The Coronavirus Job Retention Scheme, commonly called the Furlough scheme, closes at the end of October and is being replaced with a new arrangement.
Under the Furlough scheme employees receive 80% of their salary and do not have to do any work, although they can work part time if the company wants. In October 60% of the salary is paid by the Government, 20% by the company and the employee receives the 80%.
The replacement arrangement, which will operate from 1st November 2020 for 6 months, requires that the employee works at least 33% of their normal time and is paid for this by the company. The government will pay for 1/3 of the unworked time, the company must pay another 1/3, and the employee is not paid for the rest.
For example, if an employee normally works 5 days per week, and actually work 2 days, then the company pays for the 2 days worked, plus 1 day not worked, and the government pays for 1 more day, taking the pay received by the employee up to 4 days, equivalent to 80% of their normal pay as before.
The difference is that the government support only applies if the employee actually works and is paid by the company for some part time working.
Delaying tax payments
Companies were able to delay paying any VAT due between March and June 2020 until 31st March 2021. All businesses can now apply to delay this payment even further by making 11 interest free payments up to the end of March 2022.
Extending the guarantee for government loans
The government has given the banks lending under the smaller (GBP 50000) ) Bounce Back loan scheme a guarantee of 100% of the loan amount valid for 6 years, and for loans above that amount a guarantee of 80%, for 6 years also.
The period of the guarantee is extended to 10 year, meaning that companies have much longer to pay these loans back.
If you wish to discuss further, EBS Team will be happy to assist.