There have been fresh announcements in recent days on two key parts of the Government’s package of measures in response to the economic impact of the Coronavirus pandemic.
Firstly, some details of how the Coronavirus Job Retention Scheme, more commonly known as the Furlough Scheme, will change from July through to its conclusion in October.
Secondly, there was also a surprise announcement that there will be a second and final grant payable under the Self Employed Income Support Scheme to qualifying self-employed individuals who have been adversely affected by the pandemic.
Details of previous guidance on all areas of Coronavirus support available to business can be found on the news section of our website
Furlough Scheme (Coronavirus Job Retention Scheme – “CJRS”)
It was confirmed that the Furlough Scheme, officially called the Coronavirus Job Retention Scheme, or CJRS, would be continuing until 31st October 2020. However, there will be some significant changes to the rules over the intervening months between now and then.
The current scheme (“CJRS1”) effectively stops on 30th June, being replaced immediately by “CJRS2”.
There are some key differences, as support is gradually being reduced over the next few months under CJRS2, though offset with some flexibility that businesses have been asking for. So, what is changing?
Changes from 1st July:
- Importantly, employees must have been in a period of furlough for three weeks under CJRS1 to qualify for CJRS2. In other words, no new entrants to the scheme may be made after 10th June (in order to have 3 weeks’ qualification by the cut off date). What is as yet unclear, with details expected on 12th June, is what happens to someone brought in for a week, say on 8th June, to deal with a big order, and then put back on furlough on 15th Please take care with such cases until we know the details.
- Part-time working with part-time furlough (called flexible furlough) will be possible from 1st. Therefore, as part of the scheme reporting, you will have to report both actual hours worked, and normal hours of work in the period as part of the claim. The employer will cover the cost of wages and associated Employer’s NIC and pension contributions for the proportion of time worked (at 100% presumably, unless a temporary variation to contract is agreed), with the remainder covered under the scheme at 80%, subject to the £2,500 cap. It is unclear at this stage how exactly the cap will apply to someone with a normal salary of over £2,500 but who is working part-time under a flexible furlough arrangement. Again, details are expected on 12th June, so please watch our website or social media platforms for further announcements.
- Due to the complications of monthly changes to the scheme, claims may no longer span calendar months. So please make sure that your June claim covers the period right up to 30th Also, critically, applications for grants under CJRS1 will close on 13th July 2020 (covering all periods up to and including 30th June)
- Claims will need to be made for a minimum period of one week.
- “Flexible furlough” agreements must be made in writing and agreed with the employees concerned.
Changes from 1st August:
From 1st August, the funding will reduce, such that the Employer’s NIC and pensions contributions will no longer be allowable in the claim. Therefore, only the gross salary element will be paid from this date. For August, this remains at 80% of normal earnings subject to a maximum of £2,500
Changes from 1st September:
From 1st September, the amount of wages covered by the CJRS2 grant reduces from 80% subject to a cap of £2,500, falling to 70% of wages subject to a cap of £2,187.50. However, the employee will still have to be paid at 80% of normal earnings, so the remaining 10% (subject to a cap of £2,500) will become a cost to the employer, on top of the Employer NIC and pension payments on the whole payment.
Changes from 1st October:
From 1st October, the amount of wages covered by the CJRS2 grant reduces from 70% subject to a cap of £2,187.50, falling to 60% of wages subject to a cap of £1,875. As is the case from September, the employee will still have to be paid at 80% of normal earnings, so the remaining 20% (subject to a cap of £2,500) will become a cost to the employer, on top of the Employer NIC and pension payments on the whole payment.
Self Employed Income Support Scheme (SEISS)
The additional grant payable under the Self Employed Income Support Scheme will be very similar to those of the initial grant scheme launched in May (please see here for full details of this scheme).
It is important to note that claims for this first grant will close on 13th July 2020. We are aware that not all self-employed individuals (including partners in partnerships) have been contacted by HMRC. It is important therefore to make sure that, if you have not yet done so, please check your eligibility as soon as possible, and get any claim underway. Details of how to do this can be found in our previous article of 12th May, available from the news section of our website.
The second grant is very similar to the first grant but will be slightly lower.
Eligible individuals can claim a taxable grant worth 70 per cent of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profit, and capped at £6,570 in total. This compares to the limits on the first grant which were 80% of three months’ worth of profit, capped at £7,500
The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by coronavirus when applying for the second and final grant.
An individual does not need to have claimed the first grant in order to be eligible for the second and final grant. Applications will open in August 2020. Further information on the second grant is expected to be released on 12 June 2020.
Please make sure you are following us on our social media platforms (Twitter @OxfordAccounts, LinkedIn and Facebook) and checking the news section of our website //crmoxford.co.uk/news/ for updates as we have them, and in particular for our analysis of the rules for both schemes, which are expected to be released in the next couple of weeks.
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