The Coronavirus Job Retention Scheme (CJRS) for furloughed workers has been extended until 30 September 2021. Currently, the worker must receive a minimum of 80% of ‘normal’ pay for their furloughed hours and this will continue through to September.
Until 30 June 2021, the position of the employer will be unchanged, namely: They can claim a CJRS grant to cover 80% of normal pay; but
They must pay the employer National Insurance Contributions (NIC) plus minimum auto-enrolment pension contributions on the salary actually paid to the worker, with no grant to cover these amounts.
From July, the cost of furloughing the worker will increase, as the grant will only cover 70% of normal pay, reducing to 60% for August and September.
An employee must not work for the company at all during the hours for which they are furloughed, but this can be as many or as few hours a week as are agreed between the worker and employer. An exception is a furloughed director, who is allowed to carry out any statutory work related to their directorship (e.g. preparation of accounts).
The eligibility for the scheme is being amended from 1 May 2021 to include employees who were employed on 2 March 2021, as long as a payment of earnings was reported through RTI between 31 October 2020 and 2 March 2021.
There are three possible reference dates for determining furlough pay, which depend on when the employee first had earnings reported on a Full Payment Statement (FPS) through Real-Time Information (RTI).
Grant claim deadlines will continue to be 14 days after the month-end although, as currently, most employers will want to make the claims in advance of payrolls being run.
There are to be two further grants available under the Self-employed Income Support Scheme (SEISS), both based on three months’ worth of previously reported profits.
The 4th grant (SEISS-4), covering February to April 2021, will be 80% of profits, up to a maximum of £7,500. HMRC will contact potentially eligible taxpayers in mid-April and applications will be open from late April until the end of May 2021.
The SEISS-5 grant covers May to September 2021 but is still based on three months of profits. Claims can be made from late July, but note that this grant will work differently
to the others:
- If turnover has fallen by ≥ 30%, it will be 80% of profits, up to a maximum of £7,500
- If turnover has fallen by < 30%, it will be 30% of profits, up to a maximum of £2,850
Taxpayers who started a business in 2019/20 were not eligible for the first three grants but
will be able to claim the 4th and 5th grants if they meet the revised qualifying conditions, including having filed a 2019/20 tax return by 2 March 2021. However, many people are still ineligible for these grants, including traders whose profits were previously over £50,000 and taxpayers who have less than 50% of total reported income from self-employment.
Various points on the new SEISS grants still need to be clarified by HMRC but it has been confirmed that any grant received will be taxable in the tax year of receipt, irrespective of the business’s accounting period.