On Friday the Chancellor, Rishi Sunak, announced more details about the extension of the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme. Whilst not all details have yet been published we have set out below what we already know.
Coronavirus Job Retention Scheme Changes
The Chancellor has announced three changes to the job retention scheme:
- From 1 July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working.
- From 1 August 2020, employers will have to start contributing to the wage costs of paying their furloughed staff and this employer contribution will gradually increase in September and October.
- The scheme will close to new entrants from 30 June.
From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked.
This flexibility comes a month earlier than previously announced to help people get back to work.
Employers will decide the hours and shift patterns their employees will work on their return, and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that they can furlough staff for.
Any working hours arrangement agreed between a business and their employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, they will need to report and claim for a minimum period of a week. They can choose to make claims for longer periods such as on monthly or two weekly cycles if preferred. Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.
If employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough and the employer can continue to claim the grant for their full hours under the existing rules.
Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.
IMPORTANT – If you are considering unfurloughing any employees the guidance is not yet clear on whether these employees could subsequently be put on part-time furlough given that they may not have been on furlough between 10-30 June. Given that guidance is not due until 12 June you may wish to hold back on unfurloughing any employees until 1 July.
From August 2020, the level of the grant will be slowly tapered to reflect that people will be returning to work:
- in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work
- in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed
- in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
- in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
- the cap on the furlough grant will be proportional to the hours not worked.
Many smaller employers have some or all of their employer NIC bills covered by the Employment Allowance so will not be significantly impacted by that part of the tapering of the government contribution.
Closure to new entrants from July:
It’s important to note that the scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June.
This means that the final date by which an employer can furlough an employee for the first time will be 10 June for the current three-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.
Self-Employment Income Support Scheme
The Chancellor also announced plans to extend the Self-Employment Income Support Scheme (SEISS) for those people whose trade continues to be, or is newly, adversely affected by COVID-19 (coronavirus). This will be a second and final grant expected to be paid in September.
Self-employed individuals, including members of partnerships, are eligible if they:
- submitted their Income Tax Self-Assessment tax return for the tax year 2018-19;
- continued to trade in 2019-20 and intend to keep trading in 2020-21;
- carry on a trade which has been adversely affected by COVID-19;
- have average self-employed trading profits of no more than £50,000 and at least equal to their non-trading income.
Individuals can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.
First Grant Eligible individuals can claim a taxable grant worth 80 per cent of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profit, and capped at £7,500 in total.
Applications for the first grant opened on 13 May 2020. Applications for the first grant will close on 13 July 2020.
IMPORTANT - If you have not already heard from HMRC about this grant and you think you should qualify please contact us as a matter of urgency by clicking the button below so we can confirm whether you are eligible and ensure that you apply by 13 July.
Second and Final Grant Eligible individuals can claim a taxable grant worth 70 per cent of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profit, and capped at £6,570 in total.
The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by coronavirus when applying for the second and final grant.
An individual does not need to have claimed the first grant in order to be eligible for the second and final grant.
Applications will open in August 2020. Further information on the second grant will be available on GOV.uk on 12 June 2020.
As always please do not hesitate to contact us if you require any further assistance.
Our previous updates can be found here
All Government guidance is available here