Furlough Scheme extension and addition support for businesses that have to close due to lockdown

The government announced yesterday that the Furlough Scheme (also known as the Coronavirus Job Retention Scheme – CJRS) is being extended until December, due to a national lockdown. The new Job Support Scheme that was due to start on 1st November is currently on hold.

Business premises forced to close in England are to receive grants worth up to £3,000 per month under the Local Restrictions Support Grant and £1.1bn is being given to Local Authorities, distributed on the basis of £20 per head, for one-off payments to enable them to support businesses more broadly.

This is what we know about the Furlough Scheme / CJRS extension so far:

  • The scheme is being extended until December. 
  • Neither the employer nor the employee needs to have previously used the CJRS.
  • To be eligible to claim under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
  • The level of the grant will mirror levels available under the CJRS in August, so the government will pay 80% of wages for hours not worked up to a cap of £2,500 and employers will pay employer National Insurance Contributions (NICs) and pension contributions only for the hours the employee does not work.
  • For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.
  • Businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time and will only be asked to cover National Insurance and employer pension contributions which, for the average claim, accounts for just 5% of total employment costs.
  • When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.
  • Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.The Job Retention Scheme will operate as the previous scheme did, with businesses being paid upfront to cover wages costs although there will be a short period when the legal terms of the scheme will need to be changed and the system updated.
  • Businesses will be paid in arrears for that period.
  • As with the current CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
  • The Government will confirm shortly when claims can first be made.

An outline of the additional support being made available, including Mortgage holidays and Business Grants can be found via this link: https://www.gov.uk/government/news/furlough-scheme-extended-and-further-economic-support-announced fbclid=IwAR0iLRlWYarCf5q7aSBTlBmJQdzIxxZdYLjPmP5lzDZcSickSjZ4_YQXuKQ

No doubt more details will follow this week.