run for 6 months starting on the 1st of November. Staff currently on furlough will qualify as well as those that are not on furlough. It is likely there will be some sort of cap on the amount paid. There will also be a job retention bonus when an employee is brought back from furlough. The Job Support Scheme is targeted at small and medium sized businesses but will only be allowed for large businesses if turnover has fallen by a third.
Bouncebank loans will be able to "pay as you grow" and can be paid back over 10 years. If a business is in severe difficulty they can defer all payments for up to 6 months.
CBILS and Bounceback Loans can be applied for until 30th of November.
VAT payable in March 2021 to be deferred and can be paid over 11 months
Hospitality and tourism VAT rate will continue at 5% until March 2021.
No help announced for the music or theatre industry which will be a big disappointment. Nor for company directors and some of the self employed. 3m people in work have not had any support.
The main takeaway in all this is that the government want to save viable jobs and not support ones where there is simply no work. The Furlough Scheme was meant as a temporary measure assuming that the virus shut down would be shortlived. The prospect of further restrictions over the next 6 months has meant that the help has had to be changed to make it affordable and in the best interests of the economy.
Paul Johnson from the Institute for Fiscal Studies said; “This is significantly less generous than the furlough scheme. A lot of these workers who are not working at all are likely now to lose their jobs”
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Please note that the guide was mostly written pre Covid-19 and there have been some changes to insolvency legislation that limits creditors actions and relaxes rules regarding wrongful trading. A new 20 day moratorium for distressed businesses has also been introduced.