The UK government’s Job Retention Scheme, which pays towards the wages of staff who are furloughed during Coronavirus, changed as of 1st August 2020.
The government continued to pay 80% of wages up to a cap of £2,500 for the hours that an employee was furloughed. However, as of 1 August, employers had to pay Employer National Insurance Contributions (NICs) and pension contributions.
Employees are required to pay tax, NICs and pension contributions on the money they receive through the furlough scheme.
Further changes to the scheme came into effect in September, when the government contribution to wages fell to 70% (up to a cap of £2,187.50) for the hours an employee was on furlough.
Employers were required to pay employer NICs and pension contributions and top-up employees’ wages to ensure they received 80% of their wages up to a cap of £2,500. This means employers needed to pay £312.50 to top-up wages to £2,500.
In October, the government paid 60% of wages up to a cap of £1,875 for the hours the employee was on furlough. Employers paid employer NICs and pension contributions and top-up employees’ wages to ensure they received 80% of their wages up to £2,500. The employer contribution to wages at this point were £625.
If you have any questions about any of the above, please get in touch with us.