Another week and another furlough scheme!

With the announcement yesterday of a new national lockdown starting on 5 November, there is a realisation that more support is needed for businesses.

As well as those legally required to close, there will be a knock-on effect for many businesses.

Therefore, the Coronavirus Job Retention Scheme or “Furlough”, which was due to end on 31 October, is being extended. The replacement scheme – the Job Support Scheme – is now delayed until after the lockdown.

How will it work?

The Furlough scheme has been reduced over the past few months ahead of its closure but we will now be going back to the version of the scheme used in August.

In simple terms, this means that:

  • Staff can be furloughed full or part-time
  • Employers pay the wages while they work, and claim 80% furlough while they don’t.
  • Employers pay all Employers NI and Employers Pension contributions for worked and unworked hours
  • There is a cap on the grant of £2,500 per person per month.

As you can imagine, there is a lot of detail to this, and some is yet to be announced. As I seem to be writing an update every week at the moment, I’m going to use the Government’s exact wording from their website!

Who is eligible?

Employers

  • All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.
  • The government expects that publicly funded organisations will not use the scheme, as has already been the case for CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements apply to these employers.

Employees

  • To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
    *As under the current CJRS rules:
  • Employees can be on any type of contract. Employers will be able to agree any working arrangements with employees.
  • Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. Such calculations will broadly follow the same methodology as currently under the CJRS.
  • When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.
  • Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
  • For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.

What support is being provided and employer costs:

  • For hours not worked by the employee, the government will pay 80% of wages up to a cap of £2,500. The grant must be paid to the employee in full.
  • Employers will pay employer NICs and pension contributions, and should continue to pay the employee for hours worked in the normal way.
  • As with the current CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
  • The Government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.

Source for the above: https://www.gov.uk/government/news/furlough-scheme-extended-and-further-economic-support-announced

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Any questions?

If you’d like a meeting or a Skype call to discuss this, please get in touch with your favourite Liverpool accountant