Furlough extended until March 2021
The furlough scheme is to be extended until the end of March 2021, the Chancellor announced today.
The news is a major shift in policy after the Government had insisted for months that the furlough scheme had to be wound down, not least due to the astronomical costs.
And it comes days after Rishi Sunak revealed furlough would get a month extension to continue through November.
The replacement for furlough – the Job Support Scheme – was originally supposed to start in November. That was before the national lockdown in England was decided.
What are the details on the furlough extension?
Chancellor Rishi Sunak told the Commons that the Coronavirus Job Retention Scheme will continue to pay up to 80% of a person’s wage up to £2,500 a month with a review taking place in January.
He added that the Government’s highest priority continues to be protecting businesses and workers, stating that they’re offering “significant extra support to protect jobs and livelihoods in every region and nation.”
It seems that all the previously outlined factors such as employer contributions and part-time furlough will remain the same.
As for claiming the extended scheme, business owners will have to wait for additional information.
A change of heart
The additional extension comes as a surprise to many as the Government repeatedly reaffirmed their view that the Coronavirus Job Retention Scheme could not be extended following its initial deadline on 31 October.
Businesses repeatedly heard that it was unsustainable to continue the scheme as the costs continued to mount.
However, following increasing pressure, it seems the Government has flipped their view with the scheme seeing two extensions in just one week.
Nick Eardley, the BBC’s Political Correspondent, commented: “This is a change of heart from ministers - and a really significant one. The Government will argue it is necessary because of a changing health picture. But political opponents have been calling for this for some time - they believe the Chancellor has waited too long.”
What does this change mean for businesses?
Ultimately, the extension may come as some much-needed relief for business owners and their employees, providing some stability over the coming winter months.
The extension arrives after the Bank of England said it was providing an extra £150 billion for the economy, warning that the resurgence of COVID-19 would lead to a slower economic recovery.
Time to consider outsourcing payroll?
With furlough being extended and so many changes to payroll legislation this year, some accountants may be reconsidering how they carry out their payroll responsibilities.
With over 40 years of experience in running payroll, IRIS can help through IRIS Resourcing.
Geoff Glover, Tax Partner at The Buxton Partnership, has found it “cost-effective” and a catalyst for his practice to grow. Read Geoff’s story here.
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