Chancellor Rishi Sunak announced that the furlough scheme will be extended by a further 5 months until the 30th September 2021. The announcement came on the 3rd of March 2021 to the relief of many organisations that will still be affected by the restrictions on social contact which are set to extend into the summer months of this year.
Government support has been through many iterations since the beginning of the pandemic. At its peak, the Coronavirus Job Retention Scheme (CJRS) supported upwards of 8.9 million workers in the UK, with more than one million businesses accessing COVID-19 support loans in order to stay afloat, according to Treasury figures.
What does it mean for your business?
Speaking before the budget, the chancellor said; “Our Covid support schemes have been a lifeline to millions, protecting jobs and incomes across the UK.”
Organisations have been calling out for an extension of the furlough scheme beyond April for months to prevent a flood of unemployment as employers struggle under significant debts and the looming threat of Government support dwindling. Whilst the roadmap is laid out, furlough has been a lifeline for many businesses, especially by those in industries which cannot operate under current lockdown restrictions such as retail and leisure and hospitality facilities.
Further to the CJRS, the chancellor announced that Government support for self-employed people has also been extended until September 2021.
A fourth grant under the Self-Employment Income Support Scheme (SEISS) will run from February 2021 through to April 2021. This will cover up to 80% of three months’ trading profits up to a maximum of £7,500. A fifth grant will then be available from May to September which will see people whose turnover has fallen by 30% or more gain access to the 80%, but those who are self-employed and whose turnover has fallen by less than 30% will get a 30% grant.
To support low-income households, the universal credit uplift of £20 per week will continue for a further six months, and Sunak reiterated that the national living wage will increase to £8.91 per hour from 1 April.
Extending the financial support offered by the Government into Q2 2021 offers more security for businesses at this challenging time. With the extension there is no change to the eligibility criteria; to be eligible for the grant you must continue to pay your furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough.
Those who have been submitting for furlough support for their employees and businesses should continue to accurately track and record their employees flexible working hours to allow accurate calculations.
As with the other COVID-19 support initiatives including the Job Support Scheme, which was due to start on the 1st of November 2020 but was superseded by the CJRS, a planned tapering of support is still in place. From the 1st July 2021, the level of grant that businesses can claim will reduce from 80% to 70%, and employers will be asked to contribute towards the costs of their furloughed employees’ wages.
Full details of the changes to the furlough scheme can be found on the Gov UK website.
Important dates for your diary:
15th March 2021: The deadline for claiming furlough days in February 2021
1st July 2021: Government support reduces to 70% and employers contribute 10% of wages
1st August 2021: Government support reduces to 60% and employers contribute to 20% of wages. This continues until the scheme ends.
30th September 2021: Furlough scheme ends
With the roadmap out of lockdown now in place, it’s unlikely that we will have an update on the furlough scheme for some time. With the rollout of the vaccine programme, we, like many others, hope to see coronavirus cases in the UK continue to fall, and normality return. During this time, we’ll continue to monitor the situation and share the latest news regarding furlough and the Government’s support for businesses at this time, and in the future.
Need help recording your employees flexible working hours? Our flexible furlough management software can be up and running in as little as two weeks. Contact the team today for further information on how we can help.