Furlough Scheme: Set to change next week

The 2021 Budget, announced at the beginning of March, introduced the government’s spending plans for the upcoming year and the measures they’re taking to wind down the furlough scheme while at the same time supporting businesses and employees. It was announced that the Coronavirus Job Retention Scheme (CJRS) would be extended until 30th September with a number of changes introduced before its closure. This week, on July 1st, changes will be made to the level of grant available.

What is the current subsidy scheme?

Currently, under the existing scheme rules, employers can claim grants covering 80% of wages up to a cap of £2,500 for the hours an employee is not working. Where the employee is not working, the employer does not have to contribute towards wages for unworked hours, but they are responsible for paying employer NICs and pension contributions. Where an employee is on flexible furlough, employers must pay the full amount for any hours worked (including doing work-related training).

What’s set to change?

From 1st July, the level of grant will be reduced, and employers will be asked to contribute towards the cost of their furloughed employees’ wages. The Government will contribute 70% of wages, up to a maximum of £2,187.50 per month for hours not worked. The employer will also have to contribute 10% of wages so that the employee receives 80% of their usual wages for any hours not worked (up to cap of £2,500). You can choose to top up your employees’ wages above the 80% total at your own expense. You must also continue to pay the employer National Insurance contributions and pension contributions.

Any more changes?

The Government subsidy will continue to drop. In August and September, this contribution will drop to 60% of wages, up to £1,875 per month for hours not worked. The employer will be required to contribute 20% of wages for hours not worked, (again, up to a cap of £2,500).

Support Available

BrightPay hosts frequent webinars, free-of-charge, to support the accounting and bookkeeping community. Take a look at our upcoming webinar where we’ll be discussing the changes to the furlough scheme and how BrightPay payroll software caters for CJRS.

Check out the full list of our upcoming webinars here.

Related articles:

• Furlough extension: How the rules are changing
• Informally Payrolling of Benefits Changes for 2021-22
• The Impact the National Minimum Wage Rise has on Furloughed Employees