What should employers do once furlough ends?
Over the past few weeks I’ve been up late at night pondering things in my head before I go to sleep. Will Arsenal really be relegated? What will I do now that Love Island has finished? And what should employers do once furlough ends and how will it impact their payroll processing?
Well I don’t think I’m alone, as many employers up and down the country are now coming to terms with the fact that the Coronavirus Job Retention Scheme will end later this month. Since the furlough scheme started way back in March 2020 there’s been 11.6 million people put on furlough at one point or another. Back in May of this year there were 2.4 million employees on furlough and as of 30th June of this year, and the easing of all lockdown restrictions, this figure has decreased to 1.9 million. So nearly 10 times lower than the pandemic’s peak but still a hefty chunk of employees.
This month's payment rules are the same as August, with furloughed employees receiving 60% of their pay (up to £1875) from the government and 20% (up to £625 plus pension and National Insurance contributions) from their employer. Luckily, HMRC have issued advice on just this topic recently and there are three options employers can choose from before the scheme ends on September 30th 2021.
So what are the three things that employers can do? They must decide to either:
- Bring employees back to work on their agreed terms and conditions.
- Terminate their employment (with normal redundancy rules applying to furloughed employees).
- Or agree with employees any changes to terms and conditions of employment (rules for contractual changes apply to furloughed employees also).
HMRC have added “When employers are making decisions about how and when to end furlough arrangements, equality and discrimination laws will apply in the usual way” and another warning stating “payments you received under the scheme are to offset the deductible revenue costs of your employees. You must include them as income when you calculate your taxable profits for income tax and corporation tax purposes”.
If you are a business then you can deduct employee costs as normal when you calculate your taxable profits for Income Tax and Corporation Tax purposes, but if you are an individual with employees that aren’t part of a business, such as a nanny or groundskeeper, then these are not taxable grants received under the scheme.
If you still need to know more and aren’t sure what to do and have an hour to kill, then HMRC are running a live webinar session on the furlough scheme ending on September 14th at 11:45 am which you can register for here. Well, that’s one less thing to keep me awake at night!
Written by Aoibheann Byrne | BrightPay Payroll Software