Government coronavirus support schemes - Aegon
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For intermediaries only
Government coronavirus support schemes
This article is for financial advisers only. It mustn’t be distributed to, or relied on by, customers. It is based on our understanding of
government guidance and announcements made at the date of publication.
24 June 2020
The measures put in place by the Government to control the spread of coronavirus in the UK have vastly changed the working lives
of many people. Whilst some people have seen demand for what they do become key or significantly increase others have seen
their work tailing off or stopping altogether. Recognising the huge economic impact that the lockdown restrictions have caused, the
Government has put in place two separate schemes aimed at providing financial support to employers, employees and self-
employed people in the UK whilst the coronavirus crisis continues. The key points of each scheme are summarised below:
Job Retention Scheme (for employers and employees) Self-Employment Income Support Scheme
Scheme details The Job Retention Scheme (JRS) will run from 1 The Self-Employment Income Support
March 2020 and it’s intended it will stop providing Scheme (SEISS) will run from 1 March
support to employers at the end of October 2020. 2020, and it’s possible for two separate
Designed to help employers whose business grants to be claimed covering two
operations have been severely affected by the different three month blocks.
coronavirus crisis to retain their employees and For self-employed individuals or
protect the UK economy. members of a partnership who have lost
Open to all UK employers that had created and trading profits due to the coronavirus
started a PAYE payroll scheme on or before 19 restrictions.
March 2020. This includes businesses, charities, Applications can be made if the individual
recruitment agencies, public authorities and or partnership are currently trading (or
individuals with employees such as nannies. would be if it weren’t for the coronavirus
restrictions).Job Retention Scheme Self-employment Income Support Scheme
Eligibility Covers employees of any nationality on payroll on or The business must have traded in the tax
before 19 March 2020 whose employment has been year 2019/20 with an intention to continue
temporarily put on hold (furloughed employees). to trade in the 2020/21 tax year.
Full-time employees, part-time employees, The business must have submitted a tax
apprentices, shielding employees, employees with return for the 2018/19 tax year (the
caring responsibilities, employees on fixed term deadline for this was extended to 23 April
contracts and those on agency, flexible and zero- 2020).
hour contracts are included. Self-employed trading profits must be
Other eligible individuals could include office less than £50,000 and more than half of a
holders, company directors, salaried members of person’s income must come from self-
Limited Liability Partnerships and agency workers employment.
employed by umbrella companies. The SEISS is open to those with trading
Employees made redundant since 28 February profits of less than £50,000 in 2018-19 or
2020 that have subsequently been rehired can also an average trading profit of less than
be included. £50,000 from 2016-17, 2017-18 and
Furloughed individuals have the same rights as they 2018-19.
would do when in employment. The minimum time Where a business only started trading at
an employee can be furloughed for is three weeks some point during 2016 to 2019, HMRC
although an employee can be put on furlough more will only use the years where a tax return
than once. has been filed.
Up to 30 June 2020, furloughed employees cannot Businesses that only recently started
carry out work for or on behalf of their employer trading who can’t supply a tax return from
except in very limited circumstances. 2018/19 (and of any of the earlier tax
From 1 July 2020, employers are able to bring years) won’t be covered under the
furloughed employees back to work part-time. If an scheme.
employee has some part-time work and some time Either or both of the two separate grants
on furlough in the period from 1 July 2020 to 31 can be claimed depending on an
October 2020, their employer can only claim for their individual’s particular circumstances.
usual hours that they are still furloughed for from the To be eligible for the second grant, the
JRS. business must have been adversely
effected by coronavirus on or after 14
July 2020.Eligibility To allow for the introduction of part-time furloughing
(cont’d) from 1 July 2020, the JRS will close to new entrants
on 30 June 2020. The last three-work furlough
periods before then must start by 10 June 2020.
This means the final date by which an employer can
furlough an employee for the first time, and make a
claim under the JRS, is 10 June 2020.
The ordinary rules of employment law apply so
employers should discuss going on furlough or part
furlough with affected employees or trade union
representatives and make changes to employment
contracts by agreement (legal advice may need to
be sought). They must also write to employees who
will be furloughed or part furloughed and keep a
record of this.
