The Furlough Scheme and Self Employed Income Scheme updates – at last!

It seems a long time since Rishi Sunak confirmed the extension of the Coronavirus Job Retention Scheme on the 12th May. The detail around the various changes was promised ‘by the end of May’. We’ve been waiting since then to hear the more detailed information. and finally, on the last working day of the month, we have more information!

This delay may well be an indication of the challenges inherent in the process…

Rishi Sunak opened by talking about how things needed to change around the scheme, which he said ‘couldn’t continue indefinitely’.

He restated that the Furlough Scheme would continue until October, as outlined previously, but that at that point, it would end. There is no opportunity for a further extension.

So, how will the scheme change?

In June and July, the contributions to the scheme would remain the same. The total amount available would stay at £2,500, being a maximum of 80% of the furlough employees salary.

From 1st August, that 80% contribution to the salary would remain, but employers will be required to contribute the Employers element of National Insurance and the Employers Pensions contributions.

From 1st September, when the Chancellor feels businesses would have had a chance to make the necessary changes to practices within the business to meet the requirements of social distancing etc, they will need to start contributing towards the scheme. At this point Employers will need to pay 10% of the 80%, with the Government contributing 70%, rather than the original 80%.

From 1st October, Employers will need to increase their contribution to 20%, while Government would reduce their contribution from 70% to 60%.

FLEXIBLE FURLOUGH

One of the strongest calls from businesses has been to bring forward the opportunity to bring employees back from furlough on a part-time basis.

Rishi Sunak had announced that this is going to happen. and that employers will be able to bring employees back from furlough on a part-time basis from 1st July, a month earlier than planned.

As we suggested yesterday, there has been a trade-off by the Chancellor for this enhancement.

There will now be a cut-off date for employees to be placed on furlough, which will be the 10th June, for them to have completed the minimum 3-week furlough period by the 30th June, when the scheme effectively becomes the ‘Flexible Furlough’ scheme.

THE SELF EMPLOYED INCOME SUPPORT SCHEME

Since the extension of the Furlough Scheme to the end of October there have been calls for the Self Employed Income Support Scheme to be extended as well.

This extension was confirmed today.

A final grant will be paid in August, based on average monthly profits and calculated in the same way as before.

In line with the reduction in the Furlough Scheme levels, the maximum payment under this scheme will also reduce. The maximum sum to be paid in August will be £6,570.

At this stage we don’t know if a second application will be required, or whether this lump sum payment will be issued automatically.

The written guidance will follow these announcements, and we’ll be back in touch once we have had a chance to review this in detail.

These announcements appear to be positive, in that they extend the benefits of the scheme and provide business owners with plenty of warning of the changes to come. There remains no direct support for Directors, which is disappointing, but was always unlikely, given its previous omission.

If you have any questions around how these changes may affect your plans for the coming weeks, please do get in touch.