The budget 2021: Rishi Sunak announces extension to the furlough scheme

The budget 2021: Rishi Sunak announces extension to the furlough scheme

The budget 2021: Rishi Sunak announces extension to the furlough scheme

In his speech to the House of Commons on 3 March 2021, Rishi Sunak announced that the Coronavirus Job Retention Scheme (CJRS) is to be extended again until 30 September 2021. The CJRS commenced in March 2020, so the scheme will now cover a period of 18 months in total. Various government guidance documents have been amended following this announcement. These can be found here. This summary is based on the amendments to these guidance notes as of 3 March 2021.

Tapering government support

With the government’s roadmap to easing lockdown indicating that many businesses will continue to be impacted in the coming months, the government will continue to pay 80% of employees’ wages for the hours they cannot work until 30 June 2021, up to £2,500. However, with the expectation that the economy will gradually begin to reopen, the level of government support will taper down from 1 July 2021, with the level of grant being reduced each month and employers being expected to contribute towards the cost of furloughed employees’ wages. From 1 July 2021, the government will pay 70% and employers will contribute 10% towards the employee’s furlough pay. The grant will decrease to 60% in August and September, with employers picking up the extra 20%. Employers will continue to pay all employers’ National Insurance and pension contributions.

Employers can continue to choose to top up their employees’ wages above the 80% total and £2,500 cap for the hours not worked, at their own expense.

New information on claim periods from 1 May 2021

For periods starting on or after 1 May 2021, the guidance states that employers will be able to claim a grant under the CJRS in respect of employees who have not previously been furloughed, provided that the employee was employed and on the employer’s payroll on 2 March 2021 (and provided the employer had made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying HMRC of a payment of earnings for that employee).

Amendments for TUPE transfers

New wording has been added to the guidance on TUPE transfers to deal with claim periods starting on or after 1 May 2021. The guidance states that a new employer can make a claim under the CJRS for employees that have transferred to it pursuant to TUPE on or after 1 January 2021. This applies only where those employees were employed by either their old employer or new employer on or before 2 March 2021 (and provided that that employer had made a PAYE RTI submission between 20 March 2020 and 2 March 2021, notifying HMRC of a payment of earnings for that employee).

Further guidance and an amended Treasury Direction may be forthcoming covering the new period of the CJSR from 1 May 2021 onwards.

Contact our experts for further advice

Search our site