Furlough & SEISS: Summary of the March 2021 changes

19 Mar 2021

Both furlough and the SEISS grant for the self-employed have been extended until 30th September 2021, when both will have been with us for 18 months, benefiting 11 million workers to date.  This seems likely to be the last of both programmes but there are some important variations to take note of between now and the autumn.

Furlough: what stays the same…

Employees will continue to get 80% of their pay (subject to the £2,500 per month cap) for hours not worked.   Part-time working  - flexible furlough - will still be allowed.  Any employer ‘impacted by disruption caused by coronavirus’ can claim but remains liable for national insurance and pension contributions.  There’s no size or profitability test or any requirement to have claimed under previous stages.

…and what changes

Employers are going to have to start contributing 10% of the cost from July, and 20% in  August and September.  But recently taken-on staff will be eligible from May, provided they were on the payroll from 2nd March 2021, and the business had submitted information about them to HMRC by that date.

Furlough abuses investigated

HMRC’s 1,000 strong ‘Taxpayer Protection Taskforce’ is policing furlough fraud and already has 10,000 open investigations.  But it won’t be investigating genuine payment errors; the focus will be on unlawful deductions, such as  claiming support when still working.  For instance directors, particularly of small companies, who’ve furloughed themselves while continuing to run the business (tasks related to Companies House returns aren’t at issue). 

Furlough-related staffing issues

Long absences from work can lead to mental health problems, loss of confidence and impairment of skills not used. Assessing promotion applications or redundancy selection could be difficult when it’s impossible to assess recent performance for an employee who has not been at work.
Be careful with employees transferring under TUPE who are already on furlough as they will have signed a furlough letter changing their terms and conditions for the furlough period.  Check those furlough letters carefully to see what arrangements must be made in order to change their status rather than simply taking them off furlough when any transfer of employment takes place.

New SEISS qualifying conditions

SEISS grant 4 will provide income worth 80% of average trading profits up to £7,500 for February to April (when claims open).   A final SEISS grant (the fifth) will apply from May onwards, with applications from late July.  Trading profits must still be under £50,000 and at least half of income must be derived from self-employment. Unfortunately there’s a gap between the third and fourth grant payments so some people will face a short term income gap.
The full SEISS fifth grant will only be paid  if turnover has fallen by 30% or more.   Should turnover reduce by less than 30% individuals will only be eligible for a maximum grant of £2,850.

Good SEISS news for the previously excluded

Those unable to submit self-assessment tax returns for 2019/2020 were left out of earlier schemes.  But an extra 600,000 people will become eligible provided they’ve sent in a 2019/20 return by midnight on 2 March 2021

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