Government announces new Coronavirus Job Retention Scheme and further benefit changes

Monday 23 March 2020

On Friday, the government announced the ‘Coronavirus Job Retention Scheme’, a new type of financial support to help employers carry on paying their workers.

If your employer agrees to ‘furlough’ you i.e. to keep you on payroll rather than lay you off, they can apply to HMRC for a grant to cover 80% of your salary (up to a total of £2500 a month). You will remain employed while furloughed although you cannot undertake any work for your employer during this time.

Your employer can choose to make up the extra 20% of your wages but is not obliged to do so. If they choose not to, you should seek advice about whether you qualify for any income related benefits to top up your reduced earnings. This will depend on your individual family circumstances. If you already get income related benefits such as Housing Benefit or tax credits these may be increased as a result of your lower earnings. Alternatively, you may be able to claim Universal Credit instead. You can find out if you might qualify for any additional income via benefits by accessing the Turn 2 Us calculator on the Contact website.  

The Coronavirus Job Retention Scheme is an entirely new type of financial support and detailed information about it isn’t yet available. For instance, how this will apply to those on zero hours contracts is not yet clear. The government says that it intends the scheme to run for at least 3 months from 1st March 2020 but will extend it if necessary. It will be a few weeks until the scheme is up and running properly but grants can be backdated to the beginning of March 2020.

I’m self-employed. Will I be able to apply for help under The Coronavirus Job Retention Scheme? 

The scheme only applies to employees and not to self-employed people. 

I’ve had to tell my employer that I can’t work at the moment as my children’s school has closed. Will I be able to apply for help under The Coronavirus Job Retention Scheme? 

If you are unable to work because your children’s school or nursery has closed you will not be covered by the Coronavirus Job Retention Scheme unless your employer agrees to furlough you.

The government also announced a series of new changes to the benefits system. These include:

  • Increasing the universal credit standard allowance and the basic element of working tax credit by £20 per week. This increase will apply for a temporary period of 12 months.
  • Scrapping the minimum income floor for all Universal Credit claimants. This means that self-employed people will no longer be treated as having an assumed amount of earnings when their Universal Credit is calculated.
  • Increasing the local housing allowance rate used in capping the amount of help with rent private tenants get under Housing Benefit and Universal Credit. This will be increased to ensure that it covers at least 30% of rents in any particular area.