Winter Economy Plan No 4 extends furlough to March 2021

5th November 2020

The Chancellor has extended the furlough scheme to March 2021 to soften the impact for businesses of the second lockdown, building on his previous announcements. The Job Retention Bonus payable in February 2021 has been scrapped.

It comes on top of an earlier furlough extension for November and the Bank of England pumping another £150 billion into the economy.

As the Treasury attempts to come up with a plan that lasts more than four weeks, the Chancellor is giving the UK economy a further lifeline in lockdown.

New announcements

  • The furlough scheme will not be extended for one month – it will be extended until the end of March 2021. Employees will receive 80% of their usual salary for hours not worked, up to £2,500 a month. Employers will pay the NICs and workplace pensions.
  • The Self-Employed Income Support Scheme grant covering November to January will now be calculated at 80% of average trading profits, up to a maximum of £7,500.
  • The Jobs Retention Bonus (JRB) will not be paid in February and the government will redeploy a retention incentive at the appropriate time. The purpose of the JRB was to encourage employers to keep people in work until the end of January. However, as the furlough scheme is being extended to the end of March 2021, the policy intent of the JRB falls away. 

The furlough policy will be reviewed in January “to decide whether economic circumstances are improving enough to ask employers to contribute more”.

More details are contained in a factsheet, and a separate policy paper for the furlough scheme provides more details on some immediate action required.

Employers concerned about how to implement changes to working agreements retrospectively can be reassured that as long as they are consistent with employment law, furlough agreements made retrospectively that have effect from 1 November 2020 can support a furlough grant claim. However, these retrospective agreements must be in place on or before 13 November 2020 to be relied on for this purpose.

Further details

FURLOUGH SCHEME

  • Eligible employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month.
  • Employer flexibility: Businesses will have flexibility to use the scheme for employees for any amount of time and shift pattern, including furloughing them full-time.
  • Employer contribution: There will be NO employer contribution to wages for hours not worked. Employers will only be asked to cover National Insurance and Employer pension contributions for hours not worked. For an average claim, this accounts for just 5% of total employment costs or £70 per employee per month. The policy will be reviewed in January to decide whether economic circumstances are improving enough to ask employers to contribute more.
  • Payment: The extended CJRS will operate as the previous Scheme did, with businesses being able to claim either shortly before, during or after running payroll. Claims can be made from 8am Wednesday 11 November. Claims made for November must be submitted to HMRC by no-later than 14 December 2020. Claims relating to each subsequent month should be submitted by day 14 of the following month, to ensure prompt claims following the end of the month which is the subject of the claim.
  • Employee eligibility: Neither the employer nor the employee needs to have previously claimed or have been claimed for under CJRS to make a claim under the extended CJRS (if other eligibility criteria are met). An employer can claim for employees who were employed and on their PAYE payroll on 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.
  • Employees that are re-employed: Employees that were employed and on the payroll on 23 September 2020 (the day before the Job Support Scheme announcement) who were made redundant or stopped working afterwards can be re-employed and claimed for. The employer must have made an RTI submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees.
  • HMRC will publish details of employers who make claims from December onwards under the extended scheme. Full details of this will be within the detailed guidance to be published next week.

Previous Winter Plan announcements

Winter Economy Plan Part 3 - the lockdown sequel (2 November)

  • An extension of furlough until 2 December, with employees receiving 80% of their pay.
  • A more generous third grant for the self-employed claimable from 30 November
  • Extra welfare support for the self-employed until April 2021
  • Cash grants for businesses which are closed
  • Business Loan Schemes extended to 31 January 2021
  • A top up facility for Bounce Back Loans
  • Extended mortgage and consumer credit payment holidays

Winter Economy Plan Part 2 (22 October)

  • A more generous Job Support Scheme
  • More generous business grants
  • More generous Self-Employed Income Support Scheme

Winter Economy Plan Part 1 (24 September)

  • New Job Support Scheme unveiled to replace furlough
  • Two new grants under the Self-Employed Income Support Scheme
  • Extension of the temporary VAT rate cut
  • More time to pay deferred VAT and income tax
  • Flexibility over repaying government-backed loans

Check out our Business after COVID-19: Transition Knowledge Hub for more guidance and advice on managing the pandemic.

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