Furlough scheme – The latest guidance
HM Revenue & Customs (HMRC) has published a series of updates to its guidance on the Coronavirus Job Retention Scheme (CJRS), more commonly known as the ‘furlough scheme’.
The updates cover the changes to the scheme as it is extended from 1 May 2021 to 30 September 2021.
The guidance confirms that new employees who have not previously been eligible for furlough can be furloughed for the first time from 1 May 2021 onwards, as long as they were included in a Full Payment Submission to HMRC by 2 March 2021.
As with the existing scheme, furloughed employees will continue to receive 80 per cent of their usual wages capped at £2,500 a month, or equivalent weekly or daily figures, for usual hours not worked under the extended scheme.
CJRS grants will continue to cover the full 80 per cent paid to employees in May and June, while employers must continue to cover the costs of the associated Employer National Insurance and workplace pension contributions.
However, employers will also need to make a 10 per cent contribution in July and a 20 per cent contribution in August and September towards the hours not worked for each furloughed employee, to total the amount paid at a minimum of 80 per cent.
The calculation of usual wages is based on the last pay period before the employee became eligible for furlough, for fixed salary workers. For variable salary workers, calculations are taken from their average pay, based on the amount of days they’ve been employed up until their furlough start date, for those with a start date after 30th October. For individuals who were hired in 2019-2020, the average pay will be based on days (usually 366 or furlough start date if claimed in March) or the corresponding period in 2019-2020, whichever is higher.
Please note: furlough cannot be claimed if someone is leaving their role i.e. no furlough during their notice period.
Remember, these dates vary, depending on whether the employee was reported to HMRC on or before 19 March 2020, 30 October 2020 or 2 March 2021.
The Governments’ latest guidance also clarifies and changes several technical points relating to the calculation of furlough pay in various circumstances. Full guidance for the CJRS is available here.
This support continues to provide a vital lifeline to many businesses. If you need help with the upcoming changes to the furlough scheme in the months ahead, please speak to our team.
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