Furlough and self-employment support runs now to March 2021
Written by Ray Coman
On 5th November, the government announced a further extension to the furlough scheme. At the start of the month, the government had extended of furlough through the month of November. However, in this more recent announcement furloughing at 80% of pay will continue right to 31 March 2021. On 17th December, the furlough was extended again to 30th April 2021. This means that the government has committed to covering up to 80% of the cost of those hours not worked by an employee due to lockdown. The grant will be subject to a limit of £2,500 per month. The government has set 3rd March 2021 as the date for the Spring Budget.
Flexible furlough arrangements will continue, which means that employees can continue to work when they are able, with the government grant supplementing those hours not worked. Hours not worked are based on the normal working hours of the employee.
Employers will still be required to make employers national insurance and workplace pension contributions based on earnings. In this case, earnings includes the coronavirus job retention scheme grant.
A claim for furlough must be made by 14th day of the month following the month to which the furlough relates, so 14 December for November claims.
Any employee who was on payroll on 30 October 2020 will be eligible to join the new grant scheme, and it is not a requirement that the furloughed staff member has previously been on furlough.
Provided an employee was made redundant not before 23 September 2020, it is possible for that employee to be re-employed and placed back on furlough. This could suit certain employers who could have made redundancies in anticipation of furlough ending on 31 October.
The previously announced Job Support Scheme has been shelved. Since this was due to run until 31 March 2021, there has not been a clear indication about whether the Job Support Scheme will be re-introduced.
Employees can accrue holiday while furloughed but are unlikely to take holiday. On the end of furlough, it is possible that an employee would have accrued substantial holiday entitlement.
In a previous announcement, the government revealed a Job Retention Bonus which would be available for employers who brought staff back and kept them employed until 31 January 2021. The Bonus will not be paid as previously scheduled. A further announcement about this bonus is awaited.
The Self-Employment Income Support Scheme (SEISS) will also be increased. In a previous announcement the government pledged to supplement income for the self-employed with a grant equal to 55% of profits. However, the grant which covers the period from 1 November 2020 to 31 January 2021 will now be 80% of profits. More specifically, the grant will be based on an average three months of profit for the year to 5 April 2019. The amount will be paid in a lump sum and subject to a cap of £7,500. As with the previous two grants, it will only be available to businesses that have been adversely affected by lockdown.
Applications for the grant will open on 30 November 2020 and will require an online declaration by the applicant. The amount of the grant is automatically calculated by reference to 2018/19 profits record held by HMRC.
A fourth grant covering the three months from 1 February to 30 April 2021 is also scheduled, but details of the amount of the grant and eligibility of applicants have not yet been released.
Evidence of the first lockdown has shown that the affected parts of the economy did not bounce back straight back with the easing of restrictions. The latest extension is in recognition of that extra support businesses will need through the post-covid recovery phase. The announcement included further grants for businesses that have been forced to closed and additional backing for loans to help adversely affected business to bounce back.
The current furlough scheme is due to be reviewed by the government in January next year.
On 17th December, following Tier 3 lockdowns, business loan scheme will be available until the end of March 2021.