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Furlough scheme to be extended

View profile for Rianna Billington
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Furlough scheme to be extended

In the budget speech on 3 March 2021, the Chancellor, Rishi Sunak, announced that the furlough scheme will be extended.

The furlough scheme will cease at the end of September. Employees will continue to receive 80% of their wages up to £2,500 per month until then. Employers will be asked to contribute towards 10% of the wages in July and 20% in August and September as the scheme is gradually phased out.

In his statement, the Chancellor said that the extension of the furlough scheme is necessary to help millions through “the challenging months ahead” and credited furlough with slowing the pace of unemployment.

Eligibility for furlough will also change:

For periods ending on or before 30 April 2021, you can claim for employees who were employed on 30 October 2020, as long as a PAYE Real Time Information (RTI) submission was made to HMRC between 20 March 2020 and 30 October 2020. 

For periods starting on or after 1 May 2021, you can claim for employees who were employed on 2 March 2021, as long as a RTI submission was made between 20 March 2020 and 2 March 2021. In neither case does a prior claim for furlough have to have been made.

You can find the government guidance on the changes from July and beyond here

Self-employed support

In addition, the Government has pledged to support self-employed people by also extending the Self-Employment Income Support Scheme (SEISS) until the end of September.

A fourth grant under the SEISS will run from February to April and cover up to 80% of three months’ trading profits, up to £7,500. It is estimated that some 600,000 more self-employed people will be eligible, provided they filed their tax returns for 2019-20 by midnight on 2 March 2021.

A fifth SEISS grant will be available from May to September. You will be able to claim this from late July if you are eligible.

The fifth grant differs slightly from that of the fourth as shown below:

  • For those whose turnover has fallen by 30% or more, they will receive an 80% grant of three months’ average trading profits, which is capped at £7,500.
  • For those whose turnover has fallen by less than 30%, they will receive a 30% grant of three months’ average trading profit, which is capped at £2,850.

The rest of the eligibility criteria remains unchanged. As a reminder, to be eligible under SEISS:

  • You must be a self-employed individual or member of a partnership
  • You must have traded in the relevant tax years
  • You must either:
    • be currently trading but are impacted by reduced demand due to coronavirus
    • have been trading but are temporarily unable to do so due to coronavirus
  • You must also declare:
    • that you intend to continue to trade
    • that you reasonably believe there will be a significant reduction in your trading profits

If you need advice on the furlough scheme or the Self-Employment Income Support Scheme, please contact our specialist BLHR and Employment team. I can be contacted on 01245 453812 or rianna.billington@birkettlong.co.uk.

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Keep up to date with changes in the law relating to the COVID-19 pandemic, furlough, coronavirus job retention scheme (CJRS) and other employment law issues by visiting our coronavirus blog.

If you are an employer looking to make redundancies, our myBL portal may be of use. For a fixed price you can access template letters and redundancy guidance that will take you through the process properly.

Employees facing redundancy can register for our free employee redundancy kit, which offers examples of letters you may receive and explains the redundancy process.

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