Furlough Scheme for PAYE Employees Extended Until End of October

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June 1st 2020
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Furlough Scheme for PAYE Employees Extended Until End of October

Furloughed staff will continue to receive 80 percent of salary up to a £2,500 max - but changes to support amounts will come in from August.

The Chancellor Rishi Sunak has announced a further extension to the Job Retention Scheme (JRS). The scheme will now run through to the end of October 2020. Employers will continue to receive the 80 percent of regular pay and associated costs through government support. Employees will receive 80 percent of their gross salary (capped to £2,500 a month) and taxes/deductions will apply on this gross amount.

The scheme therefore will remain unchanged in terms of rules and amounts paid out up until the end of July. From August there will be an initiative to get furloughed workers back into work and therefore a cut to government support for salaries is expected.

From August furloughed staff will be able to come back into work, on a part-time basis - most likely in order to maintain social distancing protocols. The government will cover a percentage of the staff's wages, with employers having to pay the difference.

Specific details on how this will occur has not been revealed but it is thought that the government may impose this by capping the percentage of support they provide via the JRS to 60 percent or less, and the employer, now with staff working part-time, covering the shortfall themselves.

Nearly one million businesses with a combined 7.5 million staff are currently continuing to use the JRS.

We had previously reported that the furlough scheme would be wound down gradually based on industry rumours, and it appears the Chancellor did implement the extension and tapering.

Self-employed people currently continue to have the SEISS (Self Employed Income Support Scheme) but so far there have been no announcements on an extension or changes to the payout on that scheme. It is due to go live very shortly for initial claims for the March, April and May months - with eligible claimants receiving a lump sum equivalent to 80 percent of their regular turnover (capped to £2,500 per month).

Self-employed people may find an organic gradual return of turnover as the economy re-opens so expect the Chancellor, in order to avoid a cliff-edge removal of support scenario, to also extend the SEISS through to the end of October, with a gradual limiting to the amount of grant support provided. There are thoughts that the turnover limit could be cut from 80 percent to 60 percent and the turnover cut-off reduced to £30,000 from £50,000. You can use the SEISS calculator to see how much your grant could be.

On a last note, we have a furlough calculator to help calculate the amount an employer can claim for an employee (factoring in employers' NIC and auto-enrolment pension costs). This has now been updated to include the months of July through to the end of October.

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