The furlough scheme (CJRS), which protected millions of jobs during the pandemic is fast approaching its final closing stages. HMRC has updated the guidance covering the Coronavirus Job Retention Scheme (CJRS) to include a section on what happens when the scheme comes to a close. 

 

If you haven't already, then now is the time to ensure that your business has put all of the necessary procedures in place to ensure that you make the right decisions when it comes to bringing staff back into the business. 

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What happens if your employees are still on furlough?

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When the scheme closes at the end of September, you must decide to either:

• bring your employees back to work on their agreed terms and conditions;

• terminate their employment (normal redundancy rules apply to furloughed employees); and

• agree with employees any changes to terms and conditions of employment (rules for contractual changes apply to furloughed employees).

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Claims for furlough days in August must be made by 14th September 2021 and claims for September must be made by 14th October 2021, with any amends made by 28th October. 

 

For claims relating to August and September 2021, the government will pay 60% of wages up to a maximum cap of £1,875 for the hours your employee is on furlough.

 

Claims can be made directly to HMRC or through your accountants. Once a claim has been submitted, you will be given a claim reference number. HMRC will check that the claim is correct and pay the claim amount by BACs into the employer’s bank account within six working days.

 

Employer National Insurance contributions (NICs) are also payable on the full amount paid to your employees.

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Remember - When you are making decisions about how and when to end furlough arrangements, equality and discrimination laws will apply in the usual way.

 

Payments received under the scheme are to offset the deductible revenue costs of employees. They must be included as income when calculating taxable profits for income tax and corporation tax purposes.

 

You can deduct employment costs as normal when calculating taxable profits for income tax and corporation tax purposes.

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Please get in touch with us if you require any accounting support with the wrap up of the CJRS within your business.

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How did furlough work?

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• Furlough was introduced in spring 2020, to stop people being laid off by their employers during lockdown. It applied across the UK.

• The government initially paid 80% of the wages of people who couldn't work, or whose employers could no longer afford to pay them - up to a monthly limit of £2,500.

• In July 2021 employers were required to pay 10% of salaries - with the government's contribution falling to 70%.

• In August and September, the government's contribution reduced further: it now pays 60% and employers pay 20%.

      Employers also have to pay staff pension and National Insurance contributions

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www.orleighfox.co.uk 

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Disclaimer: The information contained in this article is intended to be a guide and is not intended to be exhaustive. No action should be taken on the basis of information contained herein without obtaining the necessary advice. No responsibility can be accepted for loss or damages occasioned to any person acting or refraining from acting as a result of the material contained herein.

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