Many people in this country have spent Spring and Summer on furlough. This has been a life-saving and important scheme, which has allowed people, who are not keyworkers, and are unable to work from home, to keep safe and still earn money.
The government has been paying people 80% of their monthly salaries, up to £2500 a month, since April. It has been a very expensive scheme to maintain, costing up to £80bn. As industries have been gradually reopening, the furlough scheme has started to wind down.
Of course, there will be many redundancies, as the government retires the scheme and companies are unable to afford employee salaries. The scheme will come to an end on the 31st of October, but it will come to a gradual stop over the next few months. The roadmap for winding down the scheme is as follows.
August
Government to pay 80% of wages up to a maximum of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
September
Government to pay 70% of wages up to a maximum of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
October
Government to pay 60% of wages up to a maximum of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.
By November, nobody will be on furlough anymore. If you are an employer and you need some help working out how you will need to alter your payroll in the coming months, you can always get in touch with us.
We keep ourselves firmly up to date on all new developments with HMRC. We know how confusing times like these are and are able to advise on how to make your payrolls as tax efficient as possible.
We offer a free, no-obligation callback service. To discuss your business needs, do not hesitate to get in touch.