Furlough and self-employment scheme amended
The Chancellor Rishi Sunak announced changes to the existing support schemes last Friday. The schemes which have been a lifeline for employees, self-employed and businesses at large is set to change from July.
Changes to the Coronavirus Job Retention (Furlough) Scheme (CJRS)
From 1st July businesses will be able to bring back employees on a part-time basis. The employees can return for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week.
Otherwise the scheme will continue as normal until August after which the following changes will occur:
August – The grant will no longer cover the Employer’s National Insurance Contributions or Employer’s pension payments
September – Businesses will pay 10% of the wages of the furloughed employees so Government only covers 70% to a cap of £2,187.50. Employers will continue to pay the National Insurance and Pension costs mentioned above.
October – The businesses contribution will increase to 20% of the wages of the furloughed employees so the Government only covers 60% to a cap of £1,875.
So, from September employers will basically make up the shortfall to get the salaries up to 80% of normal level.
Currently the government covers 80% of the wages to a cap of £2,500.
The scheme closes to new entrants from 30th June after which time only those employees that have been furloughed previously for a full three-week period will be eligible.
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 3-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 (SEISS)
Alongside the furlough scheme, self-employed individuals, and partnerships eligible under the SEISS which has so far seen 2.3m claims worth £6.8bn, will be able to claim a second and final grant in August.
The grants paid out by the Self-Employment Income Support Scheme (SEISS) will be worth 70% of a self-employed person's average monthly trading profits to cover three months' worth of income. The total for the three months will be capped at £6,570.
Applicants can apply for the first grant until 13th July so if you have not already done so you need to investigate this. Applications for the second grant will open in August.
You do not have to have claimed the first grant to qualify for the second.
What to do next
Further guidance on both the schemes will be published on 12th June detailing how to calculate the claims.
For both the schemes the overarching condition is that the business has been affected by the Covid-19 pandemic.
If we are running your payroll for you rest assured that we will lodge the claims on your behalf if you have asked us to do so already. You should however inform the member of our payroll team of any changes immediately.
We are going to be asking clients to sign the secure payroll reports each month until end of October due to all the changes.
We are not able to complete the claims for the SEISS but we can of course double check the figures for you before you make the application. Please direct your queries to Martin Wackett via email to firstname.lastname@example.org