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Budget 2021: Furlough and self-employed support extended

Budget 2021: Furlough and self-employed support extended

The furlough scheme will now run until the end of September and self-employed income support will be extended to 600,000 who were previously excluded, the Chancellor has confirmed in today's Budget.

The extension of both coronavirus income support schemes was announced on Tuesday night ahead of the Budget, and more detail has emerged since. We've got the key need-to-knows on what this means for you below, plus for full help on how the schemes work, see our Coronavirus Employees' Help and Coronavirus self-employed & small limited co help guides.

Furlough will now run until September

The furlough scheme – which is officially known as the Coronavirus Job Retention Scheme and covers some of the wages of employees who can’t work – had officially been due to close at the end of April. It’s already been extended multiple times though – and now that’s happened again:

  • Furlough will now run until the end of September across the UK. However, from July onwards the state’s contribution to that will gradually reduce, with employers asked to contribute more (see more info below).
     
  • Employees on furlough will continue to get 80% of their salary for hours not worked, up to £2,500/mth. That will remain the case until the scheme ends

  • From July employers will be asked to contribute more. Between now and 30 June, the state will pay 80% of wages for hours not worked, up to £2,500/mth, while as now, employers will only be asked to cover national insurance and employer pension contributions. But in July the state will only pay 70%, with employers expected to pay the remaining 10% of employee's reduced income, and in August and September the state will pay 60% and employers will have to pay 20%.

  • You can continue work part-time while on furlough or be furloughed full-time, as now. Your employer can either put you on furlough full-time, or you'll be able to work part-time and be furloughed for the hours you don't work. Your employer will have to cover your wages at the normal rate for any hours you do work. For more on how this works, see Flexible furlough.

For full help on how it works now, including eligibility, how annual leave works and more, see our Coronavirus Employees’ Help guide.

Self-employed income support will be open to more – and there’s a fifth grant

The Government’s also announced a major extension to the Self-Employment Income Support Scheme (SEISS) – and crucially, for the first time since the scheme launched, its scope will now be widened to include some of those who weren’t previously eligible. Here are the key details:

  • The fourth SEISS grant will be worth 80% of trading profits for three months, capped at £7,500. The value of the grants has varied since they were launched, but the next grant, which is supposed to cover February, March and April, will be worth 80%. However there are still unanswered questions over the detail - for example, exactly how average profits will be calculated and over which years. We're chasing answers on these and will update our Coronavirus self-employed & small limited co help guide when we know more.

  • Applications for the fourth SEISS grant will open in April. We still don't know the exact date though. 

  • More than 600,000 newly self-employed people will now be eligible to apply. One of the big criticisms of the self-employed income support scheme has been that it excludes an estimated three million people due to strict eligibility criteria – MoneySavingExpert’s campaigned for more support for those who’ve missed out.

    Now the Government has said it’ll widen its eligibility criteria. While previously you must have filed a tax return for 2018/19 to apply, it now says those who’ve filed a 2019/20 return may also be eligible – a move it says means over 600,000 more people may be able to apply. The Government says all other eligibility criteria will remain the same as the third grant.
  • A FIFTH self-employed grant is coming - and its value will be linked to change in turnover. There will be a fifth and final SEISS grant covering May to September.

    The value of the grant will be determined by a turnover test:
    - If your turnover's fallen by 30% or more.. you'll be able to claim the full grant worth 80% of three months’ average trading profits, capped at £7,500.
    - If your turnover's fallen by less than 30%... you'll be able to claim a grant worth 30% of three months' average trading profits, capped at £2,850.

    The final grant can be claimed from late July. We don't yet have full details - for example, over what period a change in turnover is calculated. The Government says more info will be published in due course, but we've asked it a series of questions and will update our Coronavirus self-employed & small limited co help.guide with full info as we get it. We'll also give full updates in the MSE weekly email

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