We now have a better understanding of how these two schemes will operate up to the end of October 2020.
The CJRS will continue at its current full level of support up until the end of July, providing 80% of furloughed employees’ wages up to a maximum of £2,500 per month, as well as the employer NIC and auto-enrolment pension contributions.
For August, September and October, the government will slowly reduce the level of support, asking employers to make up the difference:
The position for furloughed employees should not change, because they will continue to receive at least 80% of their salary, subject to the cap. While employers were not required to make up the difference between 80% and 100%, they will be required to make up the difference to the 80%.
There are also provisions now to enable gradual returns to work from July onwards. So from that date, if employees are asked to return to work but initially for less than their normal contracted hours, the government support will apply to the difference, and employers will pay as normal for actual hours works.
In order for this transition to be seamless, the CJRS will close to newly furloughed employees on 30 June. Although this is four weeks away, in practice this means that anyone who has not been furloughed yet, but needs to be, must be placed on furlough by 10 June so that they will have met the minimum three week furlough period by the closing date of the 30th.
We are advised that further guidance on flexible furloughing and how calculations should be made will be released on 12 June.
In order to level the playing field, the government has also extended the SEISS, so that eligible self-employed businesses and partners will be able to claim a second grant, covering the months of June, July and August.
While the original grant covered 80% of calculated profits with a cap of £7,500, the second grant will be slightly lower, in line with the reduction in CJRS support. The grant will be for 70% of calculated profits with a cap of £6,570.
As with the original grant, the profits figure is based on the average profits for the three tax years 2016-17, 2017-18 and 2018-19, multiplied by 3/12 to represent the three months of support.
Applications can be made for this second grant in August.
Remember, you can find a summary of all our articles about Covid-19 support mechanisms here. Our team remain fully operational from home and are ready to provide advice and support.
James Geary is head of Corporate Tax and is happy to help with any questions or concerns you may have at this time – you can contact James on email@example.com or 01242 776000 to arrange a call back.