Written by revel accountants on 5th November 2020 in Uncategorised

Chancellor extends furlough scheme and bolsters self-employment support

The Chancellor has announced a five-month extension to the current Coronavirus Job Retention Scheme and increased the level of the next self-employed income support grant.

The Chancellor told the House of Commons that the Coronavirus Job Retention Scheme (CJRS) will now run until the end of March, with employees receiving 80% of their current salary for hours not worked.

The Self-Employment Income Support Scheme (SEISS) will also be increased, with the third grant covering November to January calculated at 80% of average trading profits, up to a maximum of £7,500.

Furlough extension

Originally due to end on 31 October, the CJRS will now remain open until 31 March 2021. The scheme had already been extended to December 2020 following the announcement of a new national lockdown for England.

For claim periods running ‘through to January 2021’ (this is unclear but some think it means all of November and December at least and most probably January too), employees will receive 80% of their usual salary while on furlough, subject to a cap of £2,500. The CJRS extension will be reviewed in January.

Meanwhile, employers will be asked to continue to cover the costs of employer national insurance and pension contributions for hours not worked.

Immediate action for Employers

An accompanying policy statement provides more details on some immediate action required. Employers concerned about how to implement changes to working agreements retrospectively can be reassured that as long as they are consistent with employment law, furlough agreements made retrospectively that have effect from 1 November 2020 can support a furlough grant claim. However, these retrospective agreements must be in place on or before 13 November 2020 to be relied on for this purpose.

See here for template Furlough letters and agreements.

The government will not pay the Job Retention Bonus in February but, according to an economic factsheet accompanying the latest announcements, will instead redeploy a retention incentive at some unknown date.

Support for self-employed

The level of the third SEISS grant was increased to 80% of trading profits covering November to January for all parts of the UK. It is calculated based on 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500.

The window for claiming the third grant will open on a phased basis from 30 November and HMRC expects to pay grants within six working days of the date of the claim.

Further measures

  • cash grants of up to £3,000 per month for businesses which are closed
  • £1.1bn to local authorities, distributed on the basis of £20 per head, for one-off payments to enable them to support businesses more broadly
  • plans to extend existing government-backed loan schemes and the Future Fund to the end of January, and an ability to top-up Bounce Back Loans
  • an extension to the mortgage payment holiday for homeowners

If you are new to Revel and are keen to find out more, please call our consultant Will Bolter FCCA MAAT ATT  (our designated COVID-19 response advisor) on 07379 451484 or contact us by email here.