Covid-19 – Furlough Ambiguity

There is a lot of confusion at the minute in relation to the interpretation of the furlough rules, we have been discussing this with other firms of accountants, looking at lawyer and HR team opinions and re-reading the guidance on numerous occasions and discussing the ambiguity therein as it can be quite contradictory.

The initial and present understanding is that if 80% of the salaries are paid to furlough workers that this will be fully refunded (up to the £2500 costs), however this could also be interpreted that they are only going to refund 80% of whatever is paid.

It is imperative that businesses know this situation as some businesses will have to consider redundancies sooner if they are to cover 20% of this cost and/or they need to know if they can reduce the payment to below 80% for furloughed workers if they are going to have to fund the other 20%.

We will not know the exact situation until more guidance, legislation or actual procedures become available but as soon as we have some clarity on this we will let you know.

We do see the Coronavirus bill drafted is proposing some help for the self employed linked to the lower of 80% of their net monthly earnings averaged over the last three years and £2917.