Business leaders have welcomed news that the Government is extending both its support for the self-employed and the ‘furlough’ scheme, with furloughed workers able to return part-time from July and employers having to contribute to the wage bill from August.
The Self-Employment Income Support Scheme is to be extended, giving more security to people whose livelihoods are adversely affected by coronavirus in the coming months, the Chancellor, Rishi Sunak, announced yesterday (Friday).
He said those eligible would now be able to claim a second and final grant capped at £6,570.
He also gave further details on the extension of the Coronavirus Job Retention Scheme, including improved flexibility to bring furloughed employees back part-time in July, and a new taper requiring employers to contribute ‘modestly’ to furloughed salaries from August.
Both schemes are UK-wide.
Those eligible under the Self-Employment Income Support Scheme, which has so far seen 2.3 million claims worth £6.8bn will be able to claim a second and final grant in August. The grant will be worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.
8.4 MILLION JOBS
So far, the Coronavirus Job Retention Scheme has helped one million employers across the UK furlough 8.4 million jobs.
Businesses will be able to bring furloughed employees back part-time from July 1 – a month earlier than previously announced. Individual firms will decide the hours and shift patterns their employees will work on their return – and will be responsible for paying their wages while in work.
From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. That means that for June and July the Government will continue to pay 80% of people’s salaries. In the following months, businesses will be asked to contribute a ‘modest’ share, but crucially individuals will continue to receive that 80% of salary covering the time they are unable to work.
The scheme updates mean that the following will apply for the period people are furloughed:
* June and July: The Government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions. Employers are not required to pay anything
* August: The Government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not
* September: The Government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed
– October: The Government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.
TOP PRIORITY
The Chancellor said: “Our top priority has always been to support people, protect jobs and businesses through this crisis. The furlough and self-employment schemes have been a lifeline for millions of people and businesses.
“We stood behind Britain’s businesses and workers as we came into this crisis and we stand behind them as we come through the other side.
“Now, as we begin to re-open our country and kickstart our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world.”
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.
Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud hotline.
Dame Carolyn Fairbairn, Director-General of Confederation of British Industry, said: “The Government’s support throughout the lockdown so far has been a lifeline for businesses, employees and the self-employed. The changes announced will help ensure the schemes stay effective as we begin a cautious recovery.
“Introducing part-time furloughing at the same time as more stores and factories start to open will help employees to return to work gradually and safely. Many more businesses will feel supported during this vital restart phase.”
A TRUE LIFELINE
Mike Cherry, national chairman of the Federation of Small Businesses, said:
“The furlough and self-employed schemes have been a true lifeline for all those protected by them – continuation, certainty and increased flexibility will boost economic recovery and help us get through the turmoil created by the coronavirus.
“Small firms have long been the backbone of the UK economy and these policies will help keep it that way. Keeping the self-employed and those who work in a small business attached to the labour market is crucial to prevent scarring of the economy – the package today gives certainty and support to millions.”
Stephen Phipson, CEO of the manufacturers’ organisation Make UK, welcomed the news that the Job Retention Scheme would remain unaltered for the next two months, ‘giving businesses much-needed time to recover order books and start to get production levels back on track’.
He said: “Crucially the Chancellor has also delivered the flexibility which industry so desperately needs to bring its workforce back in a staggered way allowing for imaginative working patterns until business recovers.
“Industry has always accepted that Government could not continue to pay indefinitely and understands that cost to the taxpayer had to be reduced. But this gradual increase in the amount companies contribute to their employee wage bill will buy companies vital time before they are asked to take on the full cost burden.
“The Chancellor has today protected many more jobs and kept vital skills within the sector to help power the economic recovery which the country so needs as we come out of the covid crisis and the extension of the Self-Employment Income Support Scheme will also help protect vital elements of the supply chains as we go forward.”
To download the factsheet for SEISS and CJRS schemes, go to: www.publishing.service.gov.uk/government/Factsheet_for_SEISS_and_CJRS_schemes.pdf
