As outlined in the Budget 2021, the level of Government support available to businesses for furloughed employees via the Coronavirus Job Retention Scheme (‘CJRS’) is set to reduce from 1 July 2021.
From this date the Government will reduce its contribution from 80% (up to a cap of £2,500) to 70% (up to a cap of £2,187.50).
This will continue to reduce gradually throughout the summer, narrowing to 60% in August and September (up to £1,875), before ending entirely in September.
Changes to CJRS and the impact on employers
In keeping with previous furlough schemes, furloughed employees will remain unaffected – they will continue to receive 80% of their wages, capped at £2,500 until the scheme ends. Employers, however, will be required to contribute the initial 10% shortfall of furlough wages, rising to 20% in August and September. Employers still have the option to top up workers’ wages above the 80% minimum, although that is at the employer’s discretion.
Employers will need to continue to fund employer NICs and mandatory minimum automatic enrolment pension contributions.
A comprehensive summary of the key information is detailed below:
(Furlough wages for hours not worked)
|80% up to £2,500||80% up to £2,500||70% up to £2,187.50||60% up to £1,875||60% up to £1,875|
(Employer National Insurance contributions + pension contributions)
|Employer contribution (Furlough wages for hours not worked)||No||No||10% up to £312.50||20% up to £625||20% up to £625|
|For hours not worked employee receives furlough wages||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month||80% up to £2,500 per month|
Phasing out the Coronavirus Job Retention Scheme
Despite a delay in lifting the last of the lockdown regulations, forcing some industries to remain closed until at least 19 July 2021, the Government intends to press ahead with its plans to gradually withdraw the CJRS scheme, phasing it out incrementally from 1 July through to 30 September 2021. At present, there is no indication that the scheme will be extended beyond this date.
Getting the help, you need
If you would like further details on how changes to the CJRS may impact your business, please get in touch with our dedicated Employment Tax team.