Latest Covid-19 financial support from the government

Following the Chancellor’s statement on 22nd October 2020, we have highlighted two government support schemes that we believe could be of interest to the construction community.

Self Employment Income Support Scheme Grant

Announced on 22.10.20

The Self-Employment Income Support Scheme Grant has been given an Extension by the Government.

It will provide support to the self-employed in the form of two grants, each available for three month periods:

  • November 2020 to January 2021
  • February 2021 to April 2021.

To be eligible for the Grant Extension self-employed individuals, including members of partnerships, must:

  • have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although you do not have to have claimed the previous grants)
  • declare that you intend to continue to trade and either:
    • are currently actively trading but are impacted by reduced demand due to coronavirus
    • were previously trading but are temporarily unable to do so due to coronavirus

A first taxable grant at the start of November will cover 40% of average monthly trading profits, with a limit of £3,750 in total. It will be paid out in a single instalment covering three months’ worth of profits.

The second grant, with the same terms, will cover a three-month period from the start of February 2021 until the end of April 2021.

The grants are taxable income and also subject to National Insurance contributions.

Note: Self-employed people who pay themselves a salary and dividends through their own company are not covered by the scheme.

However,  job retention schemes offer options if you operate through PAYE.

There are more than five million self-employed people in the UK. Roughly a fifth of the self-employed are in the construction sector, according to the Office for National Statistics (ONS).

Job Support Scheme

Announced on 22.10.20

The Job Support Scheme (JSS) replaces furlough (Coronavirus Job Retention Scheme). It was designed to help people who couldn’t do their jobs and prevent mass redundancies during lockdown.

When originally announced, the JSS – effective from 1 November 2020 – saw employers paying a third of their employees’ wages for hours not worked. And it required employers to be working 33% of their normal hours.

However the announcement on 22 October about JSS (open) reduces the employer contribution to those unworked hours to just 5%, and reduces the minimum hours requirements to 20%, so those working just one day a week will be eligible. That means that if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer only £44.

Employers will continue to receive the £1,000 Job Retention Bonus. The Job Support Scheme (Closed) for businesses legally required to close, remains unchanged.

JSS (open businesses) in summary:

  • The government will provide up to 61.67% of wages for hours not worked, up to £1541.75 per month (more than doubling the maximum payment of £697.92 under the previous rules). The cap is set above median earnings for employees in August at a reference salary of £3,125 per month.
  • Example: a typical full-time employee is paid an average of £1,100 per month. They will still take home at least £807 a month. All the employer needs to pay is a total of £283 a month or just £70 a week; the government will pay the rest.
  • Employers using the scheme will also be able to claim the Job Retention Bonus (JRB) for each employee that meets the eligibility criteria of the JRB. This is worth £1,000 per employee. Taking JSS-Open and JRB together, an employer could receive over 95% of the total wage costs of their employees if they are retained until February.

To qualify, your staff must have been on your payroll since 23 September.

You can move them on and off the scheme, or ask them to work different hours, but each working arrangement must cover at least seven days.

JSS (closed businesses) in summary:

  • Each employee who cannot work due to these restrictions will receive two thirds of their normal pay, paid by their employer
  • Fully funded by the government, to a maximum of £2,083.33 per month
  • The employer has discretion to pay more than this if you wish
  • Employees may also be entitled to additional financial support, including Universal Credit.

You cannot make anyone on this scheme redundant or put on notice until after the JSS grant stops being claimed.

Employers will be reimbursed by the government for its share after salaries have been paid. The scheme will run for six months from 1 November, and then be reviewed.

Further information

Previous articles relating to government support during the Covid-19 crisis can be found here:

6 August 2020: The latest financial support for small businesses >>

24 September 2020: Chancellor’s Winter Economy Plan >>