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Job Retention Scheme and Self Employed Income Support Scheme – Update 1st June 2020

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On Friday (29th May) the Chancellor announced some changes to the Coronavirus Job Retention Scheme and the Self employed Income Support Scheme.

Here are the details:

Coronavirus Job Retention Scheme (CJRS) – Important Update 29th May 2020

The Chancellor has announced three changes to the job retention scheme:

1. From 1‌‌ July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working.

2. From 1‌‌ August 2020, employers will have to start contributing to the wage costs of paying their furloughed staff and this employer contribution will gradually increase in September and October.

3. The scheme will close to new entrants from 30‌‌ June. This is a particularly important point if you have staff who you have not yet placed on furlough or have come off furlough and may need to be placed on furlough again.

1. Part time furloughing

From 1‌‌ July 2020, businesses using the scheme will have the flexibility to bring previously furloughed employees back to work part time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced to help people get back to work.

Employers will decide the hours and shift patterns their employees will work on their return, and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that they can furlough staff for.

Any working hours arrangement agreed between a business and their employee must cover at least one week and be confirmed to the employee in writing. 

When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week. You can choose to make claims for longer periods such as on monthly or two weekly cycles if preferred. Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. This means that you MUST keep strict records of this to enable the claim to be submitted correctly.

If employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough and the employer can continue to claim the grant for their full hours under the existing rules.

2. Employer contributions

From August, the government grant provided through the job retention scheme will be slowly tapered.

in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance and workplace pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work

in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay the employers National Insurance and any workplace pension contributions.

in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. Again employers will pay the employers National Insurance contributions and for the workplace pension. Employers will also pay 10% of wages to make up 80% of the total up to a cap of £2,500

in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work..Again the employer will pay the employers National Insurance contribution and the workplace pension contributions plus 20% of wages to make up 80% of the total up to a cap of £2,500 the cap on the furlough grant will be proportional to the hours not worked.

3. Here is some important Information

It’s important to note that the scheme will close to new entrants from 30‌‌ June. From this point onward, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30‌‌ June.

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 three-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.

Naturally with a split between the government paying on furlough for some hours and the employer paying in full for others the calculation of the furlough claim becomes significantly more complicated so it is vital that you maintain strict records of the hours your staff work.

The Chancellor also announced that he is extending the Self Employed Income Support Scheme (SEISS) for a further and final period. Here are the details you need to know:

Self-Employment Income Support Scheme – Important Update 29th May 2020

The Chancellor also announced plans to extend the Self-Employment Income Support Scheme (SEISS) for those people whose trade continues to be, or is newly, adversely affected by COVID-19 (coronavirus).

Eligible self-employed people will be able to claim a second and final SEISS grant in August; this will be a taxable grant worth 70% of their average monthly trading profits for three months, paid out in a single installment and capped at £6,570 in total.

The eligibility criteria for the second grant will be the same as for the first grant. It is worth noting that you do not need to have claimed the first grant to claim the second grant: for example, your business may have been adversely affected by COVID-19 (coronavirus) more recently.

Claims for the first SEISS grant, which opened on 13‌‌ May, must be made no later than 13‌‌ July so if you have not yet made a claim it is worth doing so before this deadline.

Eligible self-employed people must make a claim before that date to receive the first SEISS grant (a taxable grant of 80% of their average monthly trading profits, paid out in a single installment covering 3 months’ worth of profits, and capped at £7,500 in total).

It’s really important to note that as with the first SEISS grant, I am not permitted to claim on your behalf so you must do so yourself via your own government gateway account.

If you have any questions please do not hesitate to contact me.

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