5 month extension to the Coronavirus Job Retention Scheme and increased self-employed income support grant

by | Nov 6, 2020 | Corona

The Chancellor has announced 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.  Employers will be asked to cover the costs of Employer National Insurance and Employer Pension Contributions.

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, but the Government has acted, saying it is clear the economic effects of COVID-19 will be “much longer-lasting” for businesses than the duration of any current restrictions.

For claim periods running through to January 2021 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 to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions.

Meanwhile, employers will be asked to continue to cover the costs of employer national insurance and pension contributions for hours not worked. According to the government: “For an average claim, this accounts for just 5% of total employment costs or £70 per employee per month.”

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.

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 the right time”.

The Job Support Scheme, originally due to replace the CJRS on 1 November but superseded by the furlough extension, was not mentioned, but could still be revived at a later date.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

The government also announced a raft of further measures, including 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.  More information is expected on this in the coming weeks.