2020 keeps on surprising us and it can be hard to keep up with everything that is happening as the COVID-19 pandemic means that laws, guidance and regulations are changing as fast as we can keep up with them! One change the government has made that will have lots of people wiping their brows with relief is the extension of the original furlough scheme, that was first introduced back in March. The government has recognised that many businesses have not yet been able to recover from the fiscal blows dealt to them by the restrictions enacted to try and control the virus.
Why Has The Scheme Been Extended?
The scheme, technically known as the Coronavirus Job Retention Scheme and Furlough Leave Scheme was supposed to run its course at the end of October and then the government decided it would run until the 2nd of December 2020. However, on the 5th of November the Chancellor, the Rt Hon Rishi Sunak MP, announced that the scheme has now been extended until the end of March 2021, in light of the continued struggle with Coronavirus.
What Does The Scheme Provide To Employers?
The government hopes that this generous extension of financial support will help to provide people with more fiscal certainty over the long, cold winter. The job retention scheme will continue to see employees getting 80 percent of their wages for hours they have not worked, up to a payment of £2,500 per month.
What Do Employers Have To Pay For?
Right now, employers do not have to make any contributions to any employees wages for hours not worked, they only have to pay National Insurance and employer pension contributions. The Treasury estimates that these payments will likely add up to no more than 5 per cent of normal employment costs.
Is There Any Flexibility In The Scheme?
In short yes. The government recognises that these are unprecedented times and it is difficult for businesses and employers to keep to a consistent working pattern from week to week. As such, it is helpful that companies will be allowed the opportunity to utilise the furlough scheme for employees for any period of time and working pattern.
What Are The Practicalities?
The extended scheme will simply continue to function as it did previously, businesses can still make claims at any point in their payroll cycle. Though it is worth noting that claims for this month must make their way to HM Revenue and Customs by the 14th of December at the latest. Following that all claims for the previous month must be submitted by the 14th day of the following month.
In addition, a business does not need to have been using the scheme before any extensions were announced, a fresh claim can still be made, as long as the normal eligibility criteria are met. These include that furloughed employees need to have been employed and registered on the Pay As You Earn payroll no later than the 30th of October 2020.
What Will Happen In The Future?
Nobody can say for certain what will happen going forward. However, what we do know is that the government have committed to appraising the Coronavirus Job Retention Scheme and Furlough Leave Scheme at the start of next year. It is possible that the government will decide that businesses need to shoulder more of the burden of retaining employees, if economic conditions are deemed to have improved sufficiently.
Further details on how to claim from the Coronavirus Job Retention Scheme and Furlough Leave Scheme were made available on the government website on the 10th of November.
We understand that furlough can be a minefield and difficult to understand. Let us take the strain off you and handle your furlough claims. Get in touch at sayhello@woodvilleaccountancy.co.uk