Furlough Scheme Being Updated from 1st July (but don’t forget 10th June!!)

Here we go again…..more updates to government support schemes!!

 

You will have seen last week (Fri 29th May) that the Chancellor announced an update to the coronavirus job retention scheme (CJRS) or as most of you will be more familiar with it as the Furlough scheme.

 

The changes will apply from 1st July, where a number of changes will come into force.  I will discuss them below.

 
However, a key point that needs to be dragged out immediately is that no new employees can be added to furlough unless they are on by the 10th of June.  This is a key date as the guidance refers to 1st July, but you need to take into account the 3 week completion period by that point hence they need to be furloughed by 10th June.

Now that we’ve addressed that point, we can look at what changes have been made.

Part-time furloughing

Previously it was either all or nothing.  You were either furloughed or you weren’t.

Now, part-time furlough has been introduced to help get people back to work.  Employers will need to decide the hours and shift patterns for their employees (take HR advice which Link Accounting clients can obtain for free through our partners!) and will be responsible for paying their wages in full whilst working.

For the time not working, this will be covered under the furlough scheme.  The details of this have now been updated as per the following section.

Employer contributions

For July, the support has not changed, as the government will continue to pay:

  • 80% wage support up to a c £2,500 cap; plus
  • Employers’ NIC and 3% pension costs on furloughed hours

 

From August and thereafter, this is where the changes are being brought in as follows:

  • August – Still 80% of wages being paid but no ERs NIC or pensions (these will stop from August onwards)
  • September – 70% of wages to a cap of £2,187.50 and employers will then pay 10% (unless they are topping up)
  • October – 60% of wages to a cap of £1,875 and employers will then pay 20% (unless they are topping up)
  • November – scheme is closed

 

What will need to be considered is that the support will be given proportional to the hours not worked.  In simple terms, if someone is on full-time furlough, the above will apply in full.  If they are part-time furloughed, you will need to abate the support for the non-furloughed proportion.

Piece of cake, ey!  Well, as per usual, the guidance is fairly vague in terms of the detail behind it.  However, they have said that further guidance will be given on the 12th of June.  I suspect this date is as such so as to avoid allowing people to game the system as they will need to have been included by the 10th of June (remember above!?!?)

For further guidance, you can read the official full government announcement here https://www.gov.uk/government/news/chancellor-extends-self-employment-support-scheme-and-confirms-furlough-next-steps

 

At Link Accounting, we’ve been providing support for our clients here in Banbury, Oxfordshire, but also all over the UK on all manner of areas through this situation.  We’ve been surprised to hear from new clients that they were not receiving any such support from their previous accountants.  If this sounds like you, feel free to give us a shout and we can have a chat.

All the best, Huw

 

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Huw Moseley
huw@link-accounting.co.uk