The Government has announced changes to the furlough scheme giving businesses a lifeline to October.
The changes will see employers from:
- 1 July allowed to bring back furloughed staff on a part time basis;
- 1 August required to make NICS and pension contributions;
- 1 September required to contribute 10% of wages; and
- 1 October required to contribute 20% of wages.
Andrew Tate, Partner and Head of Restructuring at accountants, business and financial advisers Kreston Reeves comments:
"Businesses will be relieved to see a generous phasing is out of the furlough scheme. We had expected the Chancellor to make much deeper changes, possibly requiring businesses to contribute up to 50% of wages to furloughed staff.
"The requirement to pay NICS and pension contributions will for most businesses mean contributing approximately 5% of their wage bill, increasing to 14% in 1 September and 23% on 1 October.
"This may be too much for some businesses and they will either make redundancies or collapse. But for many businesses, this window gives them the time to plan and prepare - the cliff edge of a sudden end to furlough has been avoided.
"However, a word of caution. This level of support to businesses is not sustainable indefinitely and we expect to see further and deeper changes to furlough in the Autumn. Businesses should use this window to 1 October to prepare for those changes and ensure they are on the strongest possible financial footing."