Chancellor Rishi Sunak has announced that the furlough scheme will be extended into Spring next year.
The Coronavirus Job Retention Scheme (CJRS) will now run until the end of March 2021, with employees receiving 80 per cent of their current salary for hours not worked.
Similarly, support for millions more workers through the Self-Employment Income Support Scheme (SEISS) will be increased, with the third grant covering November to January calculated at 80 per cent of average trading profits, up to a maximum of £7,500.
Under the CJRS scheme, 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 five per cent of total employment costs, or £70 per employee per month.
The government says that the CJRS extension will be reviewed in January to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions.
The extension follows the start of a second month-long national lockdown in England which is set to end on December 2. It has been imposed in an effort to cut the rate of Covid-19 infections.
Announcing this latest CJRS extension, Mr Sunak said: “I’ve always said I would do whatever it takes to protect jobs and livelihoods across the UK – and that has meant adapting our support as the path of the virus has changed.
“It’s clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support.
“Extending furlough and increasing our support for the self-employed will protect millions of jobs and give people and businesses the certainty they need over what will be a difficult winter.”
Businesses will have flexibility to use the scheme for employees for any amount of time and shift pattern, including furloughing them full-time.
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 November 11. Claims made for November must be submitted to HMRC by no-later than December 14.
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.
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 scheme – if other eligibility criteria are met.
An employer can claim for employees who were employed and on their PAYE payroll on October 30, 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between March 20, 2020 and October 30, 2020, notifying a payment of earnings for that employee.
Employees that were employed and on the payroll on September 23, 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 March 20, 2020 to September 23, 2020, notifying a payment of earnings for those employees.
The government has also announced:
• cash grants of up to £3,000 per month for businesses which are closed worth more than £1 billion every month
• £1.1 billion is being given to local authorities, distributed on the basis of £20 per head, for one-off payments to enable them to support businesses more broadly
• plans to extend existing government-backed loan schemes and the Future Fund to the end of January, and an ability to top-up Bounce Back Loans
• an extension to the mortgage payment holiday for homeowners
• up to £500 million of funding for councils to support the local public health response
The new Job Support Scheme (JSS), which was scheduled to start on November 1, has been postponed.