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The 7th treasury direction and further amendments to the furlough scheme

Posted Thursday 6th May 2021

Further changes to the Coronavirus Job Retention Scheme (furlough) were announced in HMRC’s seventh treasury direction, which took effect from 1 May 2021. The furlough scheme will run until 30 September 2021 and whilst it remains largely unchanged, there are several important considerations for employers claiming under the scheme.

Employers can continue to claim provided that a PAYE submission for the relevant employee was made in the period 20 March 2020 to 2 March 2021. Employers also cannot have terminated the employment and notified HMRC that this has occurred. Claims may be made for employees who transferred to the employer after 1 January 2021 (for example, through TUPE) provided that all further requirements are met.

Employers should look to the furloughed employee’s salary for the same month in 2019 when calculating their claim; for example, a July 2021 claim should consider their July 2019 pay. This takes into account that many individuals may have also been claimed for under the scheme throughout 2020, and a relevant reference salary during this period may be inaccurate.

HMRC’s contribution to the furloughed employee’s wages, which is currently 80% or £2500 per month, will reduce to 70% or £2187.50 per month on 1 July 2021. This will further reduce to 60% or £1875 per month on 1 August 2021 as the scheme begins to wind down. Employers will be required to make up the difference to ensure that furloughed employees are still receiving 80% of their wages, or the £2500 cap.

All information set out above is to our knowledge accurate at the time of publication, however this does not constitute legal advice. If you have specific queries, please contact us on 020 7580 5721.


This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.


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