As part of his March 2021 budget and his three point plan to protect jobs, the Chancellor Rishi Sunak announced on 3 March 2021 an extension to the Coronavirus Job Retention Scheme (CJRS) and the Self Employed Income Support Scheme (SEISS). You can find our previous comprehensive briefing note on these schemes here.
According to Mr Sunak, the CJRS has protected over 11 million jobs since it was introduced almost 12 months ago, and the additional measures announced will mean that 1.8 million fewer people will be out of work.
The full details of how the extended schemes will operate are yet to be released, although the following Government guidance has already been updated (“Updated Guidance”):
Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme - GOV.UK (www.gov.uk)
Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme - GOV.UK (www.gov.uk)
Calculate how much you can claim using the Coronavirus Job Retention Scheme - GOV.UK (www.gov.uk)
Steps to take before calculating your claim using the Coronavirus Job Retention Scheme - GOV.UK (www.gov.uk)
Claim for wages through the Coronavirus Job Retention Scheme - GOV.UK (www.gov.uk)
Reporting employees' wages to HMRC when you've claimed through the Coronavirus Job Retention Scheme - GOV.UK (www.gov.uk)
Pay Coronavirus Job Retention Scheme grants back - GOV.UK (www.gov.uk)
We have summarised below the key things to note.
Coronavirus Job Retention Scheme
The CJRS, which was due to come to an end on 30 April 2021, will now continue until the end of September 2021.
How will the CJRS operate?
Much of the detail of the CJRS remains the same. We have outlined below where (according to the Updated Guidance) there are some changes.
There will be no changes to the payments employees may receive under the CJRS throughout the extended period; employees will continue to be eligible for 80% of their wages for hours not worked due to them being furloughed (up to a maximum of £2,500 per month) until the CJRS ends.
No doubt recognising that for many businesses the Government’s roadmap out of the pandemic (as announced by the Prime Minister on 22 February 2021) means that any hope of fully reopening will be delayed until the start of the Summer, Mr Sunak confirmed that the Government’s contribution to the furlough wage will remain unchanged until the end of June 2021. Therefore, for the three-month period from 1 May 2021 to 30 June 2021, the Government will fully fund the furlough wage payable to employees, with employers continuing to bear the cost of employer’s NICs and pension contributions.
However, perhaps unsurprisingly, the Chancellor also announced that as businesses start to reopen, they will be required to contribute more to the cost of furlough payments under the CJRS, by making a direct contribution to their employees’ furlough wages. From 1 July 2021, employers will therefore be required to contribute 10% of their employees’ furlough pay, and this contribution will increase to 20% for the months of August and September 2021 (although at present, the Updated Guidance merely states that the level of grant available to employers will be reduced).
At the moment, the Updated Guidance does not include any details of how employers should calculate claims for periods commencing on and after 1 May 2021. It merely states that this “will be provided in updated guidance in due course”.
Who is eligible?
There are no changes to the eligibility requirements for claims relating to the period up to 30 April 2021 (see our previous briefing referred to above for details of this). However, for periods starting on or after 1 May 2021, the Updated Guidance states that employers can claim for employees “who were employed on 2 March 2021, as long as you have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021”, thus opening the extended scheme to very recent hires. The Updated Guidance also confirms that it is not necessary for employers to have previously claimed for an employee before 2 March 2021.
TUPE transfers and business succession rules
The Updated Guidance provides that, for claim periods commencing on and after 1 May 2021, a new employer can claim for any employees transferred to it provided that those employees:
had been employed by their old employer on or before 2 March 2021;
transferred to the new employer on or after 1 January 2021; and
had been included in an RTI submission by the old employer between 20 March 2020 and 2 March 2021.
Self-employed Income Support Scheme
The SEISS will also continue until the end of September 2021, with a fourth grant covering the period from 1 February to 30 April 2021, and a fifth and final grant covering the three-month period from 1 May to the end of July 2021.
The fourth grant will provide three months of support at 80% of the business’ average trading profits up to a maximum of £7,500. Claims for the fourth grant will be open next month.
The fifth grant will be targeted to support those whose business turnover has been adversely affected by the pandemic and will therefore provide the following support:
80% of 3 months’ average trading profits, capped at £7,500, for those businesses whose turnover has reduced by 30% or more;
30% of 3 months’ average trading profits, capped at £2,850, for those whose turnover has reduced by less than 30%. Presumably those businesses who have suffered no turnover reduction at all will still qualify for the 30% grant.
It remains to be seen how forensic the assessment of loss of turnover will need to be.
The good news however is that those who missed out on the first three grants because they had only recently started up in business and had not filed a tax return for 2018/2019 will be able to access the fourth and fifth grants, provided that they had filed a tax return for the 2019/2020 tax year by midnight on 2 March 2021. The Chancellor claimed that this will allow an additional 600,000 self-employed workers to claim under the SEISS.
We will issue a fuller briefing when formal guidance is issued detailing the announced changes to the SEISS.