A significant number of small businesses in the UK do not take full advantage of HMRC-approved...
The government have announced the Coronavirus Job Retention Scheme (CJRS) - more commonly known as ‘furlough’ - has been extended until the end of March 2021.
Only a few days ago, the Chancellor announced the CJRS would be extended for the duration of England’s lockdown until the start of December. But on Thursday, he further extended the scheme until next March - a welcome development which will allow for more effective planning for businesses.
Here are some of the key points from the Chancellor’s announcement:
- Employers will be able to claim 80% of employees’ salaries, up to £2,500, which is higher relief than what was available in September and October, when employers needed to make greater contributions;
- There will be a review of the scheme in January 2021, when employers may be required to contribute more, as they did previously;
- If applicable, National Insurance and employer pension contributions must be continued to be paid by the employers;
- The Job Retention Bonus Scheme, which was to pay £1000 for each employee retained by a business after furlough, has been put on hold;
- The Self-Employment Income Support Scheme (SEISS) grants for the period from November to January have increased from 55% to 80% of average profits, up to £7,500.
The government will release full guidance about the scheme’s specifics on 10 November, but in the interim, they have published a policy paper that sets out some of the key details.
Here’s a summary of what we know so far…
Who will be eligible?
To be eligible, employees must have been on the PAYE payroll on 30 October 2020. Therefore, a Real-Time-Information (RTI) submission, notifying payment for that employee, must have been made to HMRC between 20 March 2020 and 30 October 2020. Employers can claim even if they haven’t utilised the scheme before.
While the previous announcement imposed a cap to stop employers claiming for more people than they had furloughed previously, the government are yet to clarify whether this still applies under the new extension.
Is ‘flexi-furlough’ still an option?
The government have confirmed flexible furlough will continue, meaning employees can work part-time hours and receive a furlough grant for their unworked hours. Employers will be required to pay the employee’s wages for hours worked as normal and claim for the furloughed hours, while referencing the employee’s contracted hours.
Is the process for making a furlough claim the same?
The process for making a claim is the same. However, there is a shorter claim window, of which businesses need to be aware. For claims relating to November 2020, employers need to make a claim by 14 December 2020. For every month going forward, claims must be submitted by day 14 of the following month.
What are employees allowed to do while furloughed?
As under the current rules, furloughed employees must not do any work for their employer during the hours being claimed. But they can still take part in training, or carry out volunteer work for another organisation. Additionally, furloughed employees are allowed to work for another employer - should it be permissible in their contract.
What about SEISS?
The government confirmed that under the six-month extension, SEISS grants will be paid in two lump sum instalments, each covering three-month periods.
For the grant covering 1 November 2020 to 31 January 2021, the government will provide a taxable grant calculated at 80% of 3 months average trading profits, capped at £7,500 in total. This is an increase from the previously announced amount of 55%. The government have not yet confirmed the level of support the grant covering February 2021 to April 2021 will provide.
To be eligible, self-employed workers must have been eligible for the previous two grants - although they are not required to have made a claim. They must have been adversely affected by coronavirus, but they must declare they intend to continue trading.
The grants are considered taxable income and are also subject to National Insurance contributions.
What happens to the Job Support Scheme and Job Retention Bonus?
The government had initially intended to replace the furlough scheme with the repackaged and less generous Job Support Scheme (JSS), which offered different levels of support depending on whether a business was open or closed due to restrictions.
But the JSS has now been shelved indefinitely. Affected businesses who had agreed to arrangements with employees in anticipation of the scheme should now look to place them back on furlough instead.
Meanwhile, the Job Retention Bonus, which incentivised employers to keep furloughed employees until the end of January, is also off the table for now. However, unlike the JSS, it is expected to be introduced at a later date. The government has stated it will be “deployed at the appropriate time.”