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Latest Updates to the Coronavirus Job Retention Scheme (CJRS) and Self-employed Income Support Scheme (SEISS)
The CJRS has been extended until 30 September 2021. The level of grant available to employers under the scheme will remain the same until June 2021.
HMRC are now allowing further claims to be made for the Self-Employed Income Support Scheme (SEISS). Claims must be made by 1 June 2021
Upcoming CJRS Changes
Changes to the level of grant from 1 July 2021
From 1 July 2021, the level of grant you can claim will be reduced, and you will be asked to contribute towards the cost of your furloughed employees’ wages. To be eligible for the grant you must continue to pay your furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough.
The table shows the level of government contribution available over the coming months, what is required by employer contribution and the amount that the employee receives per month where the employee is furloughed 100% of the time.
Wage caps are proportional to the hours not worked.
|Government contribution: wages for hours not worked||80% up to £2,500||80% up to £2,500||70% up to £2,187.50||60% up to £1,875||60% up to £1,875|
|Employer contribution: employer National Insurance contributions and pension contributions||Yes||Yes||Yes||Yes||Yes|
|Employer contribution wages for hours not worked||No||No||10% up to £312.50||20% up to £625||20% up to £625|
|For hours not worked employee receives||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month|
You can continue to choose to top up your employees’ wages above the 80% total and £2,500 cap for the hours not worked at your own expense.
The 4th SEISS
HMRC are now allowing further claims to be made for the Self-Employed Income Support Scheme (SEISS).
Claims must be made by 1 June 2021
Who can claim?
You were self-employed in the tax years ended 5 April 2020 and 5 April 2021.
Your tax return for the year ended 5 April 2020 must have been submitted to HMRC on or before 2 March 2021
Your self-employment is continuing but trading has been impacted by reduced demand due to coronavirus or, you have been trading but are currently temporarily unable to trade, due to coronavirus.
You must also declare that you intend to continue to trade and that you reasonably believe there will be a significant reduction in your trading profits
In order to claim the fourth grant, you must reasonably believe that you have suffered a significant reduction in trading profits due to coronavirus between 1 February 2021 and 30 April 2021.
Below are some examples that HMRC have provided to help decide if there has been a significant reduction
A cafe owner has fewer customers due to government restrictions and is only allowed to offer take-away service, which reduces her takings. She reasonably believes this will significantly reduce her trading profits. She is eligible to claim the fourth grant.
A plasterer cannot get materials due to supply chain issues due to coronavirus. This has reduced the amount of work he can complete and be paid for. He reasonably believes this will significantly reduce his trading profits. He is eligible to claim the fourth grant.
A part-time personal trainer works in a gym that has closed due to government restrictions. This reduces her business activity on the days that she works. She reasonably believes this will have a significant reduction on her trading profits. She is eligible for the fourth grant.
A cafe owner has fewer customers due to government restrictions on households mixing, which initially reduces her takings. She increases her prices and believes her trading profits will not reduce significantly, so she is not eligible to claim the fourth grant.
A plasterer cannot get materials due to supply chain issues due to coronavirus. This has reduced the amount of work he can complete and be paid for, but he manages to quickly find a new supplier. He does not believe that the reduced demand will cause a significant reduction in his trading profits. He is not eligible to claim the fourth grant.
A hairdresser has had to shut his shop due to government restrictions. He will not have any income due to the closure and reasonably believes the reduction in his trading profits will be significant. He is eligible to claim the fourth grant.
A builder has received a letter from the NHS identifying him as clinically vulnerable and it asks him to stay at home. As he is unable to work from home he has a reasonable belief that there will be a significant reduction in his trading profits. He is eligible to claim the fourth grant.
An electrician is still trading but has had increased costs due to buying masks, cleaning supplies and screens. She is not eligible for the fourth grant because increased costs were the only impact on her business and she has not lost customers.
The client of a dog walker cancels a contract due to coronavirus. The dog walker could but chooses not to look for additional work to replace the contract. This means her business activity and her trading profits are reduced because she chooses not to replace the contract and not because of coronavirus. She is not eligible for the fourth grant.
How HMRC works out your eligibility based on your tax returns
Eligibility will be based on your tax return for the year ended 5 April 2020. Your trading profits must be no more than £50,000 and must equal at least 50% of your total income for the year. So if you have trading profits of £10,000 but rental income of £11,000 you would not be eligible.
If you’re not eligible based on your tax return for the year ended 5 April 2020 HMRC will then look at the tax years ended 5 April 2017, 2018, 2019 and 2020. You will qualify if your average profits for these years are less than £50,000 and are more than 50% of your average total income.
How much you’ll get
The fourth grant is calculated at 80% of 3 months’ average trading profits. It will be paid out in a single instalment and capped at £7,500 in total.
- average trading profit of £42,000.
- Divide by 12 = £3,500.
- Multiply by 3 = £10,500.
- Work out 80% of £10,500 = £8,400. You’ll receive £7,500 due to the cap.
What you’ll need to make your claim
You’ll need your:
- Self-Assessment Unique Taxpayer Reference (UTR)
- National Insurance number
- Government Gateway user ID and password
- UK bank details including account number, sort code, name on the account and address linked to the account
How the grant is treated
The grant is subject to Income Tax and self-employed National Insurance Contributions. It must be reported on your 2021 to 2022 Self-Assessment tax return.
The grant also counts towards your annual allowance for pension contributions.
There will be a fifth grant covering May 2021 to September 2021.
Guidance on how to claim the fifth grant will be provided in due course.
We will continue to support our clients throughout these uncertain times and provide further information when we can. Additionally, if you have any queries on any of the information provided above, or if you require any further support, please get in touch with either Gordon Gruppetta or James Andrews by calling us 0113 257 4506.