Changes to the furlough scheme from 1 July 2021
Changes to the furlough scheme are now in place, with further changes occurring in July 2021. Are you and your business furlough ready?
Chartered Certified Accountant
Hayley Hedges-Quinn
The Coronavirus Job Retention Scheme (CJRS) is being extended until 30 September 2021. If your business has been directly affected by Covid-19, you can furlough staff and apply for a grant to cover a percentage of their wages; you will still need to pay NI and pension contributions.
Periods starting on or after 1 May 2021
For claims made from 1 May 2021 onwards:
- Your staff must have been on your PAYE payroll on 2 March 2021
- You do not need to have previously claimed for an employee before the 2 March 2021 to claim for periods starting on or after 1 May 2021
- You must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, reporting a payment of earnings
- Employees must not work for you during furloughed hours – those that do will put your claim at risk
- Employees can undertake training during furloughed hours provided they do not generate income for or provide services to you and their furlough pay covers the appropriate National Minimum Wage for their age for the time they spend training. If it does not, their pay must be topped up
- You only have 14 days after the month to make the claim
Periods ending on or before 30 June 2021
You can claim 80% of your employee’s usual salary, up to a maximum of £2,500 per month.
From 1 July 2021
The level of grant will be reduced and as an employer, you will need to contribute 10% towards the cost of your furloughed employees’ wages. This contribution will rise to 20% in August and September.
Government contribution, required employer contribution and the amount employees receive per month where the employee is furloughed 100% of the time:
Government contribution, required employer contribution and the amount employees receive per month where the employee is furloughed 100% of the time:
Which employers can use the scheme?
The scheme is open to all UK employers, including businesses, charities, recruitment agencies and public authorities, of any size, in any sector. All employers with a UK bank account and UK PAYE schemes can claim the grant.
Who will benefit from the scheme?
Employees can be on any type of contract, including zero hours, fixed term or temporary.
Who will not benefit from the scheme?
- Those who were not in work on 2 March 2021 for claims on or after 1 May 2021
- Those who earn a low basic salary that’s usually topped up with non-compulsory commission
- Those with payday loan payment obligations that had been based on their full salary and who are not being given any payment reprieve
- Limited company directors who earn a significant amount of their salary through dividends
What to include in furlough pay:
- Regular wages
- Already worked overtime
- Non-discretionary fees
- Compulsory commission payments
- Piece-rate payments
What not to include in furlough pay:
- Discretionary payments e.g. tips
- Discretionary bonuses
- Discretionary commission payments
- Non-cash payments
- Non-monetary benefits e.g. company car
- Salary sacrifice schemes which reduce your employees’ tax bills e.g. pension contributions
Life is pretty tough at the moment, and H.J. Hedges-Quinn want to offer extra support to our clients. So, if you’re struggling to sort your furlough forms and you use our payroll service, we’ll sort the claims for you. Simply get in touch, and we’ll do the rest!
o talk through any furlough concerns, call Hayley on 01473 657853
o talk through any furlough concerns, call Hayley on 01473 657853
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