On Friday 29th May, the Chancellor made some important changes to the Furlough Scheme and announced the Self-Employment Income Support Scheme (SEISS) will be extended:
- The Coronavirus Job Retention Scheme (CJRS) will be extended, including improved flexibility to bring furloughed employees back part time in July, and a new taper requiring employers to contribute modestly to furloughed salaries from August
- SEISS will be extended – with those eligible able to claim a second and final grant capped at £6,570
- Both schemes are UK wide
Furlough Scheme
From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time.
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 but 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.
The scheme will close to new entrants from Tuesday 30th June 2020.
- From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to Tuesday 30th June.
- This means that the final date by which an employer can furlough an employee for the first time will be Wednesday 10th June, in order for the current 3-week furlough period to be completed by Tuesday 30th June.
- Employers will have until Friday 31st July to make any claims in respect of the period to Tuesday 30th June.
- If you are reviewing your workforce plans, it is important that you take account of the Wednesday 10th June date.
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.
- August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – on average, 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. On average, 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. On average, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.
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Self-Employment Income Support Scheme (SEISS)
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.
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.
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