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BUILDING LEGACIES BRIEFING

BUILDING LEGACIES BRIEFING


OVERVIEW

This Bulletin covers:

• Furlough Scheme reminder
• Self-Employed Income Support Scheme (SEISS) reminder
• Proposals for further support for mortgage borrowers


Furlough Scheme reminder

The Coronavirus Job Retention Scheme (CJRS), commonly referred to as the ‘Furlough Scheme’, is winding down and the Prime Minister yesterday (2nd September) once again confirmed that the Government has no plans to extend it.

From 1st September, the Government will pay 70% of wages (down from 80% in August) up to a maximum cap of £2,187.50 for the hours the employee is on furlough.

Employers must top up employees’ wages to ensure they receive 80% (up to £2,500) of their normal contracted employment remuneration.

The caps are proportional to the hours worked. Employers will continue to be responsible for making PAYE and NI payments for each furloughed employee.

Employers can only continue to claim through the scheme if:
• they have previously furloughed the employee for 3 consecutive weeks between March 1st and 30th June
• they submitted the claim before 31st July

The CJRS is now closed for new claims

From 1st October, the Government contribution for employees on CJRS will drop to 60%, with employer contributions rising to a minimum of 20%.

The Scheme is currently scheduled to finish on 31st October, after which employers will once again be responsible for paying the full amount of wages/salary for each employee.

Given this impending deadline we strongly urge all employers that have used the CJRS to urgently review their business/trading plans for Q4 of 2020 and for Q’s 1 & 2 of 2021.

Building Legacies Business Growth Managers will be pleased to give help and advice on these vital matters.


Self-Employed Income Support Scheme (SEISS) Reminder

From 17th August, millions of self-employed people whose livelihoods have been affected by Coronavirus have been able to claim a second payment of up to £6,570.

Over 2.7 million self-employed people benefited from the first stage of the SEISS, with the Government distributing £7.8 billion of grants to help them through the crisis.

Those eligible are now be able to receive a second and final grant worth 70% of their average monthly trading profits, with the money set to be paid in to their bank accounts within six working days of making a claim.

Anyone whose self-employed business has been adversely affected by Coronavirus since 14th July is eligible for the scheme.

HMRC aim to contact all potentially eligible customers to advise them that they can claim for a second and final SEISS grant – although it’s prudent to check in case HMRC miss you for some reason.

The eligibility criteria remain the same as for the first grant, with people needing to have had trading profits of no more than £50,000, making up at least half of their total income.

Qualification dates have, however, changed so we strongly suggest that you check anyway by following this link here.


Proposals for further support for mortgage borrowers

The Financial Conduct Authority (FCA) has announced proposals to ensure that lending firms continue to provide tailored support to mortgage borrowers who continue to face payment difficulties due to Coronavirus.

During the initial phase of the pandemic, payment holidays provided mortgage borrowers with immediate and temporary support.

They have helped millions of consumers through the immediate impacts of the current emergency and helped lending firms provide support at unprecedented scale.

The majority of customers who have had a payment holiday are expected to resume full repayment; however, many will remain in financial difficulty.

The FCA has published additional draft guidance for lending firms, to ensure that consumers – both those who have benefitted from payment deferrals under the current guidance who continue to face financial difficulties, as well as those whose financial situation may be newly affected by Coronavirus after the current guidance ends – get the support they need in these extraordinary times.

Some consumers will continue to be impacted by Coronavirus while others will be newly impacted in the coming months.

Consumers in these situations will benefit from lending firms providing them with the tailored support that is normally expected, which also needs to reflect the uncertainties and challenges that many customers will face in the coming months.

The current guidance will continue to provide support for those impacted by Coronavirus until 31st October 2020 – with consumers able to take a first or second three-month payment deferral.

The FCA expects the current guidance to expire on 31st October but will keep this under review depending on how the wider situation develops.

The new draft guidance proposes that lending firms should consider the appropriateness, and use, of a range of different short and long-term support options to reflect the specific circumstances of their customers.

This could include extending the repayment term or restructuring of the mortgage.

Where consumers need further short-term support, lending firms should offer arrangements for no or reduced payments for a specified period to give customers time to get back on track.

Under the proposed guidance, lending firms should prioritise giving tailored support to borrowers who are at most risk of harm or who face the greatest financial difficulties. 

Where borrowers require further support from lenders, either at the end of payment holidays under FCA guidance, or where they are in need of support for the first time, this would be reflected on credit files in accordance with normal reporting processes.

This will help to ensure that lenders have an accurate picture of consumers’ financial circumstances and reduce the risk of unaffordable lending.

Lending firms must be clear about the credit file implications of any forms of support offered to borrowers.

The FCA has now concluded their discussions with lenders and others and anticipates issuing new and formal guidance/regulations by the end of September.

We will update you as soon as these are published.