Job Retention Scheme Self-employment Income Support Scheme
Calculating a From 1 August 2020, the amount of grant that can HMRC uses data from 2018/19 returns to
claim be claimed from the JRS will be tapered to reflect identify those eligible for the SEISS.
that employees should be able to return to work. Both payments from the SEISS are made
From 1 March to 31 July 2020, employers who use in the form of a lump sum taxable grant.
the JRS can claim for 80% of furloughed employees’ The first available grant is 80% of the
usual monthly wage costs, up to a maximum of average monthly profits from three
£2,500 a month. They can also claim for the applicable tax years (2016/17, 2017/18
associated employer National Insurance and 2018/19).
contributions and minimum automatic enrolment The maximum amount for the first grant
employer pension contributions (3% of qualifying will be capped at £7,500 in total for the
earnings). three months of March, April and May
For August 2020, employers who use the JRS can 2020.
still claim for 80% of furloughed employees’ usual This means that self-employed
monthly wage costs, up to a maximum of £2,500 a individuals with average annual profits in
month, but they will need to pay the associated excess of £37,500 will see their grant
employer National Insurance contributions and any capped at £2,500 per month if they make
pension contributions due. a claim from the SEISS.Calculating a For September 2020, employers who use the JRS Applications for the first grant opened on
claim (cont’d) can claim for 70% of furloughed employees’ usual 13 May 2020 and will close on 13 July
monthly wage costs, up to a maximum of £2,187.50 2020.
a month. Employers will pay 10% of employees’ The second available grant is 70% of the
wages (to make up the 80% total, subject to a average monthly profits from three
maximum of £2,500 a month), the associated applicable tax years (2016/17, 2017/18
employer National Insurance contributions and any and 2018/19).
pension contributions due. The maximum amount for the second
For October 2020, employers who use the JRS can grant will be £6,570 in total for the three
claim for 60% of furloughed employees’ usual months of June, July and August 2020.
monthly wage costs, up to a maximum of £1,875 a This means that self-employed
month. Employers will pay 20% of employees’ individuals with average annual profits in
wages (to make up the 80% total, subject to a excess of £37,500 will see their grant
maximum of £2,500 a month), the associated capped at £2,190 per month if they make
employer National Insurance contributions and any a claim from the SEISS.
pension contributions due. Applications for the second grant will
Actual salary before tax from an employee’s last pay open in August 2020.
period before 19 March 2020 should be used to
calculate the furlough wage. This can include past
overtime, fees and any compulsory commission but
shouldn’t include dividends, discretionary
commission, bonuses, tips, non-cash payments or
non-monetary benefits.
If an employee’s pay varies, it’s possible to base a
claim on the same month’s earnings from the
previous year or average monthly earnings for the
whole of 2019/20 or since they started work, if they
have been employed for less than a year.
It may be necessary to proportion amounts in
different pay periods to calculate the amount that
can be claimed. HMRC’s online calculator can be
used to calculate claim amounts.Job Retention Scheme Self-employment Income Support Scheme
Claim process Claims can be made online through a portal made HMRC contacts those deemed eligible for
available from 20 April 2020. the SEISS and this includes an invitation
Employers have until 31 July 2020 to claim for to apply online for a grant.
furlough periods up to 30 June 2020. Once HMRC receives and approves a
Amounts due will be paid to employers by BACS to claim, it will contact the applicant to
a UK bank account (expected to be by 6 working confirm how much their grant will be and
days after making an application). confirm the payment details.
When the JRS closes at the end of October, Lump sum grants will be paid directly to a
employers will need to decide whether full and part- recipient’s bank account with payments
time furloughed employees can fully return to their being made for the first grant from the
duties or not. beginning of June.
Employers must include amounts claimed under the
JRS as income in their calculation of taxable profits
for income tax and corporations tax purposes.
Additional An employer pays a furloughed employee as normal Individuals can also access other
points and claims the amount available under the JRS. available support from the Government –
The employee’s wage is still subject to income tax, including more generous universal credit,
employee NI and other deductions due (including business continuity loans, income tax and
pension contributions). VAT deferrals and mortgage holidays.
An employer can choose to top up an employee’s Those eligible to claim can continue to
salary in addition to the amount claimed but isn’t work, start a new trade or employment or
obliged to do so. Additional employer NI due and carry out voluntary work.
pension contributions made can’t be claimed from It’s not clear if the grant will count as
the JRS. relevant UK earnings for an individual
The coronavirus pandemic counts as a life event, so making personal contributions to a UK
a furloughed employee could ask to opt-out of an registered pension scheme.
existing salary sacrifice arrangement. The pre-
sacrifice position is then likely to apply but the
calculation of the furloughed wage will still be based
on the post-sacrifice salary that was in payment in
the last pay period before 19 March 2020.
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