The furlough scheme was introduced in the Spring of 2020 to prevent mass job losses as the United Kingdom went into its first lockdown following the emergence of the 2020 COVID-19 pandemic worldwide. The furlough scheme incentivised businesses across the country not to lay off staff whilst they were unable to trade due to the lockdown preventing them to do so. The incentive being that the government would cover the employee’s wages with the business only needing to pay national insurance contributions. However, with the vaccination drive that has been hugely successful, we are now looking at the eventual end of the furlough scheme.
The furlough scheme is coming to an end towards Autumn of this year. The latest extension meaning it will last until September 2021. However, the end of the furlough scheme won’t be abrupt. Instead, the government are planning to slowly phase out the scheme.
By progressively increasing the amount that employers have to contribute to those still on furlough and decreasing the amount they are contributing thus lowering the reliance that businesses have on furlough.
The reason behind this was that when furlough eventually came to an end, it wouldn’t come as a shock to the system for a lot of businesses and a lot of them naturally had already been moving towards a sense of normality for a reasonable period of time prior to that point.
With Chancellor Rishi Sunak saying, “Announcing the extension, the Chancellor said that “there’s now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help businesses and individuals through the challenging months ahead – and beyond.”
If you have any questions about the furlough scheme and how it affects your business and your employees, get in touch with a member of the team here at D&K Accounting, your team of dedicated Profit First professionals helping your business put profit first.