Everything You Need To Know About The Extended Furlough Scheme

With the furlough scheme recently being extended to spring 2021, here's what you need to know about how it works, what you can expect, and how it differs from the original scheme.

On the 5th November the UK headed into a second lockdown which closed non-essential shops, asked people to work from home, and extended the furlough scheme. The 'Coronavirus Job Retention Scheme,' was originally announced at the end of March for three months as a way to preserve jobs during the pandemic and has been extended several times as the UK goes in and out of lockdown.

The furlough extension was announced in order to give people and businesses certainty over the winter, and will now end formally in spring 2021.

The Chancellor of the Exchequer Rishi Sunak said: 

"Extending furlough and increasing our support for the self-employed will protect millions of jobs and give people and businesses the certainty they need over what will be a difficult winter."

Here's everything you need to know about the extension of the furlough scheme, including when it starts and ends, what you can expect from it and how it differs to the original scheme.

How long will the furlough extension scheme last?

The extension of the furlough scheme was announced on the 5th November and will end on 31st of March 2021.

What has happened to the Job Support Scheme?

The launch of the Job Support Scheme has been postponed as a result of the recent lockdown and extension of the furlough scheme.

Which parts of the furlough scheme have stayed the same?

  • In order to benefit from the scheme, employees still need to be placed on furlough, and employers can claim a grant to pay 80% of staff wages. Employers will still continue to pay National Insurance and employee pension contributions.

  • Both 'full' and 'flexible' furlough options remain. This means that furloughed staff can work part-time provided they are paid in full for the time they work or not work at all.

  • Staff must agree to be furloughed.

  • Staff on any type of contract including zero-hour workers can be furloughed.

  • All employers with a UK bank account and UK PAYE schemes can claim the grant, which is a departure from the eligibility requirements that were to be in place for use of the Job Support Scheme.

  • Furloughed staff are able to take annual leave, provided they are paid in full and will continue to accrue holiday during furlough.

  • Businesses in the public sector cannot use the scheme, except in certain cases where they are not fully funded by public grant.

  • Employees can be furloughed for as much or as little time as necessary, with a minimum claim of seven days.

  • If employees were eligible to be furloughed under the original scheme from March, they should continue to use the same procedure for calculating hours worked, and corresponding pay, when applying for the grant. If not, new rules apply.

  • Currently, if an employee is serving their notice period, due to redundancy for example, they can be employed and can benefit from the scheme. This may change over the coming months.

How is the furlough scheme different this time?

  • In the summer the furlough grant reduced from 80%, but from November this is returning to 80% of wages with a cap of £2,500 a month per employee.

  • The summer furlough meant that only current employees who had already been furloughed could be furloughed again. From November any employee can be furloughed for the first time, as long as they meet the criteria.

  • To be eligible, employees need to be on the employer's PAYE payroll by 23.59 on 30th October 2020. A Real Time Information submission (RTI) notifying payment for the employee to HMRC must have been made before this time.

  • Currently, if an employee is serving their notice period, due to redundancy for example, they can be employed and can benefit from the scheme. This may change over the coming months.

  • There is a change to the rules regarding employees coming off of family leave. If an employee wishes to return to work from maternity leave for example, they need to now provide 8 weeks notice to their employer.

Will anything change in the scheme over the next few months?

  • Currently, if an employee is serving their notice period, due to redundancy for example, they can be employed and can benefit from the scheme. This may change over the coming months.

If you'd like to read more about how the extended furlough scheme works, you can find details on the Government website here. We understand that as a business owner these changes are hard to keep up with. Our Accounting Team are working hard to understand the intricacies of the scheme and take the hard work out of it for you. If you're already a client of Chesterton House Accounting Services then you're sure to be receiving our advice now anyway, but if you are new to us or unsure about what the extended furlough scheme means for you then our friendly Team will be pleased to help. Contact us today to speak with one of our Accountants.

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