Government Support for Employed and Self-Employed Extended

On Friday, the Chancellor announced changes to the Coronavirus Job Retention Scheme and the Self-Employed Income Support Scheme. Below we detail those changes.

Self Employed Income Support Scheme

During May, self-employed people with average trading profits over the last three years of less than £50,000, were able to claim a taxable grant from the Government. The grant paid was for the months of March, April and May and represented 80% of their average monthly trading profits over the last three years, capped at a maximum of £2,500 per month. Therefore, the maximum payable was £7,500. The final date for claiming this grant is 13 July.

A second taxable grant can now be claimed in August representing 70% of a self-employed person’s average monthly trading profits and capped at £6,570. This grant will cover the months of June, July and August.

Coronavirus Job Retention Scheme

The Chancellor announced that this scheme will close permanently at the end of October. However, before then, there are two major changes being introduced to this scheme. These are:

1. Flexible working: Part-time furloughed employees – from 1 July 2020

From 1 July, employers will be able to bring back furloughed employees on a part-time basis to perform the duties of their employment. This will only apply, however, to employees that have previously been furloughed, for at least a period of three weeks, prior to 30 June. This effectively means that any employees not furloughed by 10 June under the current rules cannot be furloughed under the new arrangements.

The furlough scheme is also closing to new entrants from 30 June. This, therefore, means that 10th June is the final day an employer can furlough an employee for the first time.

If an employee is brought back on a part-time basis, the employer will be responsible for paying their salaries for the hours they worked, and these costs cannot be recovered from the Government.

The employer will be responsible for working out the employees’ normal working hours and for paying a pro-rated salary based on 100% of their normal salary.

There is no definition of what is classed as ‘part-time’ – it is down to the employee and employer to agree this. However, there must be a written agreement with the employee confirming the new part-time working arrangements.

2. Restriction on the number of employees that can furloughed – from 1 July 2020

For periods starting on or after the 1 J‌ul‌y, the maximum number of employees an employer can claim for in any period cannot be higher than the maximum number they have claimed for in a previous period. For example, if your highest single claim for periods up to 30 J‌un‌e was for 100 people, you cannot claim for more than this number in later periods.

3. Employers’ contribution to furloughed staff costs

During July, there is no change to the government support for furloughed staff, subject to the employer paying the salary costs of the hours worked by those furloughed staff working flexibly, as noted above. However, changes come into effect from 1 August, as follows:

From 1 August 2020 – Employers National Insurance and Pension Contributions no longer funded.

From 1 August, the Government will continue to pay 80% of an employee’s salary (up to a maximum of £2,500). However, it will be the employers responsibility to pay the Employer’s National Insurance and employer’s pension costs which were previously also reimbursed.

From 1 September 2020 – Reduction in amount paid by Government to 70%

From 1 September 2020 the amount the Government will reimburse in respect of furloughed employees will reduce to 70% of their wages, up to a maximum of £2,187.50. However, crucially, the employer must still continue to pay the employees up to the previous minimum cap of 80% of their salary. The employer will also continue to be responsible for the payment of all Employer’s NI and employer’s pension contributions.

From 1 October 2020 – Reduction in amount paid by Government to 60%

From 1 October 2020 the amount the Government will reimburse in respect of furloughed employees will reduce to 60% of their wages, up to a maximum of £1,875.00. However, as noted above, the employer must still continue to pay the employees up to the previous minimum cap of 80% of their salary. The employer will also continue to be responsible for the payment of all Employer’s NI and employer’s pension contributions.

As mentioned above, the scheme closes on 31 October, so this will be the last month that a claim can be made under the scheme. From 1 July, claims cannot overlap a month because of the different rules applying to each month.