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Furlough – what is changing and when will it come to an end?

On 12 May 2020, Rishi Sunak announced that the Coronavirus Job Retention Scheme (CJRS) was to be extended until 31 October 2020 but that changes were to be made to the CJRS and these were to be announced by the end of May.

Last Friday (29 May 2020), Rishi Sunak announced what these changes will look like and confirmed the deadline for final entrants into the CJRS.  At present we have limited information as to how these will operate in practice, but set out details of what we do know below:

  • No new entrants to the CJRS will be permitted after 30 June 2020 – this means a deadline of 10 June for any new employees to be put onto furlough;
  • Flexible furlough from 1 July 2020 (a month earlier than previously announced) – employers can bring furloughed employees back to work part time, but still access the CJRS and reclaim the employees’ salaries (up to the CJRS cap) for the days that the employees are not working and furloughed;
  • Tapering of the CJRS from August 2020 – from August 2020, employers will be asked to contribute towards the wages of their furloughed employees on an incremental basis:
    • June and July: Unchanged.  The government will continue to pay 80% of wages up to a cap of £2,500;
    • August: The government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay employer national insurance contributions and pension contributions;
    • September: The government will pay 70% of wages up to a cap of £2,187.50.  Employers will pay employer national insurance contributions and pension contributions plus 10% of wages to make up to the original figure of 80% of wages (up to a cap of £2,500);
    • October: The government will pay 60% of wages up to a cap of £1,875.  Employers will pay employer national insurance contributions and pension contributions plus 20% of wages to make up to the original figure of 80% of wages (up to a cap of £2,500);
  • The CJRS will close on 31 October 2020.

Further guidance is expected later in June and we will provide a further update once received.

Extension of self-employed support

In addition, the government announced that the Self-Employment Support Scheme will be extended to allow one further payment for self-employed individuals.  The same eligibility criteria apply as for the previous payment. 

Those that are eligible will be able to submit a claim for a second (or first – they do not need to have previously claimed) and final time in August 2020.  The grant will be capped at £6,570 and will be worth 70% (not the previous 80% to be in line with the CJRS) of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits.

For more information on the article above please contact Jenny Marley or visit the Coronavirus/ COVID-19 area on our website.

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