Lockdown 2: surviving the sequel
As England goes into its second lockdown, MARTIN CULL from our Audit Department looks at the help available to businesses, including an extension to the furlough scheme.
Just when we thought the furlough scheme had come to an end, it has had a sudden and dramatic extension to help businesses and employees through a new month (at least!) of lockdown.
The Coronavirus Job Retention Scheme was due to be replaced by the Job Support Scheme on 1st November 2020. As pubs, restaurants, gyms and non-essential shops are ordered to close again, however, the government has recognised the need for additional support.
Fortunately, the furlough scheme will continue to support businesses by contributing 80% of wages up to £2,500 per month, with employers only being required to cover the attached pension and national insurance contributions. We predict that there could still be future changes to the scheme, as Chancellor Rishi Sunak has announced that additional flexibility may be possible.
Job Retention Scheme Eligibility
It is important to remember that in order to claim through the Job Retention Scheme, employees must have been on a payroll and reported to HMRC on or before 30th October 2020, although they do not need to have been furloughed previously. In line with the previous rules, the minimum length of time that an employer can furlough an employee for is seven consecutive calendar days. Employers will also still be required to submit information on how many or few hours the furloughed employee is working.
What happens when furlough ends?
England is due to come out of lockdown in December, at which point regions will supposedly be put back into the three-tier system that was intended to be in place. As soon as this happens, the Job Retention Scheme will end and the Job Support Scheme will come into force, paying 67% of wages for hours not worked up to a maximum of £2,083.33 as opposed to 80%.
When the Job Support Scheme comes into effect after the England lockdown, employees will need to have worked a minimum of 20% of their regular hours in order to be eligible, and the employer must contribute 5% of wages for the hours not worked.
Support for Self-Employed
The Coronavirus Self Employed Income Support Scheme (SEISS) was initially designed to cover only 20% of average monthly trading profits, with a limit of £1,875. It is now, however, more generous, offering 40% of average monthly trading profits, with a limit of £3,750. This is paid in a single instalment to cover three months of trading for the months of November, December & January.
Other support available
- Local Restrictions Support Grant (up to £3,000 per month)
This is available if premises are forced to close.
- £1,000 for furloughed employees who are subsequently kept in employment until end of January 2021
- £1,500 for providing a 16-24 year-old with a work placement
This must be a “high-quality”, six-month work placement, given to an out-of-work young person within the age bracket.
- £2,000 for providing an under-25 with an apprenticeship until at least the end of January, or £1,500 for over-25s.
Record-keeping requirements
Employers need to keep copies for all records for six years, to include:
- the amount claimed and the claim period for each employee;
- the claim reference number for their records;
- their calculations, in case HMRC need more information about their claim;
- usual hours worked, including any calculations that were required, for employees they flexibly furloughed; and
- actual hours worked for employees they flexibly furloughed.
We can help with furlough and job support claims, as well as applying for grants and assisting with planning to support your business to overcome the COVID-19 crisis. Please contact a member of our team on 0115 955 5500 or email enquiries@pagekirk.co.uk.