Expansion of Job Support Scheme for Closed Business Premises

Rishi Sunak has announced an expansion of the Job Support Scheme to employers who are forced to close their business premises due to coronavirus restrictions. It will start on 1 November and will run for six months. The government will review it in January.

Businesses which are legally required to close their premises (such as pubs and restaurants) will receive a subsidy from the government worth two thirds of their wage costs. The subsidy will be capped at £2,100 per employee a month.

The subsidy will apply to the wages of those employees who are instructed to and actually cease work at the premises which have been forced to close, for a minimum of 7 days. It is not necessary for the employees to have been previously furloughed. Employees cannot be made redundant during a period in which the grant is being claimed.

Businesses will still be required to pay employer’s National Insurance Contributions and pension contributions on the full amount of the wage. The government has stated that it expects larger businesses who claim under the scheme to refrain from paying dividends or making capital distributions such as share buy-backs. As with the previous schemes, the grant will be taxable.

Businesses throughout the UK will qualify provided that they have a UK bank account and have registered a UK PAYE scheme on or before 23 September 2020. Claims will be made monthly in arrears, and details of how to claim will be published in due course.

The scheme will be seen as a welcome response to the tighter restrictions due to be announced next week. The question will be, how many affected businesses will be able to retain staff even with a two thirds wage subsidy.