A client is expecting that there will be changes to the Coronavirus Job Retention Scheme come September but is unsure exactly how this will impact their business. What are the changes coming in September, how much will the client be able to claim from the Government and are there any changes in October?

For many employers, August would have been the start of a very important period of post-coronavirus economic recovery. However, as we step into September, employers like your client need to be aware of the details pertaining to some upcoming changes to the Job Retention Scheme.

The Coronavirus Job Retention Scheme (furlough scheme) was put in place to support employers who were not able to operate as normal due to the pandemic. Since 20th March 2020 when the furlough scheme came into effect, 1.16 million employers have furloughed all, or part, of their workforce and claimed 80% of employee wage costs, to a maximum of £2,500 per employee per month.

Until 1st August, employers had been able to claim the portion of the employee’s wages, together with employee National Insurance Contributions and employer pension contributions. Even though the furlough scheme does not end until 31st October 2020, firms have begun contributing to furloughed workers’ wages, which will continue in stages till the scheme ends.

The first phase of contributions, which began on 1st August 2020, has required employers to pay employee National Insurance Contributions and employer’s pension contributions of furloughed workers’ wage costs in relation to the hours that the worker does not work.

Your client should be aware that further contributions from employers will be needed from September. Although the 80% grant paid by the Government has continued at a cap of £2,500 until the end of August, since 1st September, the Government’s grant has decreased to only cover 70% of furloughed employees’ wages at a decreased cap of £2,187.50.

Further changes will occur in October when the Government will only cover 60% of furloughed employee wages at a cap of £1,875.

With this in mind, your client will need to be aware that now that government grants have begun to decrease, they must top this up to ensure that furloughed employees still receive 80% of their wages up to £2,500. For example, a 70% grant up to £2,187.50 will attract a 10% top up from your client to a maximum of £312.50.

Furthermore, another important detail that your client should keep note of is that they will need to continue paying employee National Insurance and employer pension contributions for not only August but September and October as well.

Lastly, the furlough scheme may be coming to an end on 31 October, but your client still needs to make sure that they are keeping up to date with its changing structure and ensuring that the pay that their furloughed staff receive accurately reflect the intentions of the scheme, as explored above.

In association with Croner Taxwise

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