We are about to enter a phase where the changes to the Furlough scheme, announced by the Government earlier this month will start to take effect.
You will find the HMRC advice through this link: https://www.gov.uk/government/publications/changes-to-the-coronavirus-job-retention-scheme/changes-to-the-coronavirus-job-retention-scheme. However a brief summary of the changes is set out below.
The CJR Scheme will close on 31 October 2020.
From 1 July, you as employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim CJRS grant for the hours not worked.
You, the employer, will have to pay employees for the hours they come back in to work.
From 1 August 2020, the level of grant will be reduced each month.
As you know to be eligible for the grant you must pay a furloughed employee 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed.
The wage cap are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours:
At the moment and up to end of July the government will continue to pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee is on furlough.
From August, the government will still pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough but you as the employer will pay ER NICs and pension contributions for the furloughed hours.
From September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
For October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed
You can continue to choose to top up employee wages above the 80% total and £2,500 cap for the furloughed hours if you wish.
The scheme was introduced to support your self-employed business if it had been adversely affected by the Pandemic.
It currently lets you to claim a taxable grant worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.
The ability to make this claim has been with us since mid-May but if you have not made your claim (and you are eligible) then you must make your claim for the first grant on or before 13 July 2020.
The scheme is being extended. There is to be a second and final grant.
If your business has been adversely affected on or after 14 July 2020 and you are eligible, you’ll be able to make a claim in August 2020. HMRC will work out your eligibility the same way as the first grant.
You can claim for the second grant even if you did not make a claim for the first grant.
This grant will be a taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total.
The online service for the second and final grant is not available yet but you can sign up to HMRC alerts here: https://www.gov.uk/email-signup?topic=/topic/business-tax/self-employed
If you have any questions please contact your Champion Advisor.