News
End of the Furlough Scheme
The Coronavirus Jobs Retention Scheme finally comes to an end on 30 September 2021.
Introduced at an emergency Friday afternoon press conference on 20 March 2020 by the Chancellor Rishi Sunak – then only five weeks into the job but already seeing his first Budget made irrelevant by the Covid-19 pandemic – it was initially intended to last three months. It was eventually extended on no fewer than six occasions, becoming more flexible and more – or less – generous as lockdowns came and went.
At one point during the first lockdown, almost nine million employees were covered by the scheme and ‘furlough’ became an OED ‘word of the year’. Around 7% of the UK workforce is still on furlough and it remains to be seen what will happen to their jobs, but so far, the effect on unemployment has been less than once feared. Up the end of July the scheme is estimated to have cost £67.4 billion.
Employers should note the following:
- The final deadline for making claims under the scheme is 14 October 2021
- If an overclaim has been made, the error can be declared, and the excess repaid up to 90 days after the money was received
- The grant income is normally taxable in the accounting year in which the corresponding furlough pay was paid, which may be earlier – or occasionally later – than the year in which the grant was received
- Records of the claims and supporting calculations will need to be retained for six years.
On the final point, HM Revenue & Customs are only too aware that they were not able to do much in the way of checking when the priority was getting payments out to employers. The scope for error and outright fraud was clear. The process of checking all the old claims is now well under way and is likely to go on for years.
