The UK government has outlined its plans for additional financial support for businesses and workers impacted by the coronavirus, once the furlough scheme ends at the end of October.
Chancellor of the exchequer Rishi Sunak unveiled a new Job Support Scheme, which will be introduced from 1 November. Under the new scheme, which will run for six months, the government will contribute towards the pay of workers in “viable” jobs who are working fewer than normal hours — to qualify for the support, employees would need to work at least 33% of their usual hours.
Employers will continue to pay the wages of staff for the hours they work — but for the hours not worked, the government and the employer will each one third of their equivalent salary, meaning that the worker will receive 77% of their monthly wage in total.
The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
The new scheme will apply to small and medium-sized businesses, and employers will need to pick up one third of the cost to maintain workers’ pay. Larger employers will only be covered if their turnover has gone down during the pandemic.
All UK employers are eligible for the new Job Support Scheme, even if they haven’t previously used the government furlough scheme.
The Self Employment Income Support Scheme Grant (SEISS) will also be extended for those who are unable to find work over the next few months. An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade, but face reduced demand due to coronavirus.
The initial grant will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875. An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April – ensuring support continues right through to 2021.
A new ‘Pay As You Grow’ loan scheme was also announced, which will provide flexibility for businesses repaying government loans, such as a Bounce Back Loan. The repayment scheme includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available to businesses.
The government also intends to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years.