Have you been making use of the Coronavirus Job Retention Scheme - commonly referred to as the Furlough Scheme? It was announced early in May that the scheme was being extended for a further four months, taking the scheme up to 31 October 2020, when it will end. Clarification about the scheme from August onwards was announced last week (week ending 30 May) and as predicted it will taper off towards the end of the scheme.
The furlough scheme will CLOSE TO NEW ENTRANTS from 30 June. This means that the final date by which an employer can furlough an employee for the first time will be 10 June in order to complete the current three-week furlough period which is required.
Employers will then have until 31 July to make any claim in respect of furloughed staff in the period up to 30 June.
Part-time and Tapered Furloughing
Part-time furloughing (currently prohibited) will be permitted. But significantly employers will be required to share the cost. This will also apply if staff are furloughed full time.
From 1 July employers can bring back their employees who were furloughed for any number of hours, whilst still claiming for their normal hours not worked. This is a month earlier than previously announced. Employers are responsible for paying their employees’ wages while they are at work.
From 1 August the amount of grant provided by the government will continue to be tapered. Businesses will be asked to contribute but employees will continue to receive 80% of salary through the scheme covering the time they are unable to work.
From 1 September the government will pay 70% of wages – up to a cap of £2,187.50 for the month. Employers will be required to pay National Insurance and pension contributions plus a minimum of 10% of wages in order to maintain the 80% pay – up to a cap of £2,500 as with the earlier scheme. The Government estimates that for an average claim that constitutes a total 14% contribution of gross employment costs incurred by the Employer.
From 1 October this will reduce again to a 60% contribution up to a cap of £1,875. Including the National Insurance and pension contributions this will represent an average contribution of 23% of gross employment costs incurred.
Employers will need to submit data on the usual hours worked and the actual hours worked by any furloughed employee in order to receive this grant.
Self-employed? Check if you’re eligible for a grant
If you haven’t already check online to find out if you’re eligible to make a claim under the Self-Employment Income Support Scheme. The scheme allowed you to claim a taxable grant of 80% of your average monthly trading profits, capped at £7,500 total (for three months’ worth of profits). Individuals can apply for this first grant up until 13 July.
This scheme has also been extended, allowing those eligible to make a second and final claim capped at £6,570 – a reduction from the original grant to 70% of trading profits. Applications for this second grant will open in August. An individual is not required to have applied for first grant to apply for second grant. Guidance on the second grant is estimated to be announced by the government on 12 June.
Newly self-employed? Apply to the Newly Self-Employed Hardship Fund
Application for the newly self-employed hardship fund is made directly through CNES. It consists of a one-off payment of £2000 to those eligible.
The fund is aimed at self-employed people who started their business on or after 6 April 2019 and therefore were not eligible for the main Self-Employment Income Support Scheme. To be eligible, over 50% of your income must come from self-employment. It is also a requirement that you are NOT eligible for the other COVID-19 related business support schemes including Job Retention (furlough), Business Interruption loans etc (please check website for all business support options). An additional requirement is that you have taken other steps to mitigate your losses – for example through VAT deferral schemes and seeking a mortgage payment holiday if applicable.
The application is predicted to take 10 working days from application to the funds being releases if approved.
This is just a summary of what seem to be the existing rules – for full details please consult the HMG website https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme