The UK government’s Job Retention Scheme, which pays towards the wages of staff who are furloughed during Coronavirus, has changed as of 1st August 2020.
The government will continue to pay 80% of wages up to a cap of £2,500 for the hours that an employee is furloughed. However, as of 1 August, employers have 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 will come into effect in September, when the government contribution to wages will to fall to 70% up to a cap of £2,187.50 for the hours the employee is on furlough.
Employers will be required to pay employer NICs and pension contributions and top-up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500. This means employers will need to pay £312.50 to top-up wages to £2,500.
In October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay employer NICs and pension contributions and top-up employees’ wages to ensure they receive 80% of their wages up to £2,500. The employer contribution to wages at this point will be £625.
The scheme is scheduled to close on 31 October.
If you have any questions about any of the above, please get in touch with us.