As reported in our previous update, the Government confirmed that they would extend both the Coronavirus Job Retention Scheme (CJRS) and the Self Employed Income Support Scheme (SEISS).
Late Friday night the Government updated their guidance which shed some light on how the proposed extensions to both schemes would work in practice.
The main rules and changes you need to be aware of are as follows:
Extensions to the Coronavirus Job Retention Scheme (CJRS)
A reminder of how the scheme will taper off, from our previous guidance, is as follows:
- From 1 August 2020 – The grant will no longer reimburse the employer’s pension contributions and national insurance costs. Some businesses may have part of their £4,000 employment allowance remaining, meaning that those business won’t need to pay employer’s national insurance until their total national insurance exceeds £4,000.
- From 1 September 2020 – The Government are tapering their support by 10% in September, with a maximum claim of £2,187.50 per employee, and a further 10% in October, with a maximum claim of £1,875 per employee. The scheme will then close down at the end of October.
- Any employee that has been furloughed, prior to 10 June, can be flexible furloughed from 1 July 2020. There will be no more minimum 3 week requirement and any eligible employee can be placed on furlough for any number of hours, days or shifts to suit the needs of your business.
- The new scheme is closed to new entrants and therefore if you did not furlough your employees prior to 10th June, you can no longer furlough them under the new rules.
- The only exception to the above rule is where an employee may be returning from SMP or parental leave. They are still eligible to be furloughed post 1 July 2020. The business cannot claim both SMP and furlough at the same time.
Make a claim from 1 July 2020:
- The process and eligibility for making a claim will change from 1 July 2020 in line with the new rules and a claim period must start and end within the same month.
- The claim period must be for a minimum of 7 days. The only exception to this rule is where a claim period may straddle the start or the end of a month.
- Once you have decided on your claim period, all employees, regardless of flexible furlough, regular furlough, pay date or pay frequency, must be claimed for in that period. For example, if you have weekly and monthly paid employees on furlough and decide to make a claim for the first week of July, you must also claim for one week of the monthly paid individuals at the same time. Once you’ve made a claim for that period, that period closes and you will not be able to claim for furloughed employees for that period in the next claim.
- Once you have submitted a claim, you can’t make a retrospective claim. It is important that you are happy with your submission before submitting the claim.
- For flexible furloughed employees, it is important to only make the claim when you know the exact ratio of hours not worked due to furlough compared to hours they would have worked. HMRC calculations can be found in here.
- A claim can be made through the HMRC portal up to 14 days prior to your payroll date, i.e. the date you make the RTI submission to HMRC.
- You will be required to submit further details on the portal such as the number of hours usually worked compared to those hours which the employees are not currently working (the furloughed hours). It may not therefore be possible to know this detail in advance of the period end and thus you may have to wait to make your claim. It is advisable that a claim is not made until after the facts are known.
As the Government looks to close the scheme, the rules are getting increasingly more complex, especially with regards to calculating the amount to claim.
The increased complexity may lead to mistakes in calculations and if you notice an error, HMRC have added a step in the online claim with which make adjustments to correct errors of overclaimed amounts. If you need to make an underclaimed adjustment, then you will need to call HMRC on 0800 024 1222.
Our payroll team are available to assist with any complexities and advice you may have with the furlough process.
Extension to the Coronavirus Self-Employed Income Support Scheme (SEISS)
The second claim period of this SEISS scheme, June – August 2020, has much the same eligibility requirements of the first claim, thus if you were not eligible for the first grant, then unfortunately you will not be eligible for the second.
As part of the second grant, you will be asked to confirm that your business was adversely affected on or after 14 July 2020.
The Government have provided examples of what adversely affected means, your business could be adversely affected by coronavirus if, for example:
- you are unable to work because you:
- are shielding
- are self-isolating
- are on sick leave because of coronavirus
- have caring responsibilities because of coronavirus
- you have had to scale down or temporarily stop trading because:
- your supply chain has been interrupted
- you have fewer or no customers or clients
- your staff are unable to come in to work
The amount you can claim will be reduced from 80% to 70%. This will mean you will be entitled to 87.5% of the amount of the first claim you received for the months March – May 2020.
The claim portal will open again in August, with an exact date expected to be announced at a later date.