On Friday 29th May the Chancellor of the Exchequer announced a series of amendments to the CJRS. He set out more details on how the Coronavirus Job Retention Scheme will continue to support jobs and business as people return to work, following the previous announcement of an extension to the scheme on 12th May 2020.
From 1st July 2020, businesses will be given the flexibility to bring furloughed employees back part-time. This is a month earlier than previously announced and is designed to help support people back to work. Individual firms will decide the hours/shift patterns that their employees will work on their return, so that they can decide on the best approach for each of them on an individual basis. Please note that firms will be responsible for paying their employees’ wages while in work.
From 1st August 2020, the level of Government grant provided through the CJRS will be slowly tapered to reflect that people will be returning to work. This means that for both June and July the Government will continue to pay 80% of people’s salaries. In the following months, businesses will be asked to contribute a modest share, but crucially individuals will continue to receive the 80% of salary covering the time they are unable to work.
The revised and updated scheme means that the following will apply for the period during which people are furloughed:
- June and July: The Government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions. Employers are not required to pay anything.
- August: The Government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions; based on an average claim, this represents approximately 5% of the gross employment costs that the employer would have incurred had the employee not been furloughed.
- September: The Government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICS and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents around 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
- October: The Government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents about 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.
Employers will be required to submit data on the usual hours that an employee would be expected to work in a claim period and the actual hours worked. Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud hotline free of charge on 0800 788 887.
Additional information on CJRS
- Around 40% of employers have not made a claim for employer NICs costs or employer pension contributions and so will be unaffected by the change in August if their employee’s employment patterns do not change.
- Many smaller employers have some or all of their employer NIC bills covered by the Employment Allowance so will not be significantly impacted.
- Around 25% of CJRS monthly claims are below the thresholds where employer NICs and automatic enrolment pension contributions are due, and so no employer contribution would be expected for these payments to furloughed employees in August.
- To enable the introduction of part time furloughing, and support those already furloughed back to work, claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees. The scheme will close to new entrants on 30th June, with the last three-week furloughs before that point commencing on 10th June.
- From 1st July employers will be able to agree any working arrangements with previously furloughed employees.
- When claiming the CJRS grant for furloughed hours employers will need to report and claim for a minimum period of a week, in order that grants can be calculated accurately across working patterns.
- The updated CJRS will continue to operate UK-wide to the timings set out above.
- As an example, if an average claim lasted 8 months, the total cost of employer contributions would represent around 5% of the gross employment costs an employer would have incurred had the employee not been furloughed.
On Friday 29th May, the Chancellor announced that the Government’s Self-Employment Income Support Scheme will be renewed, giving more security to individuals whose livelihoods are adversely affected by Coronavirus in the coming months. Chancellor Rishi Sunak confirmed that the SEISS will be extended, with those eligible able to claim a second and final grant capped at £6,570.
- Individuals can continue to apply for the first SEISS grant until 13th July. Under the first grant, eligible individuals can claim a taxable grant worth 80% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total. Those eligible have the money paid into their bank account within six working days of completing a claim.
- Applications for the second grant will open in August. Individuals will be able to claim a second taxable grant worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.
- The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by Coronavirus. An individual does not need to have claimed the first grant to receive the second grant. For example, they may only have been adversely affected by Covid-19 in this later phase.
Further guidance on the second grant will be published on Friday 12th June.
CJRS and SEISS SUMMARY INFORMATION
The Government has published a 5–page factsheet giving an overview of both schemes and re-confirming qualification eligibility: Factsheet for SEISS and CJRS schemes
We will issue further advice and guidance Bulletins as the Covid-19 situation develops.
1530 hrs 31st May 2020