The Furlough Scheme Extension – All You Need To Know
The furlough scheme was initially brought in at the start of the Spring lockdown in March to protect jobs. With the government footing the bill of 80% of an employee’s wages so that they weren’t being let go by companies. Initially, this was meant to come to an end at the start of November and be replaced by the Job Support Scheme. However, with the recent surge in COVID cases as the UK enters into Winter, plans have changed.
On November 5th, Chancellor Rishi Sunak announced ahead of a four-week lockdown for England that the furlough scheme would now be extended into next year. With plans having changed so suddenly, if you’re a business owner it’s important to know what this now means for you, your business and your employees.
Well firstly, when is the extension lasting until? At the moment provisionally it’s set to come to a close at the end of March 2021. Intended to help businesses survive and bounce back into a bit of prosperity next Spring. Claims made by employers for employees running up to January next year will, as they have been previously, be supported up to 80% of their normal salary by the Government, with the option for the business to top up the other 20%. This covers salaries up to a maximum of £2,500 a month, the same limit that had been imposed previously.
The only difference that businesses are going to see from the recent update is that up until this extension scheme was announced, the Government was actually only paying up to 60% of employees wages in an attempt to start progressively moving away from the scheme altogether and back into a bit of normality. However, with the recent change in circumstances, this will be bumped back up to 80%.
Similar to before, all employees are eligible for furlough. Whether they’re full time, part-time, contract, or even zero hours. In addition, employees who were made redundant or let go by their employer on the 23rd September (the date when the amount covered by the Government dropped from 80% to 60%) are eligible to be re-employed by the same companies that had let them go and claims put forward for furlough.
Despite the scheme only having been announced when England belatedly entered their lockdown following the trends set by the other home countries of the UK, the furlough scheme will apply to all 4 countries of the UK. With Sunak having stated that they have a “treasury for the whole of the United Kingdom”.
If you have any more questions about the furlough scheme, and it’s extension, why not get in touch with a member of the team here at D&K Accounting. We can explain all the changes and how it affects your business and how it also might be able to help your business.