Extensions to the Self-Employed income Scheme and Flexible Furlough and JRS
The government through the chancellor of the exchequer Rishi Sunak, announced on Friday that the Self-Employment Income Support Scheme will be extended. As such, those eligible will be able to claim a second and final grant capped at £6,570
The Chancellor also outlined further details on the extension of the Coronavirus Job Retention Scheme, including improved flexibility to bring furloughed employees back part time in July, one month earlier than expected and a new taper requiring employers to contribute modestly to furloughed salaries from August. This represents a new Job Retention scheme which commences from the 1st of July, meaning new requirements around the eligibility to the original scheme up to the end of June. Both schemes are UK wide and there are no changes to those eligible.
The Self-Employed Income Support Scheme (SEISS)
Those eligible under the Self-Employment Income Support Scheme (SEISS), which has so far seen 2.3 million claims worth £6.8 billion 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.
Individuals can continue to apply for the first SEISS grant until 13 July. Under the first grant, eligible individuals can claim a taxable grant worth 80% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total. Those eligible have the money paid into their bank account within six working days of completing a claim.
Applications for the second grant will open in August. Individuals will be able to claim a second taxable grant 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.
The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by coronavirus. An individual does not need to have claimed the first grant to receive the second grant: for example, they may only have been adversely affected by COVID-19 in this later phase. Further guidance on the second grant will be published on Friday 12 June
The Job Retention Scheme
The Chancellor on Friday also confirmed further details on how the Coronavirus Job Retention Scheme (CJRS) will continue to support jobs and business as people return to work, and following the announcement of an extension of the scheme on the 12th of May, how the new scheme would firstly effect the employer contributions but also the availability of bringing staff back to part-time or more work in the near future to help and assist employers restart their business as usual.
So far, the CJRS has helped 1 million employers across the UK furlough 8.4 million jobs, protecting people’s livelihoods.
From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part-time. This is 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. This will be under a new scheme where the employer will need to confirm through the claim system the individuals normal hours and the actual hours worked and confirmation of the mechanics and return model are due to be available on or by the 12th of June. An important responsibility for employers with the new scheme and part-time return is that any changes or agreed work/shift patters required must be made to the employee in writing.
From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. That means that for June and July the government will continue to pay 80% of people’s salaries where furloughed either full or part-time. In the following months, businesses will be asked to contribute a modest share, but crucially individuals will continue to receive that 80% of salary covering the time they are unable to work.
The scheme updates mean that the following will apply for the period people are furloughed:
- For 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 under the current rules, so, the mandatory 3% employer costs under the auto-enrolment scheme after the lower qualifying earnings have been reached. Employers are not required to pay anything further. This represents the same model currently in use.
- From August the government will pay 80% of wages up to a cap of £2,500 for any periods an employee is furloughed. Employers however will commence full payment of the ER NICs and pension contributions currently covered by the scheme for those furloughed wages claimed – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
- From September the government will pay 70% of wages up to a cap of £2,187.50. As with August the employers will pay the 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.
- From October the government will pay 60% of wages up to a cap of £1,875. Employers will pay the ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500 for furloughed periods of work. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.
October will therefore be the last month of the JRS process and I not expected to continue past this date as confirmed by the chancellor on Friday.
From July in all circumstances, if an employee remains on furlough but commences any for of work for the employer, firstly the minimum period of split pay/furlough must be a week and the employer will be required to make payment of full salary for the time worked and only claim under the furlough scheme for time not worked that usually would have been so.
From 1 July, claim periods will no longer be able to overlap months, employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward. This is necessary to reflect the forthcoming changes to the scheme.
The scheme also does not change in respect of the employer topping up furloughed wages which can continue in the same way with the employer picking up the expense.
The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the current CJRS.
Employers can continue to make claims in anticipation of an imminent payroll run, at the point payroll is run or after payroll has been run and employers will be able to make their first claim under the new scheme from 1 July.
Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud hotline. HMRC will not hesitate to take action against those found to be abusing the scheme.
To enable the introduction of part time furloughing, and support those already furloughed back to work, claims from July onwards will be restricted to employers currently using the scheme and therefore previously furloughed employees. The scheme will close to new entrants on 30 June, with the last three-week furloughs before that point commencing on 10 June. As such, any individual that an employer wishes to furlough and claim for under the scheme must be furloughed on or by the 10th of June to allow for the remaining period to be completed of three weeks before the final deadline. The employer has until the 31st of July to make any outstanding claims for the first stage scheme – for any payment or claim required for the period up to the 30th of June.
From 1 July, employers will be able to agree any working arrangements with previously furloughed employees. When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week, for grants to be calculated accurately across working patterns but can be for longer, especially in situations where payrolls run fortnightly, lunar or monthly.