With the announcement of a second national lockdown, the Prime Minister also confirmed the coronavirus job retention scheme (also known as the furlough scheme) would be extended, on the day it was due to end.
Initially a one-month extension was announced for November only but, less than one week later, the Chancellor confirmed that the extension would be for a total of five months ending on 31 March 2021.
A few changes have been made to the latest version of the scheme in terms of eligibility, submission deadlines and the amount that can be claimed including:
- The employer does not need to have previously claimed under the existing furlough scheme, nor does the employee need to have been previously furloughed, to be eligible to claim from November onwards.
- Employees will be eligible for furlough where they have been on the employer's payroll (and an RTI submission made to HMRC) on or before 30 October 2020. There are different calculations for reference pay of those employees that were not originally eligible to claim under the CJRS. All other employees who were included on an RTI submission prior to 19 March 2020 should use the normal reference pay calculations, regardless of whether they were previously furloughed or not.
- The Government contribution will revert to the same level as provided in August i.e. up to 80% of an employee's salary and capped at £2,500 per month. The Government will not cover employer's NIC and pension contributions. The Government has advised that they will review the position in January and, depending on economic circumstances at that time, may look to increase employer contributions from 1 February 2021.
- Submission deadlines will be much shorter, with a requirement to file a claim within 14 days following the end of the preceding month. For example, November claims will need to be submitted by 14 December 2020. The portal is now open for November claims.
- Amendments, where you have not claimed enough in a given period, will need to be made within 28 calendar days following the month to which it relates. For example, the deadline for amendments to a December claim will be 28 January 2021.
- HMRC will publish details of employers using the scheme from December onwards. The information published will be company/LLP names and registration numbers of employers, along with an indicative value of the claim within a banded range. Employees will also be able to see how much has been claimed for them via their personal tax account.
- The guidance has always confirmed that any furlough arrangements should be communicated in writing to the employee. For November claims onwards, however, HMRC has advised that agreements should not be made retrospectively after 13 November 2020.
- CJRS grants have never been able to be used to substitute redundancy payments or PILONs – that rule remains. However, for claim periods up to and including November, employers have been able to claim CJRS grants for employees who are serving a contractual/statutory notice period. For claim periods starting on or after 1 December 2020, employers cannot claim for any days during which a furloughed employee was serving a contractual or statutory notice period.
Some aspects that remain the same as with the existing scheme include:
- All businesses, regardless of size, will be eligible for the furlough scheme.
- Employers will still be able to flexibly furlough their employees so that they can work reduced hours and receive Government funding for their usual hours, not worked, during the claim period.
- Publicly funded organisations should not access the scheme, however, mixed funded businesses may, where their private income has been impacted.
- Employees on any type of contract will be eligible for furlough, including agency workers and those on zero hours contracts.
- Employers can continue to top wages up above 80%, if they wish.
As the scheme will now run until March 2021, the Government has confirmed that they will no longer be paying the job retention bonus in February. They have indicated that an alternative incentive to retain employees will be introduced, at an appropriate point, after the furlough scheme has ended.
Further support
In addition to the extension of the furlough scheme, the Government has also confirmed that mortgage holidays will be extended. Borrowers will be able to apply for a mortgage holiday of up to six months if they have been affected by COVID-19 and have not previously had a mortgage holiday. For those who have already had a mortgage holiday, they will be able to extend this to six months in total without impacting their credit rating. For example, if you have already had a three-month mortgage holiday, you will be able to apply for a further three-month holiday.
As previously announced, business grants of up to £3,000 will be available for businesses legally required to close due to the COVID-19 pandemic. The amount received will depend on the rateable value of the property.