Budget 2021: Extension to furlough confirmed


05 March 2021

As had been widely anticipated, the Chancellor has confirmed the extension of the Government’s Coronavirus Job Retention Scheme (CJRS) to the end of September 2021. It had otherwise been due to finish at the end of April 2021.

The Government will continue to pay 80% of wages for hours not worked by staff who are furloughed, up to the existing cap of £2,500 per month, until the end of June 2021. After that, the scheme will taper off, in a similar way to the arrangements that applied last year (for August, September and October 2020).

Changes to the Scheme from 1 July

From 1 July 2021, employers will be able to claim grants of up to 70% of wages for furloughed employees, up to a cap of £2,187.50 per month.

From 1 August to 30 September, employers will be able to claim grants of up to 60% of wages for furloughed employees, up to a cap of £1,875 per month.

Employers will be required to top up pay for furloughed staff from 1 July until the scheme comes to an end, so that they receive a minimum of 80% of their usual pay for hours not worked. They must also continue to pay employer NICs and employer auto-enrolment pension contributions in respect of furlough pay for hours not worked.

 

May
and June

July

August
and September

CJRS contribution to wages (per month)

80% up to £2,500

70% up to £2,187.50

60% up to £1,875

Employer contribution to wages (per month)

-

10% up to £312.50

20% up to £625

TOTAL

80% up to £2,500

80% up to £2,500

80% up to £2,500

 

Eligibility

From 1 May 2021, employers will be able to claim in respect of eligible employees provided they were employed (and on a PAYE Real Time Information (RTI) submission to HMRC) on or before 2 March 2021. Employees do not have to have been previously furloughed under the scheme.

The HMRC Policy Paper has been revised to reflect the extension of the CJRS to 30 September 2021.

Author

Liz Stevens

Professional Support Lawyer

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