Chancellor extends Self-Employment Support Scheme and confirms furlough next steps 

The Chancellor haso set out more details on how the Coronavirus Job Retention Scheme (CJRS) will continue to support jobs and business as people return to work, following the announcement of an extension of the scheme on 12 May.

So far, the CJRS has helped 1 million employers across the UK furlough 8.4 million jobs, protecting people’s livelihoods.

From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time. This is a month earlier than previously announced to help support people back to work. Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them - and will be responsible for paying their wages while in work.

From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. That means that for 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 that 80% of salary covering the time they are unable to work.

Chancellor Rishi Sunak said:

Our top priority has always been to support people, protect jobs and businesses through this crisis. The furlough and self-employment schemes have been a lifeline for millions of people and businesses.

We stood behind Britain’s businesses and workers as we came into this crisis and we stand behind them as we come through the other side.

Now, as we begin to re-open our country and kickstart our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world.

Neil Carberry100x100Neil Carberry, CEO of the Recruitment and Employment Confederation said:

The furlough scheme has been vital in avoiding mass redundancies, and the decision to taper off the scheme rather than cut it off more abruptly is right. Continued support for the self-employed is also the right call, though we regret the lack of help for limited company directors in today’s statement.

Co-payment for furlough will make sense in many sectors, but it is unlikely to work for temps at a time when agencies have little income from clients with which to meet the bills. Because of that, getting the temp market working again must be a priority – that’s why addressing barriers like Statutory Sick Pay costs matters to agencies.

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The Chancellor is right to turn his attention to how we recover. With the claimant count unemployment already above two million, we face a crisis of a scale not seen for many decades. Recruitment and staffing industry firms are the specialists in helping people find work and companies to grow – we are ready to support Government to deliver innovative new plans to tackle unemployment.

Dame Carolyn Fairbairn, Director-General of Confederation of British Industry (CBI), said:

The government’s support throughout the lockdown so far has been a lifeline for businesses, employees and the self-employed. The changes announced will help ensure the schemes stay effective as we begin a cautious recovery.

Introducing part-time furloughing at the same time as more stores and factories start to open will help employees to return to work gradually and safely. Many more businesses will feel supported during this vital restart phase.

Firms understand the scheme must close to new entrants at some point and that those using it in future will need to make a contribution to help manage the costs. However, previously viable firms not able to open until later, particularly in leisure, hospitality and the creative industries, may need further assistance in the coming months.

Mike Cherry, National Chair of the Federation of Small Businesses (FSB) said:

The furlough and self-employed schemes have been a true lifeline for all those protected by them – continuation, certainty and increased flexibility will boost economic recovery and help us get through the turmoil created by the coronavirus.

Small firms have long been the backbone of the UK economy and these policies will help keep it that way. Keeping the self-employed and those who work in a small business attached to the labour market is crucial to prevent scarring of the economy – the package today gives certainty and support to millions.

We will continue to work with the Government to make sure small firms can come out the other side and get back to what they do best – creating jobs, fuelling growth and powering our communities forward.

Adam Marshall, Director General of the British Chambers of Commerce (BCC) said:

The Chancellor has listened to business communities and struck a careful balance that will help many firms bring furloughed staff back to work flexibly over the coming months.

The gradual reduction in furlough contributions from the Treasury will give businesses additional time to rebuild their income streams and cash flows, and the decision to give businesses maximum flexibility to bring people back part-time will be appreciated.

The extension of support for the self-employed will come as welcome relief for those who have seen their livelihoods impacted by the virus. It is right that this group continues to receive similar levels of support to those on PAYE.

Edwin Morgan, Director of Policy at the Institute of Directors (IOD) said:

The furlough scheme has played an immense role protecting jobs, and business leaders understand it couldn’t be sustained at the same level forever. This is a much more gradual tapering than many were expecting, reflecting the concerns the IoD has raised. The ability to bring people back part-time is crucial, and we’re delighted the Treasury has taken on board our members’ calls to bring this in as soon as possible.

Extending SEISS is also a welcome move, and reflects the immense challenges many self-employed people are facing.

Derek Cribb, CEO of the Association of Independent Professionals and the Self-Employed (IPSE), said:

It will be an overwhelming relief to self-employed people who are eligible for SEISS that their support has been extended. It is very welcome that the Chancellor has once again heeded our calls and taken steps to get many of the self-employed, who are particularly struggling in the Coronavirus crisis, the income support they so badly need.

Brian Berry, Chief Executive of the Federation of Master Builders (FMB), said:

We strongly welcome the extension of the Self-Employed Income Support Scheme, which means construction tradespeople will not face a cliff-edge in terms of support. This is essential for those who are not yet able to return to work. Furthermore, introducing flexibility into the Job Retention Scheme will give businesses the scope they need to scale-up activities at the right pace for their firm. Retaining the construction workforce is essential to ensure the industry stands ready to build back better as the country recovers from the impact of the coronavirus.

Stephen Phipson, CEO of Make UK, the manufacturers’ organisation commented:

It is welcome news for manufacturers that monetary support to businesses through the Job Retention Scheme will remain unaltered for the next two months giving businesses much needed time to recover order books and start to get production levels back on track. Crucially the Chancellor has also delivered the flexibility which industry so desperately needs to bring its workforce back in a staggered way allowing for imaginative working patterns until business recovers.

