Furlough scheme is extended

The Coronavirus Job Retention Scheme (CJRS) has been extended for a month until December as a new national lockdown is set to come into force in England later this week.

Employees will receive 80 per cent of their current salary for hours not worked, up to a maximum of £2,500.

Businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time.

They will only be asked to cover National Insurance and employer pension contributions which, for the average claim, accounts for just five per cent of total employment costs.

This extended furlough scheme will operate as the previous scheme did, with businesses being paid upfront to cover wages costs.

There will be a short period when the Treasury will need to change the legal terms of the scheme and update the system and businesses will be paid in arrears for that period.

The new Job Support Scheme (JSS), which was scheduled to start on November 1, has been postponed until the furlough scheme ends.

Here at WNJ we are awaiting clarification on the intricacies of the furlough extension and we are here for all our clients during this next month and beyond.

Announcing the extension, following the decision to place England in lockdown for one month from Thursday this week, Chancellor Rishi Sunak also revealed further economic support to help businesses and individuals.

Business premises forced to close in England are to receive grants worth up to £3,000 per month under the Local Restrictions Support Grant. They will be eligible for the following:

• For properties with a rateable value of £15,000 or under, grants to be £1,334 per month, or £667 per two weeks
• For properties with a rateable value of between £15,000-£51,000 grants to be £2,000 per month, or £1,000 per two weeks
• For properties with a rateable value of £51,000 or over grants to be £3,000 per month, or £1,500 per two weeks

It has also been announced that £1.1bn is being given to local authorities, distributed on the basis of £20 per head, for one-off payments to enable them to support businesses more broadly.

The government has also extended its ‘mortgage holiday’ for homeowners, which was also set to end at the beginning of November.

Announcing the moves, Chancellor Rishi Sunak said: “Over the past eight months of this crisis we have helped millions of people to continue to provide for their families. But now – along with many other countries around the world – we face a tough winter ahead.

“I have always said that we will do whatever it takes as the situation evolves. Now, as restrictions get tougher, we are taking steps to provide further financial support to protect jobs and businesses. These changes will provide a vital safety net for people across the UK.”

How it works

Employers small or large, charitable or non-profit, are eligible for the extended CJRS.

All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.

To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 on October 30, 2020.

This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before that date.

As under the current CJRS rules employees can be on any type of contract. Employers will be able to agree any working arrangements with employees.

Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. Such calculations will broadly follow the same methodology as currently under the CJRS.

When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of seven consecutive calendar days.

Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.

For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.

What support is being provided and employer costs

For hours not worked by the employee, the government will pay 80 percent of wages up to a cap of £2,500. Under the current CJRS, this cap is reduced pro-rata, dependant on the hours worked by the employee. The grant must be paid to the employee in full.

Employers will pay employer NICs and pension contributions, and should continue to pay the employee for hours worked in the normal way.

As with the current CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.

The government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.

What the latest lockdown means

England’s new national lockdown will start on Thursday November 5 and will be in place until Wednesday December 2.

To reduce social contact as it looks to reduce the spread of Covid-19, the government has ordered certain businesses and venues to close.

These include:

• all non-essential retail, including, but not limited to clothing and electronics stores, vehicle showrooms, travel agents, betting shops, auction houses, tailors, car washes, tobacco and vape shops.
• indoor and outdoor leisure facilities such as bowling alleys, leisure centres and gyms, sports facilities including swimming pools, golf courses and driving ranges, dance studios, stables and riding centres, soft play facilities, climbing walls and climbing centres, archery and shooting ranges, water and theme parks
• entertainment venues such as theatres, concert halls, cinemas, museums and galleries, casinos, adult gaming centres and arcades, bingo halls, bowling alleys, concert halls, zoos and other animal attractions, botanical gardens
• personal care facilities such as hair, beauty and nail salons, tattoo parlours, spas, massage parlours, body and skin piercing services, non-medical acupuncture, and tanning salons

Food shops, supermarkets, garden centres and certain other retailers providing essential goods and services can remain open.

Essential retail should follow Covid-secure guidelines to protect customers, visitors and workers.

Non-essential retail can remain open for delivery to customers and click-and-collect.

Hospitality venues like restaurants, bars and pubs must close, but can still provide takeaway and delivery services. However, takeaway of alcohol will not be allowed.

Hotels, hostels and other accommodation should only open for those who have to travel for work purposes and for a limited number of other exemptions which will be set out in law.

To help contain the virus, everyone who can work effectively from home must do so.

Where people cannot do so – for instance people who work in critical national infrastructure, construction or manufacturing – they should continue to travel to work/attend their workplace.