UK: COVID-19–UK Government Support Schemes

This article discusses the two main government schemes that have been implemented: 

o CJRS – This scheme was introduced to encourage employers to retain their workforce throughout this difficult period. 

o SEISS - The government have provided support for the self-employed and members of a partnership that have been adversely affected by the coronavirus. 

1. Coronavirus Job Retention Scheme (CJRS) 

On the 20 March 2020, the UK Chancellor announced measures to support businesses and encourage the retention of employees by launching a Coronavirus Job Retention Scheme. 

The scheme opened on a self-service basis on 20 April 2020 through an online portal. It is administered by HM Revenue & Customs, which is a department of the UK Government responsible for the collection of taxes. The payments were made within six working days from the date the claim was made for straightforward claims. 

Businesses eligible to use the scheme can claim 80% of their employees’ wages, capped at £2,500 per employee per month before tax. Employers can top up this pay by 20% if they wish and must let the employees know they have been furloughed. They were also provided with an upfront agreement and designated as furloughed employees. These employees then could not undertake any work that can generate income for their employer during the furloughed period. 

For the period to 30 June 2020, businesses could claim financial support for employees who were not working and were furloughed on or before 10 June 2020.

From the 1 July 2020 a furloughed employee can work some of their usual hours and be put on furlough for the hours they do not work.

From 1 August, the government contributions were tapered. Initially, they paid 80% of the wage costs of employees for employees placed on furlough (up to a maximum of £2,500 per month); currently they pay 70% and reducing to 60% from 1 October 2020. 

The scheme will run until the end of October 2020 and it is unlikely that it will continue beyond this period. The scheme has been proved very welcomed to employers who were keen to retain their employees in this difficult time and were unable to meet their wage costs. 

The UK government announced a new Job Retention Bonus scheme to provide employers with additional financial support after the end of the CJRS. 

Employers that meet the criteria will receive a one-off bonus payment of £1,000 under the JRB scheme for each employee that returns to work and remain with the business until January 2021. 

2. Self-Employment Income Support Scheme (SEISS) 

The SEISS scheme is a self-service scheme and the claims are submitted through a government online portal tax account. 

Two SEISS grant payments were available under the scheme. The first grant was available from 13 May 2020, the second and final grant was available from 17 August 2020. The online portal will remain open until 19 October 2020. Both grants were subject to the relevant eligibility criteria as follows: 

o An annual tax return for the 2018/19 tax year, which included self-employment profits, was submitted by 23 April 2020 

o The self-employed continues to trade for the whole or part of the 2019/20 tax year 

o The self-employed intends to continue trading in this tax year (2020/21) for at least part of the remainder of the year 

o The Self-employed individual meets the profits test (generally met where annual profits no more than £50,000 and at least 50% of income comes from being self-employed) 

In summary it is obvious that COVID-19 has had a drastic impact on businesses across many sectors, causing closures, lower revenue, and cash flow issues not only in the UK, but worldwide. 

However, many businesses can now resume business and the financial support schemes offered by the government will be adjusted accordingly. The government announced that they will continue to support businesses and introduce new incentives to help the economy recover from Covid 19.

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