Job Retention Scheme extended to March
Chancellor Rishi Sunak extended his Winter Economic Plan for the fourth time in six weeks to extend the Coronavirus Job Retention Scheme from early December to the end of March.
Sunak confirmed press reports that the furlough scheme would be extended in a lunchtime statement to the House of Commons on 5 November.
In a typically choreographed leak to the Financial Times on Thursday morning “the chancellor’s allies” told the paper Sunak would set out a “a fair and generous” package to address criticism that the current assistance formula favours southern England.
With CBI and TUC joining forces to lobby for the coronavirus job retention scheme to be extended until the spring, the BBC and Guardian were reporting that the Chancellor was poised to respond to their pleas.
Along with the extended furlough period, the updated support measures presented by the Chancellor included:
- An increase in the November to January self-employed income support grant from 55% of average profits to 80% - up to a maximum of £7,500
- A £2bn increase in upfront funding guarantees to £16bn for the devolved administrations and confirmation that the CJRS would be available to all the UK’s member countries until the end of March.
- Cash grants of up to £3,000 per month for businesses forced to closed. The grants will be administered as before by local authorities, who will also be given £1.1bn to distributed in the form of one-off, £20 per head payments to businesses
- Plans to extend existing government-backed loan schemes and the Future Fund to the end of January, and an ability to top-up Bounce Back Loans.
Details of the conditions surrounding the extended furlough scheme were published in a companion Treasury factsheet, which explained that as with the original CJRS, employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month.
Furlough grants will continue to be paid on the basis of claims submitted through the HMRC portal after calculating employees’ payroll. The system will open for claims from 8am Wednesday 11 November and claims for this month must be made by 14 December 2020. Subsequent claims should be submitted by the 14th of the following month.
The revised scheme allows employers the flexibility to use staff for any amount of time and shift pattern, including furloughing them full-time. The employer will not have to pay wages for hours not worked, but will be asked to cover employer national insurance and pension contributions for the whole furlough period.
The Treasury explained that neither the employer nor the employee needs to have previously claimed or have been claimed for under CJRS to lodge a claim under the extended CJRS, but then stipulated that the employer needed to have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020 for that employee.
Employees who were made redundant or stopped working after the Job Support Scheme was announced on 23 September can be re-employed and put forward for furlough grants.
“We will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more,” the Treasury said.
With furlough extended to March, the Chancellor said the Job Retention Bonus planned for February falls away. “Instead we will redeploy a retention incentive at the appropriate time,” he told the Commons.
The Chancellor devoted much of his statement explaining how his measures had held down unemployment and business failures and defending the latest changes.
“I have had to make rapid adjust to our economy plan as virus has accelerated,” he said.
That message cut little ice with watching accountants. PandoraSleeps commented in Any Answers: “I wish they would issue the updated guidance for CJRS November. I am sure there will be some surprises and nasties in there waiting to catch us out. I almost feel numb to these announcements now. The rate of change and the complexity of the schemes is becoming exhausting.”
On Twitter at around the same time @TaxQueen Sue Christensen caught the mood of exasperated fatigue with this comment:
So now a leak ahead of chancellor’s statement about extending furlough. Is it possible to actually have the government announcement without this irritating leaking? I am sick of giving new information to clients on what seems like a daily basis.
— Sue Christensen (@taxqueen49) November 5, 2020
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