The government’s Coronavirus Job Retention Scheme has been extended until the end of October
- Job Retention Scheme extended until the end of October
- Furloughed workers across UK will continue to receive 80% of their current salary, up to £2,500
- New flexibility will be introduced from August to get employees back to work and boost economy
In a boost to millions of jobs and businesses, Rishi Sunak said the furlough scheme would be extended by a further four months with workers continuing to receive 80% of their current salary.
As we reopen the economy, we need to support people to get back to work. From the start of August, furloughed workers will be able to return to work part-time with employers being asked to pay a percentage towards the salaries of their furloughed staff.
The employer payments will substitute the contribution the government is currently making, ensuring that staff continue to receive 80% of their salary, up to £2,500 a month.
Chancellor Rishi Sunak said:
Our Coronavirus Job Retention Scheme has protected millions of jobs and businesses across the UK during the outbreak – and I’ve been clear that I want to avoid a cliff edge and get people back to work in a measured way.
This extension and the changes we are making to the scheme will give flexibility to businesses while protecting the livelihoods of the British people and our future economic prospects.
New statistics published today revealed the job retention scheme has protected 7.5 million workers and almost 1 million businesses.
The scheme will continue in its current form until the end of July and the changes to allow more flexibility will come in from the start of August. More specific details and information around its implementation will be made available by the end of this month.
The government will explore ways through which furloughed workers who wish to do additional training or learn new skills are supported during this period. It will also continue to work closely with the Devolved Administrations to ensure the scheme supports people across the Union.
The Chancellor’s decision to extend the scheme, which will continue to apply across all regions and sectors in the UK economy, comes after the government outlined its plan for the next phase of its response to the coronavirus outbreak.
The scheme is just one part of the government’s world-leading economic response to coronavirus, including an unprecedented package for the self-employed, loans and guarantees that have so far provided billions of pounds in support, tax deferrals and grants for small businesses.
Today the government is also publishing new statistics that show businesses have benefitted from over £14 billion in loans and guarantees to support their cashflow during the crisis. This includes 268,000 Bounce Back Loans worth £8.3 billion, 36,000 loans worth over £6 billion through the Coronavirus Business Interruption Loan Scheme, and £359 million through the Coronavirus Large Business Interruption Loan Scheme.
Warning on furlough NICs errors
SMEs accidentally overclaiming for National Insurance Contributions (NICs) they do not pay could result in them having to repay thousands of pounds back to HMRC down the line
We have seen many small business applications for the coronavirus job retention scheme that includes the cost of their employer’s NICs for furloughed employees. However, for many SMEs that cost is already being covered by the Government.
Under the existing employment allowance, businesses that pay less than £100,000 in NICs each year can apply for up to £4,000 of tax relief on that bill. This relief is used by many micro-businesses to reduce their National Insurance bills to zero.
HMRC is currently paying furlough scheme claims to businesses as quickly as possible – those who overclaim by mistake will have to pay that money back to HMRC later.
It’s great that HMRC is taking the pragmatic approach of getting furlough scheme money out to businesses as quickly as it possibly can. However, it will catch up on its calculations later, and a lot of SMEs are going to be hit by nasty bills from accidentally overclaiming.
An unexpected bill of several thousand pounds from HMRC is the last thing small businesses will want to see as they fight to recover from the economic shock of coronavirus. If they are not very careful with their furlough scheme applications, they are putting themselves at risk of just that.
Contact MCL Chartered Accountants today on 01702 593 029 to optimise your tax position or if you need any assistance with the Job retention furlough scheme and corresponding calculations for submitting a grant application to Hmrc.