Government announces further extension to Furlough Scheme
On 5 November 2020 the Chancellor Rishi Sunak announced that the Coronavirus Job Retention Scheme (CJRS) – also known as the Furlough scheme – will be extended for a further five months.
The furlough scheme was initially extended until 2 December. However, evidence from the first lockdown showed that the economic effects are much longer lasting for businesses than the duration of restrictions. Hence the Government has decided to extend the scheme until the end of March 2021, with a review in January.
CJRS key points to note
- The grant will be paid at the rate of 80% of reference pay, capped at £2,500 per month
- Employers will therefore still need to pay:
- Employer National Insurance Contributions (NICs), and
- Pension contributions
- Flexible furloughing will be allowed in addition to full-time furloughing
- Neither the employer nor the employee needs to have previously used the CJRS that was in place from March to October
- There will be no gap in eligibility for support between CJRS schemes
While the government updates the system, employers will submit their wage claim to the government, and be refunded afterwards. After that, they will be paid upfront to cover the cost.
Further details, including when claims can first be made in respect wage costs during November and how to claim this extended support through an updated claims service will be provided shortly.
It is still unclear what reference pay will be applied, as there are now ‘new’ employees able to participate. The working assumption is that, like the delayed JSS arrangements, it will be the higher of the normal regular contractual pay at 19th March or at 30th October. We will advise as soon as this is clarified or confirmed.
Qualification is as previously, but as a reminder:
Employers must have:
- A UK bank account and
- A UK PAYE scheme
- Agree any working arrangements with employees
Eligible employees are:
- Those on an Employer’s PAYE payroll by 23:59 on 30th October 2020. This means employees included in a Real Time Information (RTI) submission notifying payment for that employee to HMRC on or before 30th October 2020
- Employees can be on any type of contract
Need further advice?
We will provide a further update when more details are known, but if you have queries in the meantime please contact our tax team if you require advice on this issues.