On 29 May, the Chancellor outlined details of the extension of two emergency support measures: the Coronavirus Job Retention Scheme and the Self-Employment Income Support Scheme (SEISS).
Coronavirus Job Retention Scheme – what’s changed?
Following the announcement of the extension of the furlough scheme, the Chancellor confirmed yesterday how the scheme will be wound down.
8.4 million workers currently benefit from the scheme, with 80% of their wages (up to £2,500 a month) being covered to reduce the financial strain on UK business. As of August, salary contributions will begin to be shared with a shift towards the employer, as outlined below.
- June: Furlough scheme continues as normal. The scheme officially closes to new entrants on 30 June. If you wish to add a new entrant to the scheme (i.e. an employee that has not yet been furloughed), you will need to do so before 10 June.
- July: Furlough scheme continues as normal, with flexible furloughing commencing on 1 July. Employers will not be able to add any new entrants to the scheme.
- August: Government will pay 80% of wages (up to £2,500). Employers will cover National Insurance and employee pension contributions only.
- September: Government will pay 70% of wages (up to £2,187.50). Employers will cover 10% of wages + NI and pension.
- October: Government will pay 60% of wages (up to £1,875). Employers will cover 20% of wages + NI and pension.
- November: Government support will cease.
Bringing forward the ability to ‘part-time furlough’ to 1 July is welcome flexibility for many businesses. It will be up to employers to decipher what ‘part-time’ means for any employee. Employers will be liable for staff wages for the days ‘part-time furloughed’ staff are working, with the scheme covering the relevant remainder of hours not worked. We expect further guidance to be published by 12 June, covering how to calculate these ‘flexible’ claims.
Self-Employment Income Support Scheme – what’s changed?
The Chancellor has also confirmed that the SEISS will be extended for a final time, with a second lump sum available to those self-employed adversely affected by Coronvirus. As before, the grant will be paid out as a lump sum to cover the prior 3 months, and is subject to the usual Income Tax and self-employed National Insurance.
You do not have to have claimed the first grant in order to claim the second, but the eligibility criteria remains the same. If you are a Harold Sharp client and are eligible for the first grant, you should have received an email from us on 6 May with details of the next steps.
- The first SEISS grant will cover 80% of average monthly trading profits, for three months, paid as one lump sum (up to £7,500). The deadline for making a claim for the first grant is 13 July.
- The second SEISS grant will cover 70% of average monthly trading profits, for three months, paid as one lump sum (up to £6,570). We expect further clarifications, included application deadline, by 12 June.
Commenting on the extensions of both schemes, Christopher Wrighton said: “Many are calling this a critical moment, as government support starts to wind down. There is no doubt that this is correct, but just as critical will be next March when businesses are due to pay their VAT bills. If they are not already doing so, business leaders must be having regular conversations with their advisers about the changing opportunities and threats in the short and long term.”
If you have a question about how these changes might affect you, or how you can start to benefit from either scheme, please contact our team.