Take two: furlough scheme extended into 2021

As the second lockdown took effect on 5 November, the Chancellor returned to Parliament to announce a further extension to the furlough scheme through to March 2021.

The extension of financial support under the Coronavirus Job Retention Scheme (CJRS) will now run past the original new cut-off of 2 December through to the end of March. Provision is at the same level as that given for August, with employees receiving 80% of their salary for hours not worked, capped at £2,500 per month. Employers have to cover National Insurance contributions (NICs) and workplace pension costs.

Two new job support schemes (JSS Closed and JSS Open) set out in the Chancellor’s Winter Economy Plan will now not take effect, if at all, until the furlough scheme ends.

Differences

One important difference from the previous furlough scheme is that claims can be made for employees notified to HMRC with an RTI submission by 30 October. Otherwise, the extension is similar to the old scheme:

  • Employees recently made redundant can be rehired and furloughed if they were employed up to 23 September.
  • Businesses will be paid upfront to cover their salary costs.
  • Flexible furloughing is allowed, with the employer paying as normal for hours worked. For hours not worked, the employer can make up the employee’s full pay if they wish.
  • Employees can be on any type of contract.
  • Hours not worked will be calculated by reference to the usual hours worked by the employee.
  • The employer’s furlough claim must be for a minimum period of seven consecutive days.
  • Neither the employer nor the employee needs to have previously used the furlough scheme prior to 1 November.

The extension will be reviewed again in January to determine whether there is scope to increase employer contributions, depending on economic circumstances.

Additional measures are also available for businesses and individuals affected by this second lockdown, including:

  • Cash grants for closed businesses up to £3,000 a month.
  • Extension of the mortgage payment holiday for homeowners.
  • One-off payment grants from local authorities.

Government-backed loan schemes and the Future Fund are likely to be extended through January in plans yet to be announced, plus options to top-up Bounce Back Loans.

If you need help in assessing your situation and requirements, please let us know.

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