Furlough scheme reinstated for English lockdown
The coronavirus job support scheme (CJRS) will continue until 31 March 2021 with grants covering 80% of wages, while the job retention bonus scheme has been scrapped. This article has been updated with new information published on 5 November.
Halloween was truly a nightmare for many accountants as the government’s announcement of England's new month-long lockdown came just as the nation was settling down to enjoy the second live show of Strictly Come Dancing.
Friday night had seen the release of further JSS details, but by Saturday evening that scheme was put on the back burner, with a full extension of the existing furlough scheme (CJRS). On Wednesday 5 November there was another anouncement by Rishi Sunak extending the CJRS again.
It appears that the JSS has now been scarificed along with the job rentention bonus.
The new English restrictions will apply from 5 November to 2 December 2020, but the financial support for employers applies from 1 November to 31 March 2021 for eligible employers across the UK.
What support is given?
The furlough scheme has been reinstated with the similar conditions as applied in August 2020.
The CJRS grant will pay for 80% of the employee’s current wages for time not worked, up to £2,500 per month. The employer must pay for all of the employer’s NIC and employer’s minimum workplace pension contributions on those wages.
The employer can top-up the employee’s furlough pay at their own expense, if they wish to.
Business grants paid by local authorities for closed businesses premises will apply in England, the devolved administrations will set their own level of business support (see below).
Which employees qualify?
Employees who were on the employer’s payroll at 23 September 2020 will qualify to be included in CJRS claim for November; they don’t have to have been included in an earlier CJRS claim. The employee must have been paid by the employer, and that pay must have been reported on a RTI return before midnight on 30 October. Employees who were made redundant or who left the employment after 23 September 2020 can be reinstated and included in a CJRS claim for November.
Employees on any type of contract can qualify, including zero hours, contractors and sole-directors, but there will be issues over determining the reference pay to use and the usual hours worked.
Flexible furlough will be permitted alongside full-time furlough, so staff may be brought back part-time to say, set up the premises for the lifting of national restrictions, or to prepare for Brexit.
The same rules for flexible furlough will continue to apply as they have done since 1 July, so the employee may be furloughed for a few days or hours per week. There appears to be no minimum time set for furloughed hours or working hours.
However, each furlough claim must be for a period of at least seven consecutive calendar days.
Which employers qualify?
All employers with a UK bank account can claim support under the extended CJRS, there is no financial test to pass for larger employers as applies for the (now postponed) JSS.
Charities and not-for-profit organisations can also claim in respect of their employees. However, public sector bodies and publicly funded organisations are not expected to use the scheme.
How to claim?
The claim process will be very similar to that which has applied so far under CJRS, the employer will have to report the hours the employee has not worked in a claim period, and the usual hours.
Claims can be made up to 14 days from the end of the pay period, and the CJRS grant should be paid within six days of the claim being submitted. Some details are included in this factsheet but legislation is expected to be published shortly.
There is also increased support for the self-employed; the next SEISS grant will be given at 80% of average profits, and applications for those grants will open on 30 November.
Where businesses have been required by law to close, they will be able to apply for a support grant from their English local authority, based on the rateable value of their business premises:
|Rateable value of premises||Grant payable per two weeks|
|Up to £15,000||£667|
|£15,001 to £50,999||£1,000|
|£51,000 or more||£1,500|
Different local business grants will be available in Wales, Scotland and Northern Ireland.
Applications for mortgage holidays for up to six months were due to close on 31 October, but this facility will now remain open for borrowers who have been impacted by coronavirus. The FCA will announced details of who can qualify in the next few days.
Rebecca Benneyworth will be discussing the furlough extension, SEISS and other changes this Wednesday on AccountingWEB Live. You can save your place by registering to watch Tax Talk - spaces are limited!