Government financial support for those impacted by COVID-19 – an update

The UK Government’s Coronavirus Job Retention Scheme, which pays towards the wages of staff on furlough during the pandemic, is changing from today (1 September 2020).

The Government’s contribution will fall from 80% to 70% of an employee’s wages up to a cap of £2,187.50 per month, pro rata depending on the hours the employee is on furlough. The rules allow for employees to be furloughed on a part-time basis, with employers liable for their employees’ full wages for any hours worked.

While the Government contribution to furlough payments is reducing, employees are still entitled to receive 80% of their wages while on furlough, up to a cap of £2,500 per month (pro rata). This means that employers will be required to top-up employees’ pay while on furlough by the 10% that the Government is no longer funding. Employers will therefore need to pay up to £312.50 in wage top-ups per employee in September.

Employers also have to pay employer National Insurance Contributions (NICs) and employer pension contributions, a change which was introduced on 1 August.

From 1 October, the Government’s contribution will fall further to 60% of wages up to a cap of £1,875 for the hours the employee is on furlough, with employers required to make up the 20% shortfall.

Unless an employer is making a new claim for an employee who is a military reservist or is returning from statutory parental leave, they can only continue to claim through the scheme for employees who were previously furloughed for at least three consecutive weeks between 1 March and 30 June 2020.

Remember, normal rules in relation to Tax, NICs and pension contributions apply on wages received through the furlough scheme.

Further information on the Coronavirus Job Retention Scheme can be found here.

The second round of the Government’s Self-Employed Income Support Scheme (SEISS) opened for applications in August. Self-employed people whose livelihoods have been affected by COVID-19 will now be able to claim a second payment of up to £6,570, covering a three month period. Anyone whose self-employed business has been adversely affected by coronavirus since 14 July may be eligible for the scheme, which is worth 70% of average monthly trading profits. Payments should be made within six working days of making a claim.

The Government has advised that HMRC will contact all potentially eligible customers to make them aware that they can claim for a second and final SEISS grant, however you do not need to wait for them to contact you before applying. The eligibility criteria remains the same as for the first grant, with people needing to have had trading profits of no more than £50,000, making up at least half of their income.

The scheme closes on 19 October 2020. Further guidance can be found here.

Further advice and guidance

If you have any further queries on how this grant may affect other entitlements, or to see if you are eligible for support through the benefits system contact the Family Benefits Advice Service on 0800 028 3008 or email hello@employersforchildcare.org.