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Furlough and self-employed income schemes to close in October

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Written by: Owain Thomas
29/05/2020
The Chancellor said the schemes are 'among the most generous in the world'
Furlough and self-employed income schemes to close in October

Chancellor Rishi Sunak has revealed the government’s furlough and self-employed income support schemes will both close after the October payments are made.

Before then, the Self-Employment Income Support Scheme will be extended, with those eligible able to claim a second and final grant capped at £6,570 in August.

The Coronavirus Job Retention Scheme (CJRS) that allows the furloughing of staff is also being extended but will deliver tapered support.

Employers will be required to pay more towards the costs of keeping their employees furloughed from August with a gradual increase continuing through to October when the scheme will close.

The scheme will also see flexibility for part-time employees introduced in July, one month earlier than planned.

As a result, the original scheme will close on June 30, so employers wanting to place new employees on the scheme will need to do so by June 10, to allow time to complete the minimum furlough period before its closure.

The changes mean the furlough scheme will operate as such:

In June and July the government will pay 80 per cent of wages up to a cap of £2,500 as well as employer National Insurance (NICs) and pension contributions. Employers are not required to pay anything.

In August the government will pay 80 per cent of wages up to a cap of £2,500. Employers will pay employer NICs and pension contributions. Treasury said for the average claim, this represented five per cent of the gross employment costs the employer would have incurred had the employee not been furloughed.

In September, government will pay 70 per cent of wages up to a cap of £2,187.50. Employers will pay employer NICs and pension contributions and 10 per cent of wages to make up 80 per cent total up to a cap of £2,500. Treasury added that for the average claim, this represented 14 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed.

Finally, in October government will pay 60 per cent of wages up to a cap of £1,875. Employers will pay employer NICs and pension contributions and 20 per cent of wages to make up the 80 per cent total up to a cap of £2,500. For the average claim, this will be around 23 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed.

Protect jobs and businesses

So far, the CJRS has helped one million employers across the UK furlough 8.4 million jobs while the SEISS has met 2.3 million claims worth £6.8bn.

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 among the most generous in the world.”

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