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Last Friday the Chancellor set out plans to extend both the Job retention scheme and Self-employment income support schemes while providing details of how these will change in the coming months. We’ve summarised these changes below and full guidance including help with calculating the reduced furlough claims will be published by HMRC on 12 June.

Coronavirus Job Retention Scheme

The Chancellor has announced three changes to the job retention scheme:

  1. From 1‌‌ July 2020, employers will be able to bring furloughed employees back part time but still receive a grant for the time they are not working.
  2. From 1‌‌ August 2020, employers will have to start contributing to the wage costs of paying their furloughed staff and this employer contribution will gradually increase in September and October.
  3. The scheme will close to new entrants from 30‌‌ June and employees must have been furloughed for a full three week period before this point to be able to continue on the scheme. This means that the final date to furlough an employee for the first time is 10 June.

1. Part time furloughing

From 1‌‌ July 2020, businesses will have the opportunity to bring previously furloughed employees back to work part time with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August.

Employers will decide the hours their employees will work on their return, and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that they can furlough staff for.

Any working hours arrangement agreed between a business and their employee must cover at least one week and be confirmed to the employee in writing as the minimum claim period is a week although longer periods are permitted. As part of the claim you 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.

2. Employer contributions

From August, the government grant provided through the job retention scheme will be slowly tapered.

  • in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NIC’s) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work as in the above point.
  • in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions.
  • in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
  • in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
  • the cap on the furlough grant will be proportional to the hours not worked.

Self-Employment Income Support Scheme

The Chancellor also announced plans to extend the Self-Employment Income Support Scheme (SEISS) for those people whose trade continues to be, or is newly, adversely affected by COVID-19 (coronavirus).

Eligible self-employed people will be able to claim a second and final SEISS grant in August; this will be a taxable grant worth 70% of their average monthly trading profits for three months, paid out in a single instalment and capped at £6,570 in total.

The eligibility criteria for the second grant will be the same as for the first grant. You do not need to have claimed the first grant to claim the second grant.

The final deadline to claim for the first SEISS grant, which opened on 13‌‌ May, is the 13‌‌ July.

As with the first SEISS grant, the eligible individual must make the claim for the second grant themselves, we cannot make a claim on your behalf as this will trigger a fraud alert and will result in significant delays to payment. 

As a reminder, this scheme is open to self-employed individuals or members of partnerships who:

  • Submitted a self-assessment tax return for the tax year 2018-19
  • Traded in the tax year 2019-20
  • Are trading when they apply or would be were it not for COVID-19
  • Intend to continue to trade in the tax year 2020-21
  • Have lost trading/partnership profits due to COVID-19
  • Had trading profits in 2018-19 of less than £50,000 which made up more than half of their total income in the year, or, average trading profits during 2016/17, 2017/18 and 2018/19 of less than £50,000.

More information about the second SEISS grant will be available on GOV.‌‌UK on 12‌‌ June.

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