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Ending of Furlough: what you need to know

14th September, 2020

As of March 2020, workers placed on furlough have been able to receive 80% of their pay, up to a maximum of £2,500 a month, through the Coronavirus Jobs Retention Scheme.

Since then, almost 10 million workers who were unable to do their job because of the coronavirus outbreak have had their wages paid by the government. But with the CJRS coming to an end on 31 October 2020, many employers are wondering what the next steps are. Here, Nottingham chartered accountants Clayton & Brewill explains what you need to know about the ending of furlough.

Flexible furlough

Ending of furloughOn the 1 July, the furlough scheme became more flexible. Employers have been able to bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim the CJRS grant for the hours not worked. The flexible scheme, known as CJRS V2, allows employees to continue to receive 80% of their salary, subject to the £2,500 cap, but employers have been required to share the burden of paying National Insurance and furlough salaries from August onwards.

As with the original scheme, employers can top up the wages above the grant for fully furloughed staff if it is feasible for them to do so. Employees might be working part-time under the revised flexible scheme, and the capped figures on the furlough pay will apply in proportion to the hours not worked.

September and October changes

CJRS V2 continues into September and October, but with some notable changes:

  • In September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough.
  • In October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough.

Employers will have to pay their employees for the hours worked, and employers are expected to continue paying ER NICs and pension contributions and top up employees’ wages, to ensure they receive 80% of their wages for time they are furloughed.

From the 1 November 2020, the CJRS will no longer be effective. With the furlough scheme coming to a close, the chancellor unveiled a new Job Support Scheme in his Winter economic update. Opening on 1 November, and with the plan to run for six months, the Job Support Scheme’s main aim is to help employers keep their employees in “viable” jobs. Find out more about the scheme here.

Important deadline: 30 November 2020 is the final date for submitting claims under CJRS V2.

Clayton & Brewill can calculate a CJRS V2 claim total for you and submit it on your behalf. We’ve already taken care of hundreds of claims for both existing and new clients, with a range of payroll sizes. If you need help making a claim, please get in touch. 

Job Retention Bonus

In the Summer economic update, Rishi Sunak presented his ‘Plan for Jobs’, outlining how the government will support the UK’s economic recovery. Part of this included the introduction of a new Job Retention Bonus to provide additional support to employers who keep on their furloughed employees after the CJRS closes.

The Job Retention Bonus will be a one-off payment of £1,000 to the employer for every eligible employee that has been claimed for under the CJRS scheme, and who remains continuously employed through to 31 January 2021 . Eligible employees must earn at least £520 a month on average between 1 November 2020 and 31 January 2021. The bonus will be taxable, so businesses must include the whole amount as income when calculating their taxable profits for Corporation Tax or Self-Assessment.

An employer will be able to claim the Job Retention Bonus for any employees that were eligible for the Coronavirus Job Retention Scheme and that they have claimed a grant for.

Employers should ensure that they have:

  • Complied with their obligations to pay and file PAYE accurately and on time under the Real Time Information (RTI) reporting system for all employees
  • Maintained enrolment for PAYE online
  • A UK bank account

Kickstart scheme

The Chancellor also announced the introduction of a new Kickstart Scheme in his summer economic update – an emergency package designed to combat the rising unemployment numbers in young people following the pandemic.

It is designed to fund employers to create new 6-month job placements for 16-24 year olds who are currently on Universal Credit and at risk of long-term unemployment.

The funding available for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.

However, this is a time-limited offer as the bonus scheme is only available for employers who apply between August 2020 and January 2021.

How we can help

Employers will no doubt welcome the certainty over how the CJRS will evolve, but the tapering off of support may be a challenge for those businesses that are struggling to return to ‘business as usual’. The changes are also quite complex in terms of payroll and processing and business owners will need to make sure they understand the impact on their financial modelling as well as ensuring their CJRS submissions are accurate.

For help with making a fast and accurate claim on the Coronavirus Job Retention Scheme portal or for any aspect of payroll advice, please email Doug Perry, or get in touch with the Clayton & Brewill team here.

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