The most recent update to the furlough scheme announced last week makes a number of changes. Some of them are beneficial for organisations like owner managed businesses and small charities but there are some problems too.
Because of the deadline for new applications being very soon it’s now urgent to review how this might work for you.
Ultimately the scheme could help you to keep staff on but it is worth looking at the detail, whether or not you’ve been using it already.
- Part furloughing of staff: This is a change that small businesses and charities have been particularly calling for so it is welcome that this has been brought forward to 1st July. It will mean that small teams can share the ‘burden’ – no more having one person off and the other carrying the remaining load, and it will mean that you can claim some of the furlough scheme realistically where there is 10%, 20%, or even 50% of the usual workload available.
- Closure to new staff from end of June: This change effectively means that unless you have furloughed someone by 10th June you cannot later furlough them. This is a real problem for owner-managed businesses which have not been able to use the furlough scheme because of the need to ‘tick over’ to save their business in the long term. It means that the hope that many had that they could reflect that they are only able to work one or two days a week and claim at least something on the furlough scheme is possilby not realistic – although look at your own circumstances and see if you could furlough the director or manager for 3 weeks from 10th June.
- Tapering off of support Many responsible businesses and charities have already been topping up the furlough scheme to continue to pay staff full or almost full wages. As expected the scheme will start to require further financial contributions from employers before ending in October. In some sectors, especially hospitality, this could cause particular problems while in others it may be reasonable.
- Still little help for #Forgottenltd –businesses who primarily or entirely pay their directors through dividends are still unable to claim and there are also problems for businesses that do operate PAYE but only pay intermittently dependent on cash flow – for the later look carefully though at the possible ways of calculating a “usual wage”
- No help for recently self employed or business starters If you became self employed more recently or started a Ltd company business that had not yet been able to pay you a wage due to getting started you still can’t get help
The furlough scheme is relatively flexible but it doesn’t fit all organisations and the smaller you are the more likely it is that your organisation will not be able to make full use of it. However, if you want to do so and you haven’t yet it really is now pretty urgent, and if you have used it but you aren’t completely sure how you want to operate it in the future again, you should review it now. It could be worth several thousand pounds, and be the difference between having enough cash flow to be ready to bounce back and having to lose staff or close up altogether.
We have a spreadsheet template we have used with our clients to help with gathering the info needed to claim furlough and are updating it for part furloughing. If you’d like us to share a copy please email rachel@holybrook.com or alternatively you can sign up to our newsletter