Update on the Coronavirus Job Retention Scheme and Self-Employment Income Support Scheme:Written statement - HCWS267

WS
Treasury
Made on: 03 June 2020
Made by: Rishi Sunak (The Chancellor of the Exchequer)
Commons

Update on the Coronavirus Job Retention Scheme and Self-Employment Income Support Scheme

Following my announcement last week, today I am pleased to share more detail on the next steps for the Coronavirus Job Retention Scheme (CJRS) and Self-Employment Income Support Scheme (SEISS).

CJRS was launched to protect jobs and help employers through this unprecedented crisis. By midnight on 31 May more than 8 million jobs have been protected which would otherwise have been at risk. More than 1 million firms have benefitted from this support.

I announced on Tuesday 12 May that the CJRS would be extended until the end of October. This means the scheme will now be in place for a full eight months, giving businesses the vital support that they need during this unprecedented time. As we now begin to re-open the economy, it is right that state support is slowly reduced and the focus shifts to getting furloughed employees back to work.

From 1 July, employers will have the flexibility to bring back their furloughed employees for any amount of time and any shift pattern, giving businesses more flexibility to respond to demand as the economy reopens. Employers will be able to claim the furlough grant for the proportion of the employees’ normal hours they are not working. Employers must pay their employees for the hours they are working, subject to their employment contract, and will be required to report data on hours worked by an employee and the usual hours an employee would be expected to work in a claim period under the scheme for furloughed employees.

As a result, from Wednesday 1 July, there will be no minimum furlough period; that is, no minimum amount of time that an employee can be on temporary leave. However, any furlough arrangement agreed between employer and employee and reported in a claim to HMRC must still cover a period of at least one week.

To enable this change on 1 July, the CJRS will be closed to new entrants on 30 June. This means employees furloughed for the first time must be placed on furlough on or before Wednesday 10 June in order to access flexible furlough, in order for the three week minimum period to have been completed by 30 June. All employers planning to claim a grant from 1 July must have completed their first claim (for the period ending 30 June) by Friday 31 July.

In June and July, nothing will change for employers and the government will continue to pay 80 per cent of people’s salaries. From August, the level of the grant will be slowly reduced and employers will be required to top up the government payment to ensure employees receive 80 per cent of their normal pay, up to a monthly cap of £2,500, throughout. In August, employers will be asked to pay Employer NICs and pension contributions; in September employers will also pay 10 per cent of wages to make up 80 per cent total, up to a cap of £2,500; in October, employers’ contribution will increase to Employer NICs and pension contributions and 20 per cent of wages, up to a cap of £2,500.

An early assessment of CJRS claims suggest that around 40 per cent of employers have not made a claim for Employer NICs costs or employer pension contributions and so will be unaffected by the change in August if their employment patterns do not change.

Detailed guidance on these changes will be published on Friday 12 June.

The SEISS opened on 13 May – days ahead of schedule – and eligible individuals will still be able to apply for the first grant until 13 July. By midnight on 31 May, 2.5 million self-employed individuals had already applied for grants, worth £7.2 billion in total.

The SEISS will be extended and eligible individuals could now qualify for a second and final grant.

The extension of the SEISS now means eligible individuals whose businesses are adversely affected by coronavirus will be able to claim a second and final taxable grant when the scheme reopens for applications in August. Individuals will be able to claim a taxable grant worth 70 per cent of their average monthly trading profits, paid out in another single instalment covering three months’ worth of profits, and capped at £6,570 in total. This is in line with changes to the CJRS as the economy reopens and the eligibility criteria remain the same for this final grant.

An individual does not need to have claimed the first grant to receive the second grant: for example, they may only have been adversely affected by coronavirus in this later phase.

Further guidance will be published on Friday 12 June.

This statement has also been made in the House of Lords: HLWS262

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