Furlough Claim Changes from August
Furlough claims are changing from August as you can no longer claim for employer’s National Insurance Contributions or pension payments, so the amount that can be claimed is reducing.
The employer continues to pay the NICs and pension contributions, as well as the 80% furlough pay which is still subject to the £2500 cap per month, but the amount of support from the government is reduced.
One thing to bear in mind when calculating costs is that the reduction from 80% to 70% will be slighter greater than 10%, as it is 10% of the greater amount of the reference pay, not the furlough pay. The 80% furlough payment still needs to go to the employee, but the employer will be making up the shortfall.
Example Furlough Claim
Some example calculations for August, September and October are as below. A simple total gross payment is taken, and no employer’s NICs or pension payments have been added.
|Total Furlough Payments||Grant Calculation||Total Grant|
|August||£10 000||10 000 x 1||£10 000|
|September||£10 000||(10 000 / 8) x 7||£8 750|
|October||£10 000||(10 000 / 8) x 6||£7 500|
The calculation is far simpler than in previous months, but then there is less available to claim. The total reference payment used in the above would have been £12 500.
What this means in practical terms
Continue to use the furlough pay calculation as previously and put the 80% through the payroll for furlough pay. If you are using flexible furlough the payroll calculation remains the same, but again when the claim is made the total will be reduced in September and October. When you come to make the claim use calculations as above, in September divide the total furlough payment by eight and multiply by seven, and in October divide by eight and multiple by six. Remember to keep records!