Details in relation to upcoming changes to the Coronavirus Job Retention Scheme have recently been outlined by the government. In addition, the Self-Employment Income Support Scheme has been extended. The latest information in relation to these schemes is explained below.
The scheme is changing from 1 July. From that date 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 the grant for their normal hours not worked.
Claims from July 2020 onwards will be restricted to employers who are currently using the scheme and to employees that have previously been furloughed.
Further guidance on the new flexible scheme will be released on 12 June 2020 and we will provide further details when they become available.
How is the scheme changing?
The scheme will close to new entrants on 30 June. This means that any employees that you intend to furlough for the first time must be furloughed by 10 June to ensure they have been furloughed for a full 3 week period prior to 30 June.
Where an employee has previously been validly furloughed for at least 3 weeks and brought back to work before 30 June our understanding is that wording used in the guidance suggests that the employee will be eligible for the updated scheme. HMRC have now confirmed that a claim can be made under the updated scheme for employees who have been furloughed for a full three-week period at any time before the end of June.
Claims in respect of the period to 30 June will have to be made by 31 July.
Only employees that have previously been furloughed on or before 10 June will be covered by the new scheme from 1 July.
Employers will need to provide details of the number of hours that were actually worked and the number of hours that are usually worked when making a claim under the new scheme.
The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the current CJRS.
Employers will need to report and claim for a minimum period of one week.
Points to Note
Where an employee who has previously been validly furloughed for at least 3 weeks commences a new furlough period starting between 11 June and 30 June, consideration should be given to whether the claim will be eligible under the current scheme.
From 1 July there will be no minimum furlough period, which allows more flexibility. An employee can be furloughed for any length of time, even down to a few hours, subject to the employer gaining their agreement in writing.
Reduction in Grants
The level of grant available will remain at 80% of the relevant workers’ wages costs throughout July, after which the level of support will gradually reduce:
August – 80% wage support up to £2,500 (no employer NIC or pension costs covered)
September – 70% wage support up to £2,187.50 (no employer NIC or pension costs covered)
October – 60% wage support up to £1,875 (no employer NIC or pension costs covered)
Applications for this grant opened on 13 May 2020 and will close on 13 July 2020.
Eligible individuals are able to claim a taxable grant worth 80 per cent of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profit, and capped at £7,500 in total.
Eligibility is explained below, and eligible individuals can claim a further taxable grant worth 70 per cent of their average monthly trading profits. This will also be paid out in a single instalment covering three months’ worth of profit and capped at £6,570 in total.
An individual does not need to have claimed the first grant in order to be eligible for the second and final grant.
Applications will open in August 2020 and further details will be published on 12 June 2020.
To avail of this support you must:-
Be a self-employed individual or a member of a partnership;
Have submitted your 2018-19 self-assessment income tax return;
Have traded in the 2019-20 tax year;
Be trading at the time of applying (or you would have been except for coronavirus);
Intend to continue trading in the 2020-21 tax year; and
Have lost trading profits due to coronavirus.
In addition, you must satisfy one of the following conditions:
You have trading profits in 2018-19 of less than £50k and these profits constitute more than half of your total taxable income; or
You have average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50k and these profits constitute more than half of your average taxable income in the same period.