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In addition to the newly announced four week lockdown for England, the Prime Minister announced on 31st October that the  Coronavirus Job Retention Scheme (“CJRS”) would be extended for a month and that employees will receive 80% of their current salary for hours not worked up to a maximum of £2,500.  Some additional economic support was also announced.

Under the extended CJRS, the cost for employers of retaining workers will be reduced compared to the previous scheme which ended on 31stOctober. This means the extended furlough scheme is more generous for employers than it was in October.

In addition, business premises forced to close in England are to receive grants worth up to £3,000 per month under the Local Restrictions Support Grant. A further £1.1bn is to be given to Local Authorities to enable them to support businesses more broadly. Mortgage holidays will also be extended.

Fiona-Holloway

Here, Fiona Holloway, Associate Partner at Claritas Tax looks at what you need to know about the new measures.

Coronavirus Job Retention Scheme (“CJRS”)

All employers should be eligible for the extended Job Retention Scheme, which will continue for a further month.

Businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time, and will only be asked to cover National Insurance and employer pension contributions, which for the average claim (the government states) accounts for just 5% of total employment costs.

The extended CJRS will operate as the previous scheme did, with businesses being paid upfront to cover wages costs, however there will be a short period when businesses will be paid in arrears whilst the terms of the scheme are updated. The level of the grant will mirror levels available under the CJRS in August, so the government will pay 80% of wages up to a cap of £2,500 and employers will only pay employer National Insurance Contributions (NICs) and pension contributions in respect of the hours covered by the government grant.

The Job Support Scheme, which was scheduled to come in on Sunday 1st November, has been postponed until the furlough scheme ends.

Detailed guidance is expected in the next few days.

Who is eligible for the CJRS?

Employers

·     All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.

·     The government expects that publicly funded organisations will not use the scheme, as has already been the case for CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements apply to these employers.

Employees

·     To be eligible to be claimed for under this extension, employees must have been on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.

·     Employees can be on any type of contract. Employers will be able to agree working arrangements with employees.

·     Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. The calculations will broadly follow the same methodology as under the previous CJRS.

·     When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of seven consecutive calendar days.

·     Employers will need to report actual hours worked, and the usual hours an employee would be expected to work in a claim period.

·     For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.

UK Sterling Currency

What support is being provided and employer costs:

·     For hours not worked by the employee, the government will pay 80% of wages up to a cap of £2,500. The grant must be paid to the employee in full.

·     Employers will pay employer NICs and pension contributions, and should continue to pay the employee for hours worked in the normal way.

·     As with the current CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.

·     The government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.

Mortgage Holidays

Mortgage payment holidays will no longer end on 31st October. Borrowers who have been impacted by coronavirus and have not yet had a mortgage payment holiday will be entitled to a six month holiday, and those that have already started a mortgage payment holiday will be able to top up to six months without this being recorded on their credit file.

The FCA is expected to announce further details today.

Mortgage holiday

Business Grants

Businesses required to close in England due to local or national restrictions will be eligible for the following:

·     For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks;

·     For properties with a rateable value of between £15k-£51k grants to be £2,000 per month, or £1,000 per two weeks;

·     For properties with a rateable value of £51k or over grants to be £3,000 per month, or £1,500 per two weeks.

To contact a member of the Claritas Tax team, click here

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