Published: November 27th, 2020 in Finance News, Latest News
As we are about to leave the second national lockdown on 2nd December, here is a summary to reflect on the extension of the Furlough Scheme.
Earlier in November, just days after he announced that the Coronavirus Job Retention (Furlough) Scheme would be extended to support businesses and their employees navigate the second lockdown, Chancellor of the Exchequer Rishi Sunak informed the House of Commons that the Coronavirus Job Retention (Furlough) Scheme would once again be extended.
Regardless of whether you are an employer or employee, it is likely that you will find yourself looking to uncover what the Coronavirus Job Retention (Furlough) Scheme update means for you.
At The Financial Management Centre, we have delved into the extended Coronavirus Job Retention (Furlough) Scheme to provide an update with regards to when the scheme will be extended until, what the extended scheme means for employers and employees, how the extended scheme impacts The Job Support Scheme and what employers will be expected to cover here.
When Will the Coronavirus Job Retention (Furlough) Scheme Be Extended Until?
On the 5th November, Rishi Sunak delivered a statement to the House of Commons outlining that the Coronavirus Job Retention (Furlough) Scheme will now be extended until the end of March 2021, a year after it initially launched to help protect jobs and support employers and their employees through the unpredicted times that COVID-19 imposed on them.
The extension of the Coronavirus Job Retention (Furlough) Scheme will guarantee that employers and their employees continue to receive vital support throughout the Winter months and into the Spring as the United Kingdom faces tier systems to reduce the spread of COVID-19.
Speaking on his decision to extend the Coronavirus Job Retention (Furlough) Scheme, Rishi Sunak stated: “The support we are providing will protect millions of jobs… today’s announcement will give people and businesses up and down the country immense comfort over what will be a difficult winter…”.
Who Will Be Entitled to Claim the Updated Coronavirus Job Retention (Furlough) Scheme?
Employers across the United Kingdom will be entitled to claim the updated Coronavirus Job Retention (Furlough) Scheme if their workplace has felt the ramifications of COVID-19.
As outlined in the previous Coronavirus Job Retention (Furlough) Scheme update, employers can fully furlough employees or flexibly furlough employees.
You do not need to have previously furloughed an employee to be entitled to claim the updated Coronavirus Job Retention (Furlough) Scheme. However, the Government has declared that in order to be eligible, employees must have been enrolled on the businesses PAYE payroll scheme on or before 30th October 2020.
Unfortunately, if your employee was not enrolled on your PAYE payroll scheme before the 30th October 2020, you will not be entitled to claim the updated Coronavirus Job Retention (Furlough) Scheme for the employee in question.
What Will Employers Be Able to Claim?
Similarly to the Coronavirus Job Retention (Furlough) Scheme that was extended in October, the recently updated scheme states that employers will be able to claim 80% of an employee’s usual salary for the hours that they have been unable to work.
Employers will be able to claim the updated Coronavirus Job Retention (Furlough) Scheme for as many employees as necessary. However, it should be noted that employers will only be able to claim a maximum of £2,500 per month, per employee.
What Does the Government Expect Employers to Cover?
Although the Government will continue to support employers by offering financial support to ensure that businesses are able to retain furloughed employees, employers will be expected to cover the cost of National Insurance Contributions and pension contributions.
What Does the Extension of the Coronavirus Job Retention (Furlough) Scheme Mean for The Job Support Scheme?
The Job Support Scheme was originally due to commence on the 1st November 2020. However, as the Government initially extended the Coronavirus Job Retention (Furlough) Scheme until December, this was postponed until the end of December.
However, Rishi Sunak has confirmed that the Job Support Scheme will once again be postponed. It is believed that this will now only be set in motion in April 2021, following the closure of the extended Coronavirus Job Retention (Furlough) Scheme.
What About the Job Retention Bonus?
Initially implemented to provide supplementary funding to employers for each employee that they had furloughed and continued to employ until January 2021, Rishi Sunak has confirmed that the Job Retention Bonus will additionally be pushed back.
Although this may cause employers some distress, it should be noted that as Rishi Sunak addressed the House of Commons and public, he confirmed that a retention incentive will be redeployed at an appropriate time in the future.
At this present moment in time, we are unable to say precisely what the new retention incentive may look like.
Will The Coronavirus Job Retention (Furlough) Scheme Be Changed Again?
Although the extension of the Coronavirus Job Retention (Furlough) Scheme is good news for employers, it is entirely normal to be left feeling somewhat anxious and curious with regards to what the future holds. You may even find yourself wondering whether the Coronavirus Job Retention (Furlough) Scheme will once again be updated in the near future.
Upon announcing the updated Coronavirus Job Retention (Furlough) Scheme, Rishi Sunak informed the Great British public and House of Commons that the Coronavirus Job Retention (Furlough) Scheme will be reviewed in January 2021.
The primary purpose of this review will be to determine whether the country’s economic circumstances are improving. Should it be determined that the economy is showing signs of improvement, the Government may ask employers to contribute towards employee wages more.
Contact The Financial Management Centre Today
Should you find yourself in need of support, advice or guidance surrounding the updated Coronavirus Job Retention (Furlough) Scheme, please do not hesitate to contact us.
Likewise, if you need assistance with regards to submitting claims and determining which of your employees you can furlough, feel free to give us a call. Our team of experienced and highly qualified accountants can provide you with the information you need and assist you as and when the time comes to submit your claim.
