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Support for self-employed extended and furlough scheme changes confirmed

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
01/06/2020

Self-employed workers whose businesses have been negatively hit by coronavirus will be able to claim “a second and final grant” in August.

Some 2.3 million people have applied for a grant under the Self-Employment Income Support Scheme (SEISS) since it launched in mid-May.

The second grant will be worth 70% of people’s average monthly trading profits, capped at £6,570 in total.

People can continue to apply for the first grant, which is worth 80% of average monthly profits up to £2,500 a month for three months, until 13 July.

The chancellor Rishi Sunak has also set out details of the extended furlough scheme.

A total of 8.4 million workers have been furloughed under the Coronavirus Job Retention Scheme, according to the Treasury.

The scheme was originally due to end in June but has been extended until the end of October.

However, there will be some changes.

Businesses will be able to bring furloughed employees back part time from 1 July but will be responsible for paying their wages for the hours they work and furlough them for the remaining hours.

The value of the furlough grant will also be gradually tapered.

Currently, the government pays 80% of an employee’s salary up to £2,500 a month plus National Insurance and pension contributions.

In August, this will continue but employers will have to pay National Insurance and pension contributions.

Then from September, the state will pay 70% of wages up to a cap of £2,187.50, decreasing to 60% in October up to a cap of £1,875.

Furloughed workers will continue to get 80% of their pay until the end of October, with employers making up the shortfall.

Chancellor Rishi Sunak said: “Our top priority has always been to support people, protect jobs and businesses through this crisis. The furlough and self-employment schemes have been a lifeline for millions of people and businesses.

“We stood behind Britain’s businesses and workers as we came into this crisis and we stand behind them as we come through the other side.

“Now, as we begin to re-open our country and kickstart our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world.”

What’s changing: the details

The following will apply for the period people are furloughed:

  • June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
  • August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.