The extended furlough scheme – what it means for you and your clients
The Coronavirus Job Retention Scheme (CJRS) will no doubt have figured highly in your practice’s workload over the past few months, with the ‘furlough scheme’ (as we’ve all come to know it) becoming an ever-more important lifeline for cash-strapped businesses over the course of the Covid pandemic.
But with the furlough scheme due to end back in October, and a replacement Job Support Scheme due to begin in November (and then promptly being cancelled again) you could be forgiven for being a little confused over the current status of the furlough scheme.
Let’s take a look at what’s actually happening on the job support front, and how you can help your business clients to make use of the newly extended furlough scheme.
The furlough scheme ends...or does it?
With the first lockdown coming to an end in Spring 2020, the UK Chancellor, Rishi Sunak, announced that the furlough scheme would be closed from 31 October 2020.
This gave a definitive deadline for furlough coming to an end, and became a cause of concern for some in the business and accounting worlds. With businesses still in ‘survival and recovery’ mode, would they be able to survive without being propped up by the furlough scheme?
To allay these fears, the Chancellor announced the introduction of the Job Support Scheme (JSS). The JSS would prop up jobs and payroll in a similar way to furlough, but would offer far less financial support. Only two thirds of the employee’s salary would be paid by the Government, raising increasing worries in the business community around the viability of the JSS as a replacement to furlough.
As an added sweetener, Mr Sunak also announced a Job Retention Bonus (JBR), aimed at incentivising employers to avoid redundancies. For each qualifying employee kept on the payroll until January 2021, employers could claim an extra £1,000 bonus, giving that extra incentive to keep people employed and to ride out the Covid downturn.
The furlough scheme lives to fight another day
So, that was the plan, as it stood in October. But how has the reality of the Government’s job support initiatives worked out in reality?
Here are the key highlights:
- Furlough scheme extended – At the end of October, the Chancellor announced that the existing furlough scheme would be extended beyond October until 2 December – with the JSS taking over after this date.
- Furlough scheme extended until March 2021 – On 5 November, however, the Government announced that it would be extending the furlough scheme until March 2021, and that the scheme would now cover 80% of an employee’s wages – as per the initial version of the furlough scheme.
- JSS and JBR both cancelled – As a result of this extension of the furlough scheme, both the JSS and the JBR have been effectively cancelled – ending months of speculation around how they would work, and whether they offered enough support.
Key points of the extended scheme
It’s been a bumpy ride for the furlough scheme, but the scheme has lived to fight another day – and will probably be an ongoing area of support for many of your business clients.
With this in mind, we’ve highlighted the main points of the newly extended furlough scheme so you can prepare your staff, systems and clients for the extension – and the cancellation of the JSS and JBR that they may have been banking on.
Key points to be aware of:
- Funding will be made at 80% of the employees wage, capped at £2,500 per month.
- The 80% funding is guaranteed until January 2021, when the scheme will be reviewed.
- Clients can continue to claim under the extended scheme if they are already making use of the original scheme.
- Clients can also claim if they haven’t used the furlough scheme before – new claims are allowed as long as the business meets the criteria.
- Employees can be ‘flexibly furloughed’, meaning that the client’s staff can be part-working and part-furloughed, to add some flexibility to their resourcing.
- Previously, employees must have been included on a Real Time Information (RTI) return submitted on or before 19 March 2020. This cut-off date has now been extended to 30 October, so more of the client’s existing staff may be eligible for the scheme.
Get the furlough scheme lowdown in our webinar
If you’re looking to get more a drilled-down overview of the newly extended furlough scheme, and the implications for your payroll processes, we have the perfect answer. Our newly retitled online webinar, ‘Important HMRC Update: The Original Furlough Scheme is back’ will take you through all of the details, with advice and guidance from our experts.