Chancellor Rishi Sunak presented a Summer Economic Update on Wednesday 8 July 2020. In his speech he stated that the government has taken
decisive action to protect the UK economy but people are anxious about losing their job and the rise in unemployment.
The Chancellor’s statement was therefore setting out the government’s Plan for Jobs. The policy measures set out a three-point plan. The Chancellor stated the aims of the government are to:
• first – support people to find jobs
• second – create jobs
• third – to protect jobs.
Our summary of the measures follow the three-point plan. In addition we explain some of the other measures that are still operating to support businesses and their employees – in particular the second phases of the Coronavirus Job Retention Scheme and the Self-employment Income Support Scheme. Both of these measures will continue to provide support to businesses and employees. Please do not hesitate to contact us if you
would like assistance with either of these measures.
Job Retention Bonus The Job Retention Scheme has supported over one million employers to protect over nine million jobs. The government has confirmed that this scheme will finish at the end of October and further details of the scheme are provided later in this summary.
The Chancellor has announced that a new Job Retention Bonus will be available to reward and incentivise employers who retain their previously furloughed employees. The government will introduce a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. However, employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Payments will be made from February 2021. Further
details about this scheme will be announced by the end of July.
The Kickstart Scheme
One of the main announcements in the Chancellor’s speech related to the introduction of a new Kickstart Scheme to fund the direct creation of high quality jobs for young people at the highest risk of long-term unemployment.
This will be a £2 billion fund to create hundreds of thousands of high quality six-month work placements aimed at those aged 16-24 who are on
Universal Credit and are deemed to be at risk of long-term unemployment. Funding available for each job will cover 100% of the relevant National
Minimum Wage for 25 hours a week plus the associated employer National Insurance Contributions and employer minimum automatic
More changes to support jobs
To address the ongoing challenges that the economy faces, the government has a large-scale plan to support people in finding jobs, enable them to gain the skills they need to get jobs and provide targeted help for young people to get into work.
In addition, the government intends to support those who are out of work for a longer period with a new large-scale employment support offer.
Further details will be announced shortly. The announcements include:
New funding for National Careers Service – an additional £32 million funding over the next two years for the National Careers Service for
personalised advice on training and work.
High quality traineeships for young people – an additional £111 million this year for traineeships in England to fund high quality work placements
and training for 16-24 year olds with a view to tripling participation in traineeships. The government will pay employers who provide trainees
with work experience £1,000 per trainee.
Payments for employers who hire new apprentices – a new payment of £2,000 to employers in England for each new apprentice they hire aged
under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, from 1 August 2020 to 31 January 2021.
Courses for school and college leavers – £101 million for the 2020/21 academic year to give all 18-19 year olds in England the opportunity
to study targeted high value Level 2 and 3 courses when there are not employment opportunities available to them.
Expanded Youth Offer – expand and increase the intensive support offered by the DWP in Great Britain to young jobseekers to include all those aged
18-24 in the Intensive Work Search group in Universal Credit.
Enhanced work search support – £895 million to enhance work search support by doubling the number of work coaches in Jobcentre Plus before
the end of the financial year across Great Britain.
Expansion of the Work and Health Programme – up to £95 million this year to expand the scope of the Work and Health Programme in Great
Britain to introduce additional voluntary support in the autumn for those on benefits that have been unemployed for more than three months.
Job finding support service – £40 million to fund private sector capacity to introduce a job finding support service in Great Britain in the autumn.
This online, one-to-one service will help those who have been unemployed for less than three months increase their chances of finding employment.
Flexible Support Fund – increased funding for the Flexible Support Fund of £150 million in Great Britain, including to increase the capacity
of the Rapid Response Service, which will also provide local support to claimants by removing barriers to work such as travel expenses for
New funding for sector-based work academies – an additional £17 million this year to triple the number of sector-based work academy placements in England in order to provide vocational training and guaranteed interviews for more people.
The second part of the government’s plan for jobs is to support job creation. Two measures have been announced to support the residential housing market.
Stamp Duty Land Tax: temporary reduced rates
Reduced rates of Stamp Duty Land Tax (SDLT) will apply for residential properties purchased from 8 July 2020 until 31 March 2021 inclusive. SDLT
will only be due on the amount paid for the property above £500,000. On 1 April 2021 the reduced rates will revert to the rates of SDLT that were in
place prior to 8 July 2020. These rates apply whether the property is a first home or the person has owned property before.
