Furlough has been extended several times as the UK finds itself in the third lockdown in less than a year, enabling businesses to retain staff. Under the current scheme the Government pays up to 80 percent of wages up to £2,500 a month. Now Chancellor of the Exchequer Rishi Sunak is gearing up to give his March 2021 budget – but could he extend furlough a fifth time?
This was originally supposed to end last October, however, is now in place until April 30, 2021.
Under the scheme, if businesses cannot maintain their workforce because operations have been affected by coronavirus, they can furlough employees.
This means applying for a grant to cover a portion of employees usual monthly wage costs.
Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.
There seems to be no end to lockdown in sight, as the death rate from coronavirus continues to climb.
Mayor of London Sadiq Khan has called the furlough scheme to be extended as well as the continuation of business rates holiday past March.
Mr Khan said: “Current plans to end the business rates holiday in March and then the furlough scheme in April create a huge financial cliff edge for employers.”
“Without the certainty that support will remain in place for as long as it is needed, many more businesses could decide to cut their losses and close permanently now.”
Currently, under the lockdown rules all non-essential businesses in the UK must close to customers – with only takeaway services permitted.
The hospitality sector has been granted a reprieve in business rates and a reduction in VAT on food and soft drinks from 20 percent to five percent.
However, both measures are due to expire at the end of March.
Whether Mr Sunak will extend these, and the furlough scheme is yet to be confirmed by the Government.