An update on the coronavirus business support initiatives including the Job Retention Scheme, Job Retention Bonus, Self-employed Income Support Scheme and new Local Lockdown grants.
The Job Retention Scheme (JRS) has been a lifeline for employers hoping to avoid laying off staff because of the impact COVID-19. Since the start of July, Phase 2 of the scheme has been paving the way for staff to return to work and employers to resume paying wages.
Previous to the Job Retention Scheme, most people had never heard the word furlough; now 1 in 4 workers has experienced what it means to be furloughed for themselves.
From 1 July 2020, ‘flexible furlough’ has made it possible for employers to bring furloughed staff back to work, for any amount of time and any shift pattern. There is no longer a minimum furlough period.
To use flexible furlough, you must agree any new arrangement with employees, and confirm it in writing. Find out more here
If bringing staff back, you are responsible for paying wages under the normal terms of the employment contract, with tax and National Insurance contributions (NICs) for any hours worked. But you can still use the Scheme to pay for the hours that staff don’t work. This has the potential to help your business adapt creatively as the economy emerges from lockdown.
Job Retention Scheme deadlines and contribution rates
1 – 30 September 2020: HMRC will pay 70% of wages up to £2,187.50 per month. Employers will be required to pay 10% of wages to make up 80% total (capped at £2,500). They will not be able to reclaim employer’s NICs and minimum pension contributions.
1 – 31 October 2020: HMRC will pay 60% of wages up to £1,875 per month. Employers will be required to pay 20% of wages to make up 80% total (capped at £2,500). They will not be able to reclaim employer’s NICs and minimum pension contributions.
31 October 2020: the furlough scheme will close altogether.
As with the previous scheme, the employer can choose to top up the payment if they want to.
IMPORTANT: If we have been processing furlough claims on your behalf, please ensure you provide up-to-date information to the Payroll team well in advance of your usual payday. Please email email@example.com with details of your arrangements, even if there have been no changes since the previous month.
The Job Retention Bonus Scheme
Chancellor Rishi Sunak announced the launch of the new Job Retention Bonus Scheme in his Summer Economic Update on 8 July 2020. This initiative is designed to ‘incentivise employers’ to retain their furloughed staff over the economically uncertain period once the Job Retention Scheme ends. It takes the form of a one-off payment of £1,000 for every furloughed employee who remains continuously employed until the end of January 2021.
As an employer, you will be eligible to claim the bonus where employees earn at least £520 per month on average for November 2020, December 2020 and January 2021. You must have furloughed and legitimately claimed for them under the Job Retention Scheme. And they must have been continuously in your employment until at least 31 January 2021. You will be able to claim the Job Retention Bonus from February 2021, once HMRC have received accurate RTI data to 31 January 2021.
Self-employed Income Support Scheme
A second phase of the Self-employed Income Support Scheme is now open for applications until 19 October 2020. HMRC has written to eligible businesses to advise them that they can apply for this second grant.
Check whether you can claim a grant here
The grant, which is taxable, is worth 70% of average monthly trading profits, capped at £6,570, and paid in one instalment. You can claim whether you claimed the first grant, or not. Claims must, however, relate to the correct period: you will need to confirm that your business has been adversely affected by COVID-19 on or after 14 July 2020. This adds potential complexity, and you can see some examples of what HMRC currently considers being ‘adversely affected’ means here
NEW Local lockdown business grants
On Wednesday 9 September, the government unveiled new grants for businesses affected by local lockdowns. These are reported to be worth up to £1,500 every three weeks. The amounts available vary from £1,000 to £1,500 based on the rateable value of the business. Read full details of the scheme here
We are here to help and advise our clients who have been affected by coronavirus on a wide range of matters from grants and business finance, to HR, business strategy and digital transformation. Please speak to your usual RfM advisor, contact one of our offices or use our online contact form.