If you’ve just been put on furlough by your employer, don’t panic! In today’s article, we’ll tell you everything you need to know, from the rules of furlough to the tax implications.

A lot of people have been put on furlough in response to the coronavirus outbreak. This is a relatively new idea in the UK jobs market, so we wanted to outline the basics in this post. We’ll go into more detail on specific aspects of furlough in subsequent articles.

We introduced this idea in our Coronavirus Summary Tips article. You can also read more about furlough from the employer’s perspective in How Do You Furlough Employees?

Please also check out our Coronavirus Update if you haven’t already.

What Does It Mean To Be Put On Furlough?

A few weeks ago the government announced the Coronavirus Job Retention Scheme. The idea was to prevent businesses from laying off staff during the worst of the shutdown. Instead, they would designate staff as “furloughed”. In the words of the official HMRC page for employees:

If you and your employer both agree, your employer might be able to keep you on the payroll if they’re unable to operate or have no work for you to do because of coronavirus (COVID-19). This is known as being ‘on furlough’.

For your purposes, it’s a bit like being on official leave/holiday (more details below). You don’t work, and you receive some/all of your income.

Am I Eligible?

Most UK employees are eligible for furlough. Here are the conditions:

  • Your employer must have a UK bank account (this will be the case for most UK companies)
  • You must have been on the employer’s PAYE payroll as of 28th February
  • The type of contract is irrelevant (permanent, temporary, zero hours etc) – all are eligible

It’s worth noting that you and your employer both have to agree to put you on furlough. Your employer can’t force you. But be aware that you risk being made redundant if you refuse. This would still have to be within the normal statutory rules around redundancy.

Furlough lasts a minimum of 3 weeks. At the moment, the scheme is open for 3 months. This may well be extended if the UK needs to keep coronavirus restrictions in place for longer.

How Much Will I Get Paid?

Your employer can claim (per month) from the government the lower of:

  • 80% of your salary
  • £2,500

Whatever they receive, they are have to pay to you. This could mean that you end up with less pay than a normal month. Your employer is allowed to top up the difference, but is not obliged to. This is obviously something you would have to discuss.

Furloughed pay is subject to exactly the same taxes and deductions as normal salaried pay.

If your salary is lower on furlough, and you’re struggling to make ends meet, you might be able to claim some extra benefits. HMRC has a section on its guidance page that you might find helpful.

Final Thoughts

If you are self-employed, you may be able to claim up to 80% of your profits from the government. We’ll have an article up on the blog soon with all the rules and regulations you need to know.

If you have been affected by any of the issues in this post, please do not hesitate to get in touch. We are still open during this period and are here to support you every step of the way.

We are getting more information all the time during the crisis. Please continue to check back on our blog for updates as soon as we have them.

Do you have any questions about personal tax?


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