What Happens After Furlough Scheme Ends October 31st

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May 25th 2022
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What Happens After Furlough Scheme Ends October 31st

Headlines warn of a second wave, 5 million are on furlough and we are six weeks from the end of the government's support for jobs.

Update - Use our Job Support Scheme calculator to see how much an employee receives under the new enhanced government scheme.

The government's headline furlough scheme has been helping businesses across the UK retain staff since the start of March.

Up until August the scheme would cover all costs of keeping an employee on payroll while requiring the employee to stay at home - to both prevent mass redundancies as well as maintain the control on the pandemic.

Eighty percent of pay as well as associate national insurance and compulsory pension costs were being paid by the Treasury. Since August, furlough has been slowly winding down, providing less support each month to employer's and requesting employees start to return to work in other 'flexible furlough' measures.

We are currently in September and furlough support has dropped wages to 70 percent of usual, with employers paying an additional 10 percent as well as payroll costs.

Next month (October 2020) employers will have to pay payroll costs and also pay 20 percent of an employee's usual wage. The government will pay 60 percent to make sure the employee still takes home 80 percent of their usual wage.

But what happens after October 31st?

Just under 5 million people are currently furloughed, nearly 2 million of those people are working in the retail and hospitality sector, a sector that is worst hit by pandemic control measures.

The high street, a sector already under threat by online companies, who are seeing rapid growth at the moment, shows near 800,000 people on furlough.

As the tapering of government support occurred through August and the full lock-down was eased, the number of people being fully supported by the government halved from earlier in the year.

The problem now is that contrary to further easing, many experts are calling for tightening of measures now as the R rate rapidly climbs as we head toward gloomier and colder weather.

The worst hit sectors will continue to be retail, leisure and hospitality, as even with the uplift from eat out to help out, trade associations are stating mass redundancies would be inevitable.

Firms who are likely to make more than 100 people redundant are now consulting with the government. Three quarters of a million people have been made redundant since March, matching up jobless figures eight years into the past.

The Chancellor Rishi Sunak is now having to put his team together once more to attempt to plug holes. Creativity with his solution is required as at the moment the flexible furlough and job retention bonus are not able to support a lock-down state.

Sunak could come up with a replacement for furlough starting from November to save jobs, however some argue that support shouldn't be provided for jobs that are not going to be viable going forward and that people should be made redundant and switch to jobs in sectors that are experiencing growth right now.

Redundant people could be provided with help with education and training and firms experiencing growth could be encouraged to hire new staff with concessions for costs such as employers' NICs.

If furlough is extended at the current support rates (60 percent) for six months, net costs estimates are around £3 billion, which is a tenth of furlough costs so far.

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