Friday [29 May 2020] saw the Chancellor clarify the expected changes to the Furlough scheme, introduced at the beginning of the COVID-19 crisis and also announce a welcome extension to the Self-Employment Income Support Scheme (“SEISS”).
Coronavirus Job Retention Scheme (“CJRS”)
Full details can be found at https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme
The furlough scheme will finish at the end of October and in the following months, businesses will be asked to contribute a modest share towards the cost of this scheme.
From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part-time. However, employers will only be able to claim going forward if they have previously claimed under the pre-July scheme. It is also important to note that there is a three week minimum period under the current furlough rules; and as a result, any new period of furlough must have started by 10th June to be complete by the 30th June, when the current scheme ends, to ensure employees are eligible under the new scheme from 1st July.
The changes will be in place a month earlier than previously announced to help support people back to work. Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them – and will be responsible for paying their wages while in work.
The scheme updates mean that the following will apply for the period people are furloughed:
- 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. Employers are not required to pay anything.
But from;
- August: The Government will pay 80% of wages up to a cap of £2,500.
Employers will pay ER NICs and pension.
For the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
- September: The Government will pay 70% of wages up to a cap of £2,187.50.
Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.
For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
- October: The Government will pay 60% of wages up to a cap of £1,875.
Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.
For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.
The withdrawal is more gradual than many had feared and the Government hopes that the support withdrawal will be mirrored by business demand recovering.
Self-Employment Income Support Scheme (“SEISS”)
The Chancellor confirmed that the Government’s Self-Employment Income Support Scheme (“SEISS”) will be extended, giving more security to individuals whose livelihoods are adversely affected by the Coronavirus in the coming months.
Full detail of SEISS is available at https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
Self-Employment Income Support Scheme will be extended – with those eligible able to claim a second and final grant capped at £6,570.
Those eligible under SEISS will be able to claim a second and final grant in August. The grant will be worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.
HMRC are still dealing with the first grant claims and the update confirms that “The online service for the second and final grant is not available yet. We will update this guidance to let you know when you can make your claim”. We will let you know as soon as details are released.
If you have any questions please contact your Champion Advisor.
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