Furlough Scheme Extended To March 2021

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Furlough Scheme Extended To March 2021

The Chancellor Rishi Sunak has just announced that the UK Government Job Retention Scheme will be extended to the end of March 2021.

Please see attached a factsheet from the Treasury that provides further details and a snap summary below.

  • This extension will apply to ALL areas of all the UK, with the government paying up to 80% of usual wages for hours not worked up to a maximum of £2,500 per month.
  • Employers will continue to contribute towards pension and national insurance costs.
  • The policy will be reviewed in January, to access if economic circumstances mean that employers could contribute more towards these costs.
  • Job Retention Bonus not be paid in February will be replaced by something similar in January by another form of a retention incentive.
  • This will be available to the devolved nations to access

Employer flexibility: Businesses will have the flexibility to use the scheme for employees for any amount of time and shift pattern, including furloughing them full-time.

Employer contribution: There will be NO employer contribution to wages for hours not worked. Employers will only be asked to cover National Insurance and Employer pension contributions for hours not worked. For an average claim, this accounts for just 5% of total employment costs or £70 per employee per month.

Payment: The extended CJRS will operate as the previous Scheme did, with businesses being able to claim either shortly before, during or after running payroll. Claims can be made from 8am Wednesday 11 November. Claims made for November must be submitted to HMRC by no later than 14 December 2020. Claims relating to each subsequent month should be submitted by day 14 of the following month, to ensure prompt claims following the end of the month which is the subject of the claim.

Employee eligibility: Neither the employer nor the employee needs to have previously claimed or have been claimed for under CJRS to make a claim under the extended CJRS (if other eligibility criteria are met). An employer can claim for employees who were employed and on their PAYE payroll on 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.

Employees that are re-employed: Employees that were employed and on the payroll on 23 September 2020 (the day before the Job Support Scheme announcement) who were made redundant or stopped working afterwards can be re-employed and claimed for. The employer must have made an RTI submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees.

Guidance: HMRC will publish details of employers who make claims from December onwards under the extended scheme. Full details of this will be within the detailed guidance to be published next week.

Job Retention Bonus (JRB): The JRB will not be paid in February and UKGOV will redeploy a retention incentive at the appropriate time. The purpose of the JRB was to encourage employers to keep people in work until the end of January. However, as the CJRS is being extended to the end of March, the policy intent of the JRB falls away.

Help for the self-employed: Today, the UK Government is announcing that they are increasing the overall level of the grant to 80% of trading profits covering November to January for all parts of the UK. There is to be a fourth SEISS grant covering February to April, further details on that are expected to be published soon.

Commenting on remarks made by the Chancellor of the Exchequer Rishi Sunak today on the extension of the Coronavirus Job Retention Scheme to March 2021, Gavin McDonagh, President of Inverclyde Chamber of Commerce, said:

“This announcement gives local businesses a glimmer of hope that we may be able to survive and work through this crisis.

“What we cannot do is to continue with uncertainty which is impacting business confidence, employee motivation and our ability to plan and invest.

“Movement in the management of the virus must be towards the re-opening of the economy, with funding such as the furlough scheme available to support businesses if restrictions need to be imposed.

“However, the furlough scheme alone will not be enough to save businesses, so the Chancellor must continue and expand his commitment to providing businesses with guaranteed grants support to help businesses recover.

“The Scottish Government should continue to follow an evidence-led approach and work in partnership with industry before applying additional, harsher economic restrictions. That also means expanding test and trace capability to which is a key enabler to keeping the economy open.

“Inverclyde Chamber of Commerce continues to campaign for Inverclyde to be categorised as a level 2 area and will ensure we push this for both our members and businesses.”

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