Furlough has been somewhat of a saving grace to both employers and employees since the beginning of the pandemic. Now as coronavirus cases begin to ease, with the help of the nationwide vaccination programme, the UK government has announced changes to the scheme which come into effect July 1st, 2021, with subsequent changes also from August 1st, 2021.

The current scheme: The Furlough funds that are currently available to businesses in the UK allow for a grant of up to 80% to cover an employees pay, up to a maximum of £2,500 per month. Employers can choose to top up to 100% if they wish.

Flexible Furlough is also an option. An employee will work only some hours, which their employer will pay them for in full, the grant will cover 80% of pay for the employees unworked hours subject to a cap of £2,500.

What will change for employers as of 1st July 2021?
From the 1st of July 2021, the Government’s grant will reduce to pay 70% of a Furloughed employees wages instead of 80%. However, monthly pay for Furloughed staff must remain at 80%, (at a cap of £2,500) so employers must contribute 10%, up to £312.50 each month.

What will change for employers as of 1st August 2021? From 1 August 2021 until the scheme ends, the Government’s grant will reduce a final time to 60% of Furloughed employees’ wages for their unworked hours (capped at £1,875 per month).

With the 80% pay still required for employees, the employer’s contributions will increase to 20% (up to £625.)

So from July until September employers will need to plan to be able to cover the cost of 10% – 20% of their employees’ wages, national insurance and pension contributions.

If you would like any assistance as we move into this next phase, the Accountancy team at Designated would be more than happy to work with you to ensure you are meeting new business requirements and responsibilities as an employer.

Our Head of Accountancy services Vicky, would be more than happy to discuss this in more detail with you, get in touch: vicky.garbett@designatedgroup.com.