A scheme originally announced back in the July mini-budget has recently launched. The Kickstart Scheme was unveiled by Chancellor Rishi Sunak in an attempt to help young people get back into work.

The Kickstart Scheme will subsidise businesses who can offer young people work placements. We have put together a mini-guide on everything you need to know about the Kickstart Scheme and how to apply for it.

What is the Kickstart Scheme?

The Kickstart Scheme aims to help people between the ages of 16-24 who are on Universal Credit get back into work. Since March, the number of young people on Universal Credit has skyrocketed to almost 538,000. That’s a rise of around a quarter of a million people within the past six months.

Rishi Sunak said, “This isn’t just about kickstarting our country’s economy – it is an opportunity to kickstart the careers of thousands of young people who could otherwise be left behind as a result of the pandemic.”

How Will the Kickstart Scheme Work?

The Kickstart Scheme will pay 100% of the relevant National Minimum Wage, National Insurance and pension contributions of the newly employed people. This will last six months and is estimated to cost £2 billion.

The scheme will also grant businesses £1,500 to help set up a training programme for the scheme’s participants.

The Kickstart Scheme will be organised and delivered by the Department for Work and Pensions (DWP). Applications will be open until December 2021 and it’s not yet clear whether the scheme will be extended beyond that time frame.

The Conditions Businesses Must Meet to Apply

Businesses must meet some conditions to apply for the Kickstart Scheme grants and new employee salaries.

1. They must be new jobs for at least 25 hours per week

Businesses must be able to offer placements of at least 25 hours per week and the job/placement must be a new position.

These placements must not be used to replace existing vacancies or cause any existing employees to lose their jobs.

2. The jobs must help young people develop their skills

The job placements themselves must not require extensive training to get new employees up to speed. However, each application will need to show how the placement will help young people develop their skills and experience. For example, by helping them look for long-term work, write effective CVs or provide support for basic skills such as teamwork and attendance.

The Government says: “DWP may contact you or the young person during the job placement to check what employability support has been offered. This is to make sure the young person has the best experience from the scheme.”

3. New jobs must be advertised through Jobcentre Plus

Any new job that employers advertise through the Kickstart Scheme must be listed through the Jobcentre Plus network only. The DWP has told businesses not to use platforms such as Indeed or TotalJobs to advertise placements and to instead sign up through the Jobcentre Plus route.

4. Businesses must offer 30 placements or team up with partner companies

Perhaps the most controversial criteria for the Kickstart Scheme is that businesses must be able to offer 30 placements. This has understandably put smaller businesses off from considering the scheme at all. However, there is a way for smaller companies to still use the scheme.

Smaller companies can partner with other businesses to reach the minimum placement number. This means one business must apply on behalf of a group of partner businesses

How to Partner with Other Businesses

If you choose to partner with other companies to apply for the Kickstart Scheme, whoever arranges it will receive a grant. The Government is offering £300 to those who organise partner applications. This is designed to support the administrative costs and time it will take to apply on everyone’s behalf.

If you want to apply on behalf of others

If you want to apply on behalf of a group of employers, the Government has published some guidance on how to do that.

As the representative, you will need to gather information about all the job placements for you and your partners. You must also pass on the relevant payments made by the DWP to the partner employers (e.g. the employee’s salaries).

To be eligible, you must have experience of managing partnership agreements with third parties and “robust financial and governance processes to manage the application”.

If you want to find a representative to partner with

Alternatively, the Government has published a list of businesses who you can partner with to apply for the Kickstart Scheme. You will be able to partner with similar employers, local authorities, trade bodies or registered charities.

Will There Be Delays?

One concern over this rule in the Kickstart Scheme is that there may be delays to large applications like this. Mike Cherry, National Chair of the Federation of Small Businesses voiced his concerns: “The time it will take to hire these 30 employees across several small firms could take months and result in increased costs for small firms at a time when they need our support the most.”

However, the DWP suggested that this would be a more efficient way of processing applications. A spokesperson said: “This is about making the process as efficient as possible so we can quickly get young people into placements – assessing a separate bid for every single vacancy would slow us down.”

A Government spokesman said: “Small and medium enterprises are an absolutely key part of the Kickstart scheme which is why we have designed the system specifically to meet their needs. We will continue to work closely with them and their representative organisations to make sure that every business that wants to employ a Kickstart participant is able to.”

How to Manage the Financial Side of the Kickstart Scheme

If you are planning to use the Kickstart Scheme, it’s important to learn more about the financial details.

The first thing to know is that the Kickstart Scheme grant will only be paid out to you after you have enrolled your new employee through PAYE. Once your new employee is set up in your payroll system, you will need to use the Real-Time Information method of reporting payroll data to HMRC.

The other question you may have is – will the grant be taxed? The training grant of £1,500 will be taxed. However, you will be able to off-set this as employment costs.

If you need help with managing payroll, the best thing you can do is hire an accountant who has plenty of experience managing payroll. With this being a brand new scheme, having a professional on hand to advise you is crucial to ensure you understand everything and are doing everything correctly.

If you’re looking for an accountant in London, we can help. For more information you can contact us here or request a quote directly here.