Key Points of Wage Subsidy Announcement by UK Government

UK Chancellor Rishi Sunak has announced a new wage subsidy as well as other steps to help those in work during the Covid-19 crisis.

Key Points of Wage Subsidy Announcement by UK Government f

"Employees must work at least a third of their normal hours"

UK Chancellor Rishi Sunak has announced a new job support scheme and with that comes a wage subsidy.

This comes amid a growing number in Covid-19 cases which has subsequently led to a curfew on businesses.

Mr Sunak warned that he cannot save every business or every job threatened by the pandemic.

He has now outlined a four-point plan in order to help the British economy through a difficult winter.

This includes plans for a job support scheme that will replace furlough, help for the self-employed, business loans and VAT cuts.

Wage Subsidy Scheme

Mr Sunak announced that the government will directly support the wages of people in work. By doing this, this can give struggling businesses the chance to keep employees in a job on shorter hours rather than making them redundant.

It is designed to protect viable jobs over the next six months after the furlough scheme ends in October 2020.

Mr Sunak said: “Employees must work at least a third of their normal hours and be paid for that work as normal by their employer.

“The government, together with employers will then increase those people’s wages, covering two-thirds of the pay they lost by reduced working hours.”

The employer and the government will pay one-third each. However, the grant will be capped at £697.92 per month.

All small and medium-sized businesses will be eligible. Large firms will be eligible only if their turnover has fallen during the pandemic.

However, the wage subsidy scheme will not help companies who do not have enough work to bring staff back part-time.

The scheme will start in November 2020.

Self-Employed Grant

Mr Sunak announced that he would be extending the existing self-employed grant on similar terms and conditions of the new job support scheme.

A grant will be available to those eligible for the Self Employment Income Support Scheme Grant.

The grant will cover three months’ worth of profits for the period from November to the end of January 2021.

It will cover 20% of average monthly profits up to a total of £1,875

A further grant will be available to the self-employed to cover February 2021 to the end of April.

Pay as you Grow

Rishi Sunak also introduced a ‘Pay as you grow’ scheme to give businesses more time and flexibility to repay their loans.

Small firms will be able to extend their bounceback loans from six to 10 years. As a result, this should halve their monthly repayments.

Struggling businesses can choose to make interest-only payments if needed.

Any businesses in trouble can apply to suspend repayments altogether for up to six months.

Hospitality & Tourism

Hospitality and tourism are two of the most affected sectors. Mr Sunak announced plans to support them.

Currently, the VAT will increase from five per cent to 20% in January 2021. However, Mr Sunak announced that the planned increase will be cancelled.

Instead, the lower five per cent will remain until March 31, 2021.

This is a summary of the plans set out by Rishi Sunak to help workers and businesses affected by the Coronavirus pandemic.

Dhiren is a journalism graduate with a passion for gaming, watching films and sports. He also enjoys cooking from time to time. His motto is to “Live life one day at a time.”