Support During Lockdown #2 from HMRC

The new England Lockdown restrictions will apply from 5 November to 2 December 2020, but the financial support for employers applies from 1st November to 2nd December 2020 for eligible employers across the UK.

Furlough scheme reinstated During Lockdown

Friday night (30th October) had seen the release of further JSS details, but by Saturday evening that scheme was put on hold with a full extension of the existing furlough scheme (CJRS). JSS will not now take effect until the CJRS ends on 2nd December.

What support is given?

The furlough scheme has been reinstated with the similar conditions as applied in August 2020.

The CJRS grant will pay for 80% of the employee’s current wages for time not worked, up to £2,500 per month. The employer must pay for all of the employer’s NIC and employer’s minimum workplace pension contributions on those wages.

The employer can top-up the employee’s furlough pay at their own expense, if they wish.

Which employees qualify?

Employees who were on the employer’s payroll on 23rd September 2020 will qualify to be included in CJRS claim for November; they don’t have to have been included in an earlier CJRS claim.

The employee must have been paid by the employer, and that pay must have been reported on a RTI return before midnight on 30th October. Employees who were made redundant or who left the employment after 23rd September 2020 can be reinstated and included in a CJRS claim for November.  

Employees on any type of contract can qualify, including zero hours, contractors and sole-directors, but there will be issues over determining the reference pay to use and the usual hours worked. 

Are those on Flexi-Furlough still eligible?

Flexible furlough will be permitted alongside full-time furlough, so staff may be brought back part-time to say, set up the premises for the lifting of national restrictions, or to prepare for Brexit.

The same rules for flexible furlough will continue to apply as they have done since 1 July, so the employee may be furloughed for a few days or hours per week. There appears to be no minimum time set for furloughed hours or working hours. 

However, each furlough claim must be for a period of at least seven consecutive calendar days.

How can you claim?

The claim process will be very similar to that which has applied under CJRS in the past, the employer will have to report the hours the employee has not worked in a claim period, and the usual hours.

Claims can be made up to 14 days from the end of the pay period, and the CJRS grant should be paid within six days of the claim being submitted. Some details are included in this factsheet but legislation is expected to be published shortly.

Local grants

Where businesses have been required by law to close, they will be able to apply for a support grant from their English local authority, based on the rateable value of their business premises:

Rateable value of premises          Grant payable per two weeks

Up to £15,000                                     £667

£15,001 to £50,999                          £1000

£51,000 or more                              £1500

Different local business grants will be available in Wales, Scotland and Northern Ireland.

Boosted SEISS

On 2 November 2020 Sunak boosted the level of the next SEISS grant to 80% of average monthly profits for November 2020 only, with the following two months set at 40% of average profits.

Therefore for the three months the SEISS grant is supposed to cover, the trader will receive 55% of average profits, capped at £5,160. Applications for this third SEISS grant will open on 30 November 2020.

No details have been released concerning the fourth SEISS grant.

Who qualifies?

HMRC has yet to publish legislation to set the rules for the next two SEISS grants, but we expect the following conditions to apply:

The trader must have been eligible for the previous SEISS grants (even if they didn’t apply for them). The business has not ceased permanently at the date of the claim.

If the business is not actively trading there is an intention to resume trading before April 2021.

The business has been adversely affected by the Covid-19 pandemic in the period from 1 November 2020 to the date of the claim.

The third SEISS grant will be based on the trader’s reported self-employed profits in the three years to 2018/19, or parts of that period when he was in business as a self-employed individual or partner.

Will there be a Fourth grant?

The government has promised a fourth SEISS grant payable for three months from February to April 2021. We have no information about the level of this grant, or the capped amount.

Additional help for individuals:

Universal credit

The level of the SEISS grant may not be enough to support the trader, in which case they should consider applying for universal credit (UC), which can be received in addition to the SEISS grants. The trader should bear in mind that it can take five to six weeks for the first UC award to arrive following the initial claim.

Another disadvantage of the claiming UC is the operation of the minimum income floor (MIF). Self-employed individuals are assumed to make profits at least equal to the MIF when applying for UC. The MIF is broadly equivalent to the national minimum wage for 35 hours per week (or the hours the claimant is expected to work), less tax and NIC due on that notional income.

The MIF does not apply in the first 12 months the individual starts their self-employed trade, or for the first 12 months of a new UC claim by a self-employed individual submitted from 23rd September 2020

Mortgage holidays

Applications for mortgage holidays for up to six months were due to close on 31st October, but this facility will now remain open for borrowers who have been impacted by coronavirus. The FCA will announced details of who can qualify in the next few days.