Industry has always accepted that Government could not continue to pay indefinitely and understands that cost to the taxpayer had to be reduced. But this gradual increase in the amount companies contribute to their employee wage bill will buy companies vital time before they are asked to take on the full cost burden.

The Chancellor has today protected many more jobs and kept vital skills within the sector to help power the economic recovery which the country so needs as we come out of the COVID crisis and the extension of the Self-Employment Income Support Scheme will also help protect vital elements of the supply chains as we go forward.

Steve McNamara, General Secretary of Licensed Taxi Drivers Association (LTDA) said:

The extension to the furlough scheme for the self employed is much needed and fantastic news for Cabbies across the Country. It highlights how the Chancellor is listening to, and helping those who need it, well done!

Those eligible under the Self-Employment Income Support Scheme (SEISS), which has so far seen 2.3 million claims worth £6.8 billion will be able to claim a second and final grant in August. The grant will be 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 scheme updates mean that the following will apply for the period 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 – for the average claim, this represents 5% of the gross employment costs 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 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 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 an employee would be expected to work in a claim period and actual hours worked. Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud hotline. HMRC will not hesitate to take action against those found to be abusing the scheme.

SEISS

  • Individuals can continue to apply for the first SEISS grant until 13 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 12 June.

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 30 June, with the last three-week furloughs before that point commencing on 10 June.
  • From 1 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, for grants to be calculated accurately across working patterns.
  • The updated SEISS and CJRS schemes will continue to operate UK-wide to the timings set out above.
  • 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.

Factsheet for SEISS and CJRS schemes (PDF, 126KB, 5 pages)

Reporting employees' wages to HMRC when you've claimed through the Coronavirus Job Retention Scheme

From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. When claiming the CJRS grant for furloughed hours employers will need to report and claim for a minimum period of a week.

The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 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 for the current 3 week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.

Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June. Find out more information on how the Coronavirus Job Retention Scheme is changing.

If you’ve claimed a grant through the Coronavirus Job Retention Scheme, you should check if you need to report payments on the PAYE Real Time Information system, as this will depend on whether you are using the grant to:

  • pay wages
  • reimburse wages that you’ve already paid

If you’re claiming a grant through the scheme, the steps to do this are:

  1. Check if you can claim.

  2. Check which employees you can put on furlough.

  3. Calculate 80% of your employees’ wages.

  4. Claim for your employees’ wages.

  5. Report a payment in PAYE Real Time Information.

If you’re using the grant to pay wages

Any grant paid to you, is to be used to pay wages to your furloughed employees and should be treated in the same way as any wage payment and is subject to all payroll deductions.

You should pay employees on their contractual payment date so that employees receiving Universal Credit are not affected.

The grant should be reported to HMRC via your payroll software on a Full Payment Submission, on or before the date that it is paid to your employees.

If you have paid your employees and submitted your Real Time Information submission early

If you have already paid your employees before their contractual payment date, the next time you pay them, make sure it’s on their normal contractual payment date.

You should submit the Full Payment Submission on or before the date that you make the payment.

If you’re using the grant to reimburse wages already paid

If you have continued to pay your employees during a period of furlough, in advance of receiving any payments under the scheme, you do not need to make another Full Payment Submission for this amount. This is because the furlough grant is reimbursing the wages you have already paid out and already reported through your payroll.

If you pay the full amount of an employee’s normal wage during furlough, but only claim back 80% from HMRC

If you choose to top up employee wages above the 80% scheme grant, that is your choice and at your own expense.

You must deduct tax and National Insurance Contributions on the full amount paid and report this payment via a Full Payment Submission on or before the pay date. When the grant is paid by HMRC, it will reimburse the wages already paid.

You do not need to make another Full Payment Submission for this amount.

If you have not paid your employees’ full wages yet

If you have not paid any of your employees any wage payments in a tax month

You must submit an Employer Payment Submission stating you have not paid any employees in that tax month. The Employer Payment Submission should be sent no later than 19th of the following tax month where possible. Do not submit a nil Full Payment Submission.

If you only pay your employees 20% of their normal wage until the grant payment is received

You must operate PAYE, deducting any tax and National Insurance contributions due on the reduced salary payment amounts and you must report these payments by sending a Full Payment Submission to HMRC, on or before the payment date.

You must only send a Full Payment Submission reporting the payments you actually made. When you pay the remaining wages to your employees after receiving the grant payment, you must send another Full Payment Submission showing that payment.

If you have not paid anything to your employees for March or April

If you are making a payment for March and April in your employee’s April wage, you must deduct tax and National Insurance Contributions on that full amount.

You must not back date the March payment as if it was paid in March.

If you reported wages to HMRC in March 2020 that you did not pay to your employees

The Full Payment Submission must only include wages you have actually paid to your employees.

You will need to submit an Earlier Year Update or closed year Full Payment Submission to reflect what you paid in wages. When you receive the grant to pay as wages, you should pay your employees on their contractual payment date for the current tax month. You should also submit a 2020-2021 Full Payment Submission, on or before the date you make the payments to your employees.

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