Income Replacement Schemes

Furloughed Employees

If your employer has no work for you to do, or you cannot work and are not self-isolating because of Covid 19, your employer may be able to keep you on their payroll. This is known as being on furlough.

If you are on furlough you may be covered by the Coronavirus Job Retention Scheme. This will entitle you to 80% of your wages up to a maximum of £2,500 per month. 

If your salary is reduced as a result of these changes, you may be entitled to apply for Universal Credit to help with your living or housing costs.  Carry out a Benefit Calculation to see if you are entitled to Universal Benefit.

Coronavirus Job Retention Scheme

The Cornonavirus Job Retention Scheme is a new Scheme that the UK Government has created to help people who have been affected by the Covid 19 Crisis and who are employed, but their employer doesn’t any work for them.

To be covered by the Job Retention Scheme, your employer must agree to keep you on as an employee, and to furlough you. You cannot do any work for your employer whilst you are being furloughed.

It is expected the Scheme will be up and running by April 2020 and will be applied to by your employer. They will pay you normally, what you are entitled to receive and you will pay tax and national insurance as normal.

You may also be entitled to apply for Universal Credit whilst you are covered by the Job Retention Scheme to help with your living costs and your housing costs (Universal Credit only provides help with rent, not mortgage payments).

You cannot apply to the Job Retention Scheme yourself. 

You must have been on your employer’s payroll before the 28th February 2020 to be covered by the Job Retention Scheme. You will not be covered if you are self-employed, but you may be able to apply for the Self Employment Income Support Scheme (see below).

 

If you are in receipt of Statutory Sick Pay, you will not benefit from the Job Retention Scheme payments, but you can be covered once you come off Statutory Sick Pay.

If you were made redundant after the 28th February 2020, your employer can agree to re-employ you and put you on furlough.

If you have multiple employers, you can be furloughed by one, but not the other. You will receive the 80% Job Retention Scheme for the Job your are furloughed. 

The grant will start from the day you are placed on furlough and can be backdated to the 1st March 2020.

Self Employment Income Support Scheme

If you are Self-employed, you may be able to apply for the Self-Employed Income Support Scheme. You may also be able to apply for Universal Credit if your income has dropped. 

To qualify for the Scheme you must:

  • Currently self-employed and submitted a self-assessment tax return for the year 2018-19;
  • Have traded in the tax year 2019-20;
  • Are trading when you apply, or would be but for Covid-19;
  • Intend to continue trading in 2020-21; and
  • Lost profits because of Covid-19.

Your self-employed profits for 2018-19 must be less than £50,000 and you also must have earned more than 50% of your income from self-employment.

  • Your self-employed profits for the years 2016-17 and 2017-18 must also be less than £50,000 on average and you must have made more than 50% income in those years from your self-employed income.

How Much will you Get?

How much you will receive is 80% of your average profits for the year 2016-17, 2017-18, 2018-19 (if applicable) up to a maximum of £2,500.

HMRC will take your total profits for the three years (if applicable) then divide by 3 (if applicable).

How do you apply?

You cannot apply at present and should not contact HMRC. 

HMRC are working to identify those that are eligible and will contact them shortly. The grant will be paid in one installment into your bank account.

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