CJRS extension and a fourth and fifth SEISS grant
Mar 10, 2021
As part of the Chancellor’s 2021 budget, he announced what will be the sixth extension to the CJRS furlough scheme, as well as a fourth and fifth SEISS grant as part of the self-employed income support scheme (SEISS).
Latest update to the CJRS
The furlough scheme was due to end at the end of April 2021, but has now been extended until the end of September 2021.
Employees on furlough will continue to receive 80% of their wages until the scheme ends. However, support for employers will gradually decrease – as the economy reopens, they will need to contribute more towards the cost of their employees’ unworked hours.
Between now and 30 June, the government will pay 80% of wages for hours not worked, up to £2,500 a month. Employers will still be asked to cover national insurance and employer pension contributions. Then from July, employers will be asked to contribute 10% of unworked hours and the government will pay only 70%. In August and September the employer contribution will increase again to 20%, and the state will pay 60%.
As previously, employees can either be on full-time or part-time furlough. For any hours actually worked, the employee has to receive their normal rate of pay.
One further amendment is the eligibility for the scheme. From 1 May 2021, newly eligible employees who were employed on 2 March 2021, will be included as long as a payment of earnings was reported to HMRC between 20 March 2020 and 2 March 2021.
Fourth SEISS grant
A fourth SEISS grant will be made available, to cover February to April 2021. It will stay at the current level, offering 80% of three months’ average trading profits for up to four tax years between 2016-20, and it will be capped at £7,500. The grant will be available to claim by late April until 31 May, and it will be paid in one lump sum. HMRC will contact those self-employed individuals it deems eligible for the grant by mid-April to provide a personal claim date, which will be the earliest date from which you can submit a claim.
Eligibility for the fourth SEISS grant will depend on whether you have experienced a significant financial impact from coronavirus between February 2021 and April 2021. HMRC will take into account your 2019/20 return when assessing your eligibility for the scheme. This means the fourth grant could be higher or lower than previous grants you have received. If you make a claim, you will need to keep appropriate records as evidence.
Fifth SEISS grant
A fifth SEISS grant will be available to claim from late July, and it will cover the period from May to September.
This grant will be still be set at 80% of three months’ average trading profits and be capped at £7,500, but only for those whose turnover has decreased by 30% or more. If your turnover has fallen by less than 30%, then the grant will be reduced to 30% and be capped at £2,850. The turnover will be determined from the period April 2020 to April 2021.
The fourth and fifth grants will also be open to those taxpayers who are newly self-employed, who were not eligible for the first three SEISS grants. This will cover about 600,000 people who became self-employed in the 2019/20 tax year, as tax return data for this period is now available. To qualify, you must have filed your 2019/20 self assessment tax return by 2 March 2021.
If you became newly self-employed in 2019/20, HMRC will be conducting pre-verification checks to confirm your identity and request evidence of trade. You should receive a letter and follow up phone call from HMRC, and will need to upload one form of identity and three months’ worth of bank statements via a secure online link before you will be able to claim a grant.
Many other workers who have not received any government support so far will still be excluded from financial help. These include directors of limited companies paid by dividends, freelancers paid via PAYE and workers earning more than £50,000 a year.
If you have any queries about claiming for furlough or a SEISS grant then please get in touch and we will be happy to help.