Government support for businesses
The government has today announced a new package of measures to support businesses through to March 2021 following the introduction of further restrictions and rising COVID infection rates.
The measures, whilst not as generous as those introduced earlier this year, will be welcomed by businesses facing an uncertain winter, says accountants, business and financial advisers Kreston Reeves. But the devil will be in the detail.
The measures announced today include:
Job Support Scheme
The furlough scheme will end on 31 October and will be replaced with financial support for businesses with staff working reduced hours. The Job Support Scheme will:
- Be available for businesses with staff working at least one third of their normal hours.
- The government will then top up salaries by one third of the remaining two thirds, with another third due by the employer. This results in an employee working 1/3 of their normal hours receiving 77% of their normal wage, with 22% funded by the government and 55% by the employer. The scheme is open to all SMEs and to larger businesses who can show a fall in turnover.
- The scheme will start on 1 November 2020 and operate for six months.
“The question that companies must answer is whether they are prepared to pay a premium for an employee to work reduced hours in order to avoid the cost of making more long-term structural redundancies. The scheme will only be of benefit to employers where there is a genuine expectation that the roles will be required from May 2021.”