Furlough Scheme and Self-Employment Income Support Update

Monday June 1, 2020

In an update on the 29^th of May 2020, Chancellor Rishi Sunak confirmed the shutting down of the government’s coronavirus furlough scheme at the end of October by. In addition, employers will start to shoulder more of the burden of paying employees’ wages, National Insurance and pension contributions from August. Here are the main headlines of the upcoming changes:

• As of August 2020, employers will start paying NICs and pension contributions for their employees.
• In September, the 80% contribution the government’s been giving toward wages will drop to 70%, leaving employers to pick up the extra 10%.
• In October, the government contribution will drop again to 60% of employees’ wages, upping employer contributions to 20%.

That’s not all that’s set to change, though. From July, employees will be able to return to work on a part-time basis, getting their wages paid by their employers, rather than the government. Here’s how that works:

• After the 1^st of July 2020, employers with furloughed workers will be able to put them back to work part-time.
• “Part-time” will pretty much be left up to employers to define, setting hours and shift patterns as necessary.
• When using this option, employers will have to pay their workers themselves, rather than through the government-supported furlough scheme.

The Chancellor also announced a second round of the Self-Employment Income Support Scheme, which has seen over 2 million people receiving a taxable grant worth up to £7,500. For self-employed people whose businesses have been hurt by COVID-19, a second grant of up to £6,570 will be available. As before, though, there are rules in place about how much you can claim, and you’re expected to be able to prove that you’ve lost out because of the pandemic. Here are the details:

• The second grant will be lower than the first, covering 70% of your average monthly earnings instead of 80%.
• The payments are capped at £2,190 a month, for a maximum 3-month total of £6,570.

As before, the payment will comes as a single lump sum. However, you don’t need to have claimed the first grant to get the second. Meanwhile, applications for the first grant are still open until the 13th of July. It’s important to remember that these grants are only for businesses that have been impacted specifically by COVID-19 – although you don’t necessarily need to have caught the virus yourself. You could qualify, for example if you’re unable to work because you’re shielding or self-isolating, if you’ve had a drop in customers of if your staff haven’t been able to come in to work.

We’ll keep piling on the updates as they crop up, so check back often for more Voices from the RIFT...