Furlough Scheme And Loans Extension – All You Need To Know

The Chancellor of the Exchequer, Rishi Sunak, has announced that the Coronavirus Job Retention Scheme (CJRS), aka theFurlough scheme, has been extended until the end of April 2021. This will give businesses and employees across the UK certainty and a much needed boost for survival ahead of lockdown lifting.

Extending government-backed loan schemes will give companies across the UK the finance they need to support, protect and create jobs as the economy recovers from the pandemic. The Chancellor stated he would review the employer contribution element of the CJRS in January, but decided to bring this forward to allow businesses to plan ahead for the remainder of the winter and the new year. The government will continue to pay 80% of the salary of employees for hours not worked until the end of April. Employers will only be required to pay wages, National Insurance Contributions (NICs) and pensions for hours worked; as well as NICs and pensions for hours not worked.

The eligibility criteria for the UK-wide scheme will remain unchanged and will continue to apply to all Devolved Administrations. All employers with a UK, Isle of Man or Channel Island bank account and UK PAYE schemes can claim the grant. You do not need to have previously claimed for an employee before the 30th October 2020 in order to apply.

In a move to ensure firms can access the support they need through continuing economic disruption, Rishi Sunak also confirmed he would be extending the government-guaranteed Covid-19 business loan schemes until the end of March. These include the Bounce Back Loan Scheme, the Coronavirus Business Interruption Loan Scheme, and the Coronavirus Large Business Interruption Loan Scheme. These had been due to expire at the end of January 2021. The government has already announced that more support will be available beyond March, through a successor loan scheme. More details of the scheme will be announced in due course, with the government providing a further update on wider COVID-19 economic support at the UK Budget on 3rd March 2021.

With the extension of the furlough scheme and the added bonus of the loans that are available, it is with hope that this will save further jobs. The latest Bank of England forecast believes unemployment will peak at 7.75% during the middle of the year.!

We hope this has outlined and informed you of the CJRS details and whether or not you will be affected. If you require any more information on the Furlough scheme or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.