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Self-Employment Income Support & Coronavirus Retention Scheme

This is the latest information released by the Government giving further details of the furlough scheme changes. Also included is the details of the Self-Employment Income Support Scheme. We hope you will find it helpful.

Impact of the scheme so far:

As of midnight on 24 May 2020, 2.3 million claims had been made, worth a total of £6.8 billion.

Eligibility criteria
Self-employed individuals, including members of partnerships, are eligible if they:
• submitted their Income Tax Self-Assessment tax return for the tax year 2018-19;
• continued to trade in 2019-20 and intend to keep trading in 2020-21;
• carry on a trade which has been adversely affected by COVID-19;
• have average self-employed trading profits of no more than £50,000 and at least equal to their non-trading income.
Individuals can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.

First Grant

Eligible individuals can 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.
Applications for the first grant opened on 13 May 2020. Applications for the first grant will close on 13 July 2020.

Second and Final Grant

Eligible individuals can claim a taxable grant worth 70 per cent of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profit, 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 when applying for the second and final grant. 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. Further information on the second grant will be available on GOV.uk on 12 June 2020.

Coronavirus Job Retention Scheme Factsheet

1. Impact of the scheme so far:
As of midnight on 24 May 2020, the scheme had been used by 1 million employers, to protect around 8.4 million jobs and the total value of claims made was £15 billion.

2. Flexible furloughing:
• 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.
• 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.
• This is a minimum period and those making claims for longer periods such as those on monthly or two weekly cycles will be able to do so.
• To be eligible for the grant, employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing.
• Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period. Further details will be included in future guidance.
• Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
• For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.
• Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.

3. Closure to new entrants from July:
• 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 three-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 the 10 June, in order for the current three-week furlough period to be completed by 30 June. Employers will have until 31st July to make any claims in respect of the period to 30 June.
• From 1 July the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed.
• From 1 July, claim periods will no longer be able to overlap months, employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward. This is necessary to reflect the forthcoming changes to the 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 can continue to make claims in anticipation of an imminent payroll run, at the point payroll is run or after payroll has been run.
• Employers will be able to make their first claim under the new scheme from 1 July.

4. Employer costs:
From August 2020, the level of the grant will be slowly tapered to reflect that people will be returning to work:
• In June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee doesn’t work. Employers will have to pay employees for the hours they work.
• In August, the government will pay 80% of wages up to a cap of £2,500 and employers will pay ER NICs and pension contributions for the hours the employee does not work.
• 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 and pension contributions and 10% of wages to make up 80% 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 and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.
The cap will be proportional to the hours not worked.

Table 1 – Government contribution, required employer contribution and amount employee receives
where the employee is furloughed 100% of the time

July

August September

October

Government contribution:

employer NICs and pension contributions1

 

Yes

 

No

 

No

No

Government contribution:

wages

80% up to £2,500

80% up to £2,500 70% up to £2,187.50

60% up to £1,875

Employer contribution:

employer NICs and pension contributions2

No

Yes Yes

Yes

 

Employer contribution:

wages

10% up to £312.50

20% up to £625

Employee receives

80% up to £2,500 per month

80% up to £2,500 per month 80% up to £2,500 per month

80% up to £2,500 per month

• As with the previous scheme, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
• An early assessment of CJRS claims suggest that 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 employment patterns do not change3.
• Indicative analysis of claims from large businesses suggests that around 25% of CJRS monthly claims are below the threshold 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 August4.
• Early analysis of CJRS claims suggests the equivalent wage on the average CJRS claim is around £1,380 per month. Requiring firms to pay the Employer NICs costs and pension contributions on the CJRS payments will introduce a cost of £69 per month on this figure5. This equates to 5% of total gross employments costs6 the employer would have incurred had the employee not been furloughed. This percentage will vary according to the wages of the employee who has been furloughed.
• The employer cost per month on the average grant will rise to £207 in September and to £345 in October representing 14% and 23% of gross employment cost, respectively.

Table 2 – Employer contribution costs for the average claim

July August September October

Implied wage of average claim

(£1,380/month)

 

Monthly

employer cost

£0

£69 £207

£345

As a percentage

of gross employment costs

0% 5% 14%

23%

 

 

    If you have any questions regarding the above information or any other issue within your business please do not hesitate to email us.
    SYLO – Beyond HR, supporting Your People and Your Business, now and in the future.
    —————————————————————————————————————————–
  1. Government contribution covers employer NICs and pension contributions (up to an amount equivalent to the minimum automatic enrolment employer pension contribution) calculated on 80% of wages up to £2,500 per month.
  2. Government contribution covers employer NICs and pension contributions (up to an amount equivalent to the minimum automatic enrolment employer pension contribution) calculated on 80% of wages up to £2,500 per month.
  3. This estimate is based on HMRC analysis of CJRS administrative scheme level claims management
    information.
  4. This estimate is based on HMRC analysis of an employee level claims management information. This
    information only covers employees furloughed from large businesses.
  5. This assumes the employee is not an apprentice, is over 21 and the firm is not benefiting from the
    Employment Allowance.
  6. Gross employment costs are the full gross wage, Employer National Insurance contributions and minimum
    pension contributions on this wage.

Updated 3rd June 2020