What The Furlough Extension Means For Businesses
You might have read our recent article about how to prepare your business for the end of furlough, but a lot has changed since then. Following the government’s recent decision to enforce another Coronavirus lockdown, there is now a plan to extend the Coronavirus Job Retention Scheme from the start of December until 31st March 2021.
In this article, you can find out what the furlough extension means for businesses and what other financial support has been put in place by the government following the second national lockdown.
How Will The Furlough Extension Work?
As part of the extended furlough scheme, employees will still receive 80% of their salary for the amount of the hours they cannot work due to the national Coronavirus lockdown which is available for up to a maximum of £2,500 per month. The furlough extension also means the cost for employers to retain their employees has been reduced since the first furlough.
In order for businesses to receive their furlough extension, they are still required to count employee payroll and claim the furlough by submitting it through the HMRC portal. The HMRC furlough extension system has been open for claims since 11th November and claims for this month had to have been made by 14th November. This will then be repeated and furlough claims for next month will also have to be submitted by the 14th, and so on.
What Does The Furlough Extension Mean For Employers?
The furlough extension is available for all employees, whatever their shift pattern and can also be used to pay employees full time. Employers are still not obliged to pay the remaining 20% of each employee’s wages but they must still cover employer national insurance and pension contributions.
If you never submitted a furlough claim during the first Coronavirus lockdown, this doesn’t mean you can’t during the second lockdown. However, you must have made PAYE Real Time Information (RTI) submission via HMRC between 20th March 2020 and 30th October 2020 for the employee that you want to grant furlough for.
If you have an employee that was made redundant or had to stop working after the Job Support Scheme was announced on 23rd September, you can now submit a furlough claim for them.
The current plan is that the furlough extension will be reviewed in January 2021 and if there have been improvements, employers may be asked to start making a larger contribution.
What Other Financial Support Has Be Added Or Extended?
As well as furlough, Chancellor Rishi Sunak also stated a few more changes to the government’s financial support scheme originally put in place at the start of the pandemic. This includes an extension of the Self-Employment Income Support Scheme with an increase in grant. It will rise from 55% of average profits to 80% with a maximum of £7,500 which is currently available from November until January 2021.
As well as this, there will also be cash grants available to businesses that have been forced to shut due to the second national Coronavirus lockdown. The grants will continue to be administered by local authorities beforehand. The local authorities will also be given a total of £1.1bn to be handed out as one-off, £20 per head payments for each business affected.
The Coronavirus Business Interruption Loan Scheme (CBILS) was also due to end at the end of this month, but following the new lockdown measures, this has been extended until 31st January 2021.
What Financial Support Has Been Withdrawn?
Even though there are some new and some extended financial support schemes available for businesses during the second national Coronavirus lockdown, there are some that have been withdrawn as plans have changed.
This includes the Job Retention Bonus which was a one-off £1,000 taxable payment to the employer for each employee that had been furloughed. This was going to be available from 15th February 2021 but because the Coronavirus Job Retention Scheme has been extended until 31st March 2021, the Job Retention Bonus has now been withdrawn.
Where Can I Find Furlough & Other Financial Support?
If you are struggling to manage your furlough claims or need support with any other finances during the second Coronavirus lockdown, Stonehouse Accountants are happy to help. For more information, feel free to contact us on here or call us on 01733 265888.