UK Government Extends Furlough to End of March

The Chancellor, Rishi Sunak, announced today that the UK Government will extend the Coronavirus Job Retention Scheme (CJRS), also known as The Furlough Scheme for 5 months until the end of March 2021 for all parts of the UK.

This is with the aim of providing “certainty” to businesses and people across the UK. Evidence from the first lockdown has proven that the economic effects of the current pandemic are much longer lasting for businesses than the duration of any restrictions.

• Eligible employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month
• Businesses will have flexibility to use the scheme for employees for any amount of time and shift patterns, including furloughing the employees full-time.
• There will be NO employer contribution to wages costs for hours not worked. Employers will only be asked to cover the National Insurance and Employer pension contributions for hours not worked. For an average claim, this accounts for just 5% of total employment costs or £70 per employee per month.

However, The UK Government will review this in January to decide whether economic circumstances are improving enough to ask employers to contribute more.

• The extended CJRS will operate as the previous Scheme did, with businesses being able to claim either shortly before, during or after running payroll.

Claims can be made from 8am Wednesday 11 November.

Claims made for November must be submitted to HMRC by no-later than 14 December 2020.

Claims relating to each subsequent month should be submitted by day 14 of the following month.

• Neither the employer nor the employee needs to have previously claimed or have been claimed for under CJRS to make a claim under the extended CJRS (if other eligibility criteria are met).

An employer can claim for employees who were employed and on their PAYE payroll on 30 October 2020.

The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee

• Employees that were employed and on the payroll on 23 September 2020 (the day before the Job Support Scheme announcement), who were made redundant or stopped working afterwards can be re-employed and claimed for.

The employer must have made an RTI submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees.

• HMRC will publish details of employers who make claims from December onwards under the extended scheme.

The detailed guidance on the extended scheme will be published next week.

The Job Retention Bonus (JRB) will not now be paid in February.  Rishis Sunak stated that the UK Government will redeploy a retention incentive at the appropriate time. This is apparently because the purpose of the JRB was to encourage employers to keep people in work until the end of January. However, as the CJRS is being extended to the end of March, the policy intent of the JRB falls away.

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.

Photo by Danielle Rice on Unsplash