On Friday the 29th May Chancellor Rishi Sunak announced further details about how the inclusion of flexibility to the Coronavirus Job Retention Scheme (CJRS) will work and confirmed that the scheme will close at the end of October. He also provided details of an extension to the Self Employment Income Support Scheme (SEISS)
Flexible Furlough details:
- From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time. (note - this is 1 month earlier than originally stated)
- 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 - employers will be responsible for paying their wages while in work (at their normal wage) - the balance of hours left will be paid by government (80% thereof)
A summary of how the CJRS will work for the next 5 months is as follows:
- June, July & August - government will continue to pay 80% up to a £2,500 cap.
- September - government will pay 70% up to £2,190 cap and employers will be required to cover the 10% additional.
- October - government will pay 60% up to £1,875 and employers will be required to cover 20% additional.
- NOTE: Employers will pay for National Insurance and Pension Contributions from August. Government will pay them until the end of July.
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.
Rishi Sunak also announces that the Self-Employment Income Support Scheme (SEISS) will be extended - with those eligible able to claim a second and final grant capped at £6,570 (70% of average monthly trading profits covering 3 months) in August.
Who can get the grant? Assuming the same eligibility criteria applies as under the first grant claim, if you’re self-employed as a sole trader or as a member of a partnership, then you may be eligible for a grant representing up to 70% of your average profits if you meet the following criteria:
- you submitted a tax return for 2018/19
- your business traded during 2019/20
- your business is continuing to trade, or would be except for coronavirus
- you intend to continue trading in 2020/21
- you have lost trading/partnership trading profits due to coronavirus
- your trading profits were less than £50,000 and represented more than half of your total taxable income in 2018/19 (or, failing that, if you meet these conditions on average over the tax years 2016/17 to 2018/19).
How much will you be paid? You’ll get a taxable grant which will be up to 70% of the average profits from the tax years 2016/17 to 2018/19 (the first grant was paid at 80% of that average earnings figure). If you became self-employed during those years, HMRC will use the average for the years you submitted tax returns for. The maximum amount is £2,250 per month for three months, so to get the full amount you would need to have average profits of £38,570 per annum.
When can I apply? Applications for this second and final grant will open in August.
Can you apply if you haven’t claimed the first grant? You don’t need to have claimed the first grant to receive the second grant, for example, if your business has only recently been affected by the coronavirus outbreak.
If you were eligible for the first grant, HMRC should have contacted you already. You can check your eligibility and update your contact details here via HMRC’s eligibility checker here.
If you have not yet applied for the first grant but consider that you are eligible to do so, you must submit your claim to HMRC by 13 July 2020 at the latest. The first grant claim process will close permanently on this date in preparation for the second claim process to be implemented from August.
Further guidance regarding the second grant claim is expected to be issued on 12 June 2020 confirming any changes to the eligibility criteria etc. so we shall keep you up to date as further information becomes available.
Please be aware that these grants are taxable income in the current tax year and will require to be disclosed on your 2020/21 Tax Return. It would be helpful if you could advise us of the amounts received to ensure that they are properly disclosed.