SUNAK STRETCHES TO SPRING
Updated: Nov 6
Rishi Sunak today announced that the furlough safety net will now extend to March 31 2021, whilst returning the self-employed support scheme to 80% of average profits capped at £7,500 for the upcoming three month claim, as the Chancellor warned of a worsening economic outlook.
Earlier the Bank of England had announced £150bn of quantitative easing, as the new restrictions across England, further delayed the prospect of an economic recovery.
However, these was no still no sign of potential inclusion within the UK government support structure for the newly self-employed, start-up businesses, company directors (mainly paid by dividends), freelancers, or business ruled out of inclusion for Local Authority grants.
All those groups have seen themselves fall through the cracks in the platform of support, that will now have run for a calendar year by the end of the furlough scheme at the end of March 2021.
80% UNTIL MARCH
The CJRS (also known as the furlough scheme) will remain open until 31 March 2021. For claim periods running to January 2021, employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. The £2,500 cap is proportional to the hours not worked.
Employer contributions during the CJRS extension until January will be the same as in August 2020. This means that for hours not worked by their employee, employers will only be asked to cover National Insurance and employer pension contributions. The government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.
EMPLOYERS ONLY PAY NIC'S AND PENSIONS
Employers will have to pay the employee’s wages for the hours they work as normal, as well as employer National Insurance and employer pension contributions.
Employers will have flexibility to use the scheme for employees for any amount of time or shift pattern, furloughing employees on either a full-time or part-time basis, and will be able to vary the hours worked in agreement with the employee.
Employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working for their employer afterwards can be re-employed and claimed for. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees.
SELF-EMPLOYED GRANT RETURNS TO THE ORIGINAL 80% OF TRADING PROFITS.
The third grant will cover a 3 month period from 1 November 2020 until 31 January 2021. The Government will provide a taxable grant calculated at 80% of 3 months average monthly trading profits, paid out in a single instalment and capped at £7,500 in total. This is an increase from the previously announced amount of 55%.
The Government has already announced that there will be a fourth grant covering February 2021 to April 2021. The Government will set out further details, including the level, of the fourth grant in due course.
The grants are taxable income and also subject to National Insurance contributions.