Furlough Scheme has been extended until the end of April 2021
Further Extension to the Furlough Scheme
The Furlough Scheme has been extended until the end of April 2021, means the UK government will continue to pay up to 80% of the wages of workers who have been furloughed. The furlough scheme is officially known as the Coronavirus Job Retention Scheme (CJRS). The government-backed business loan schemes have also been extended until the end of March 2021.
The roll-out of vaccinations has provided hope for businesses struggling to get through a winter of stop-start measures to control the virus. However, it is likely to be several months before enough of the population has been covered to allow for anything like business as usual.
Who is Eligible?
The eligibility criteria for the UK-wide scheme remains unchanged, which is that an employee needs to have been on an employer’s payroll on or before 30th October 2020. The government will continue to pay up to 80% of the salary of employees for hours not worked, which will be capped at £2,500 a month. Employers will only be required to pay the wages, National Insurance (NI) contributions and pension contributions for hours worked, as well as NI contributions and pension contributions for hours not worked.
Under current rules, employers are still able to choose to top up employee wages above the scheme grant at their own expense, but they do not have to. Workers also get their usual full salary for any hours they do work.
At the moment, employees can be on any type of contract and still get furloughed – meaning you could work part-time or as a contract worker.
What Impact will this have on UK Businesses?
The furlough scheme was due to end in March 2021 and the extension of the furlough scheme to the end of April 2021 will help some firms, but only to pay wages. So far, the furlough scheme has supported 9.6 million jobs across the UK, with more than one million businesses using it. Firms also urgently need further cash to pay rent, suppliers and energy bills. The Bank of England estimated that the private sector as a whole has £180bn less cash coming in this financial year than it needs to cover costs.
Extending the availability of the government-backed business loan schemes by two months may help ease that huge squeeze on cash flow. The National Audit Office has estimated that up to £26bn of the £43bn lent in Bounce Back Loans may not be paid back.
There is now growing pressure on the government to offer much more in grants, rather than loans to put a stop to the ruining of thousands of normally healthy businesses.
The Business Loan Schemes Available
- Bounce Back Loan Scheme (BBLS)
- Coronavirus Business Interruption Loan Scheme (CBILS)
- Coronavirus Large Business Interruption Loan Scheme (CLBILS)
These schemes, which have provided over £68billion in guaranteed loans, were due to close at the end of January 2021, but have now been extended to the end of March 2021.
