News
Furlough scheme set to taper down in July
After 18 months of support for employers and employees, the Coronavirus Job Retention Scheme (CJRS) – commonly referred to as the furlough scheme – is set to end at the end of September.
The UK Government is set to scale down its contributions to the furlough scheme from 1st July 2021. With the economy set to open up after months of lockdown, employers nationwide will be asked to up their contributions to the furlough scheme.
The furlough scheme was extended until 30th September 2021 earlier this year, with tapered government funding levels kicking in as the economy restarts.
Approximately 9.4 million employees have been furloughed within the Coronavirus Job Retention Scheme at some stage between March 2020 and June 2021.
Up to 30th June 2021, furloughed employees can be paid 80% of their wages for hours not worked and their employers can reclaim this from the government. This refund claim is capped at £2,500 per month. Employers must still pay the associated employer National Insurance contributions and minimum auto enrolment employer pension contributions, meaning the amounts paid to the employee will be subject to the usual PAYE deductions. Employers can choose to top up wages if they wish.
From 1st July, the amount that can be reclaimed will change and employers will be required to contribute 10% of wages for hours not worked (up to £312.50), with the government contributing 70% (capped at £2,187.50 per month).
From 1st August, the amount that can be reclaimed is set to reduce further and the employer contributions will rise to 20% of wages for hours not worked (£625), with the government contributing 60% (capped at £1,875 per month).
The scheme is scheduled to close at the end of September.
The table below shows the level of Government contribution available in the coming months, the required employer contribution and the amount that the employee receives per month where the employee is furloughed 100% of the time.
Wage caps are proportional to the hours not worked.
| May | June | July | August | September | |
|---|---|---|---|---|---|
| Government contribution: wages for hours not worked | 80% up to £2,500 |
80% up to £2,500 |
70% up to £2,187.50 | 60% up to £1,875 | 60% up to £1,875 |
|
Employer contribution: National Insurance contributions and pension contributions |
Yes | Yes | Yes | Yes | Yes |
| Employer contribution wages for hours not worked | No | No |
10% up to £312.50 |
20% up to £625 | 20% up to £625 |
| For hours not worked employee receives | 80% up to £2,500 per month | 80% up to £2,500 per month | 80% up to £2,500 per month | 80% up to £2,500 per month | 80% up to £2,500 per month |
Strict rules apply in this area and it is important employers are furloughing correctly. Various time limits and conditions apply to making claims and HMRC may review furlough claims that employers make.
If you are a small business owner that’s bamboozled by the furlough scheme, we can work with you to calculate your salary obligations for July and August as the government’s contributions taper down.
For a free initial consultation on your situation, get in touch with our friendly and experienced team today on 01206 576800. Alternatively, just drop us a line using our online enquiry form and we’ll be in touch.
Date published 9 Jun 2021 | Last updated 22 Sep 2021
Choose the right accounting firm for you
Running your own business can be challenging so why not let TaxAssist Accountants manage your tax, accounting, bookkeeping and payroll needs? If you are not receiving the service you deserve from your accountant, then perhaps it’s time to make the switch?
Local business focus
We specialise in supporting independent businesses and work with 100,000 clients. Each TaxAssist Accountant runs their own business, and are passionate about supporting you.
Come and meet us
We enjoy talking to business owners and self-employed professionals who are looking to get the most out of their accountant. You can visit us at any of our 409 locations, meet with us online through video call software, or talk to us by telephone.
Switching is simple
Changing accountants is easier than you might think. There are no tax implications and you can switch at any time in the year and our team will guide you through the process for a smooth transition.