COVID-19: Update on the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme

On the 29 May 2020, the Chancellor announced updates and amendments to the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS).  Details of these are summarised below and our COVID-19 Business Fact Sheet has been updated to include this information.

Further information on the changes for both the Coronavirus Job Retention Scheme and SEISS is expected on 12 June 2020.

Coronavirus Job Retention Scheme

The most important change is that the CJRS will close to new entrants on 30 June 2020.  After that date employers will only be able to furlough an employee who has previously been furloughed for three weeks before 30 June.  The cut-off date for furloughing employees for the first time then will be 10 June which will enable those employees to complete a full three week furlough and therefore be eligible for continued furloughing after 30 June.

With effect from 1 July 2020, businesses will be able to furlough employees based on business need, introducing a degree of flexibility into the scheme.  The scheme will work as follows:

• Employees can be brought back to work on a part-time basis dependent on the needs of the business, and employers will be responsible for the wages of the employee while they are working. If there is no work for the employee to do, they can remain on furlough;
• Government will continue to pay 80% of the employees’ wages for those hours the employee does not work until the end of August 2020;
• Employers and employees must agree these working hours arrangements in writing and they must cover at least one week. Employers must report and claim for a minimum period of one week.

The CJRS will start to be tapered in August as follows:

• During June and July no change will take place other than to allow for the flexible furloughing already referred to above;
• In August the Government’s contribution of 80% will continue, but employers will be required to pay employers’ National Insurance Contributions (NICs) and pension contributions;
• In September the Government will pay 70% of the hours not worked by employees up to a reduced cap of £2,187.50;
• In October the government contributions reduce to 60% and the cap to £1,875;
• The cap on the furlough grant will be proportional to the hours not worked.

Self-Employment Income Support Scheme

The SEISS is to be extended to allow eligible self-employed people to claim a second SEISS grant in August.  The grant is taxable and will be equal to 70% of the average monthly trading profits of the individual for three months up to a maximum of £6,570.  Eligibility criteria for the scheme remains the same and can be found in the guidance on the Government website here.

A reminder to those who are intending to claim under the first SEISS grant which opened on 13 May, all claims must be made by 13 July at the latest.

For more information on these changes or any other tax related measures, please contact Cathy Bryant. For a detailed view of what this means for employers, read our employment article on the furlough scheme changes.