Job Retention And Income Support

Whether you are an employer or an employee – find out how the Government Job Retention Scheme and Self-employed Income Support Scheme may affect you.

The Government introduced the furlough scheme for employers who may be struggling to maintain their workforce during the coronavirus outbreak. Each member of staff placed on furlough is entitled to 80% of their wages, up to a maximum of £2,500 per month. Employees National Insurance and pension contributions will also be met on that furloughed pay. If an employee was made redundant prior to the scheme being introduced by the government i.e. 28 February 2020, then they can be re-hired and placed on furlough by their employer.

If you are self-employed or a member of a partnership, you will also be able to claim using the self-employed income support scheme and will receive 80% of your trading profits up to the value of £2,500 per month. This is calculated by taking your average profits for the previous 3 tax years. This scheme is not yet open for applications and further guidance will be published in the coming weeks.

The government schemes are designed to be a temporary three-month solution to help keep businesses afloat and staff paid.

Job retention: who is eligible?

The scheme can be applied for by any UK entity including:

  • Businesses
  • Charities
  • Apprentices – apprentices can be placed on furlough in the same way as normal employees and they can continue to train during the period of furlough. Apprentices must be paid the appropriate minimum wage (Minimum Wage, National Living Wage or National Minimum Wage) depending on time served.
  • Public Authorities – while the option is available for staff to be furloughed within Public Authorities, it is the government’s hope that the scheme will not be used as much by these organisations as they will likely be continuing to provide vital public services. Many of these organisations pay their staff using public funds and are expected to continue doing so.
  • Individuals – furlough is available for individual staff such as nannies provided that they are paid using the PAYE system.
  • Administrators – where a company is operating under the management of an administrator, the administrator can furlough staff but should only do so if there is a reasonable prospect that they will keep their job following the administration process.

The scheme applies to part-time, full-time and zero-hour contracts but, unlike apprentices, these employees must not undertake any work during their period of furlough.

What are the employer requirements for placing staff on furlough?

Employers must have been subscribed to the PAYE scheme on or before 28 February 2020. Any staff hired after this date will not be entitled to receive payment under the scheme. It is also necessary for them to enrol with PAYE online and to hold a UK bank account in order to be eligible.

Income Support: who is eligible?

In order to claim under this scheme as a self-employed individual or member of a partnership, it is necessary to meet the following requirements:

  1. You must have submitted your Tax Return for the 2018/19 year – HMRC have agreed to risk assess any late returns provided that they are submitted before 23 April 2020.
  2. You must have traded in the 2019/20 tax year
  3. You must be trading when your application is made or demonstrate that you would still be trading if it weren’t for the coronavirus outbreak.
  4. You must intend to continue trading in the 2020/21 tax year.
  5. You must have lost trading or partnership trading profits as a result of the coronavirus outbreak.
  6. Trading profits must be less that £50,000 and constitute more than half of your income from self-employment.

If you are seeking guidance during these uncertain times, contact us on 01334654081.

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