The Chancellor has now set out the details of future of the furlough scheme including when it will come to an end.
We now know there is a deadline of 10th June for employers who wish to further furlough any employees that have not yet been furloughed.
From 1st July, employers will only be able to furlough employees who had been furloughed for a full 3 week period prior to 30 June.
The payment scheme will continue in its current form, with HMRC contributing 80% of an employee’s pay, up to £2,500, plus employer’s NI and pension contributions on that sum for the months of June and July.
From July, the concept of flexible furloughing is being introduced. Employers have the flexibility of allowing employees to work part of the week and be furloughed for part of the week, which is a welcomed changed for businesses that are not yet operating as normal and/or where demand for goods and services have not yet been restored to normal.
Employers will pay staff as normal for the hours worked and then claim from HMRC for the hours furloughed.
WINDING DOWN OF THE SCHEME
From 1st August, HMRC will still pay the 80% of employee’s pay, up to £2,500 BUT the employer will now have to pay the employer’s NI and pension contributions.
From 1st September, HMRC’s contribution will reduce to 70% (up to £2,190 per month) and employer’s will have to pay at least 10%, on top of national insurance and pension contributions.
From 1st October, HMRC’s contribution will reduce to 60% (up to £1,875) and employer’s will have to pay at least 20%, on top of national insurance and pension contributions.
Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.
FURTHER SUPPORT FOR THE SELF EMPLOYED
Following pressure to extend this beyond its previous closing date of 30-31 May, the self-employed income support scheme will be opened for a second round in August. The scheme will operate in the same way; however, grants will be dropped to 70 per cent of earnings, or a maximum of £6,570, for three months to bring this in line with the new job retention scheme.