Other existing rules relating to SDLT remain unchanged, including:
• the 3% higher rate for purchases of additional dwellings applies on top of the revised standard rates above for the period 8 July 2020 to 31 March 2021
• companies as well as individuals buying residential property worth less than £500,000 will also benefit from these changes, as will companies
that buy residential property of any value where they meet the relief conditions from the corporate 15% SDLT charge.
Temporary VAT cuts
From 15 July 2020 to 12 January 2021, the reduced rate of VAT will apply to:
• supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK
• supplies of accommodation and admission to attractions across the UK.
Eat Out to Help Out
In order to support around 130,000 businesses and to help protect the jobs of their 1.8 million employees, the government will introduce the Eat Out
to Help Out scheme to encourage people to return to eating out. This will entitle every diner to a 50% discount of up to £10 per head on
their meal, at any participating restaurant, café, pub or other eligible food service establishment. The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks) for the month of August 2020 across the UK.
Participating establishments will be fully reimbursed for the 50% discount.
The second phases of the Coronavirus Job Retention Scheme and the Self-employment Income Support Scheme will continue to provide
support to businesses and employees. Business owners need to claim for these schemes and we summarise the main points here.
Coronavirus Job Retention Scheme (CJRS) Phase 2
The CJRS was released in the first wave of the package of measures designed to help protect jobs and prevent redundancies at the start of the
pandemic. Phase 1 of the scheme ran from 1 March to 30 June 2020 with employers having until 31 July 2020 to make the claims for the period to
30 June 2020.
On 1 July 2020 phase 2 commenced. Under the Flexible Furlough Scheme, for claim periods starting after 1 July 2020 employers can bring furloughed
employees back to work for any amount of time or on any shift pattern, while still being able to claim the government grant to cover the cost for
the hours not worked.
From 1 July 2020, only employees previously furloughed are eligible under the revised flexible scheme and the rules change slightly each month until
the scheme closes on 31 October 2020, making it no longer possible for claim periods to overlap calendar months. Claims can only be made for a
period of at least seven days, except where the period includes the first or last day of the month where a claim has already been made for the period
ending immediately before. Only one claim can be made for any period and all furloughed and flexibly furloughed employees must be included in
the one claim (even if they are paid at different times).
If the employee is fully furloughed they must not work for the employer during the claim period but the claim is still calculated using the
‘maximum wage amount’ of £2,500 per month or £576.92 per week. However this is not what can necessarily be claimed in the grant. In July and August the government will contribute 80% of the employee’s wage up to £2,500 with a contribution in July only for the employer NICs and
pension contributions. From August onwards the employer NICs and pension contributions become the employer’s responsibility.
In September the government grant falls to 70% of the wages up to £2,187.50 with the employer being required to contribute 10% of the wages
up to £312.50 and the government grant falls again in October to 60% of the wage up to £1,875 with the employer being required to contribute 20% up to £625.
It is when an employee is flexibly furloughed that the Government grant calculation requires that the ‘usual’ hours and the ‘furloughed’ hours are
calculated. This is because the grant can still be claimed for the hours the employee does not work compared to the hours they would usually have
worked in that period. The ‘usual’ hours are dependent on whether the employee is on a ‘fixed’ hours rate or a ‘variable’ hours rate contract.
The term ‘variable’ hours is used to describe an employee who is not contracted for a fixed number of hours or whose pay depends on the hours
worked and a ‘fixed’ hours employee is an employee where neither of these conditions apply.
The calculation of the amount of the CJRS grant for those on flexible furlough will be based on the report of the ‘usual’ hours worked for an
employee on a ‘fixed’ hour contract and on the higher of the ‘usual’ wage earned for the corresponding calendar period in 2019/20 and the average
wages payable in 2019/20 for a variable hour contract.
Payments received by a business under the scheme must be included as income in the business’s calculation of its taxable profits. Businesses can
deduct employment costs as normal when calculating taxable profits.
Individuals with employees that are not employed as part of a business (such as nannies or other domestic staff) are not taxable on grants received
under the scheme. Domestic staff are subject to Income Tax and National Insurance Contributions on their wages as normal.
There are special rules for those returning to work following periods of parental leave or being re-hired after being made redundant and
employers must ensure the requirements of the National Living and National Minimum Wage are not breached.
HMRC will include legislation in the Finance Bill 2020 to allow for the clawback of any amounts of the CJRS grant which were not due with
the potential for a penalty charge for failure to notify or the deliberate concealment of an error.