Press release

12 May 2020 London, GB

Chris Sanger, EY's head of tax policy, comments on Chancellor's announcement to extend furlough scheme

Many businesses across the UK will have been relieved to hear the Chancellor’s announcement to extend the furlough scheme in its current form until the end of July.

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Adam Holden

EY UK&I Media Relations Senior Manager

Passionate media relations and public relations professional helping to provide insight and clarity to complex business issues. Husband and father to twin boys, and a golden retriever.

Related topics Tax

Many businesses across the UK will have been relieved to hear the Chancellor’s announcement to extend the furlough scheme in its current form until the end of July, and will be watching with interest for more details of the revised scheme that will come into effect in August and run to the end of October this year. This comes at an opportune time as businesses across the nation continue to struggle as a result of the UK and most of the world being in lockdown, so will be grateful of this additional period of financial support.

The flexibility to bring back furloughed workers part-time in Furlough 2.0 will address one of the key constraints imposed in the first version of the scheme. This will be particularly critical for those businesses that expect customer demand to return slowly and hence require flexibility.

Careful readers of the press release will note the Chancellor’s reference to ‘employers being asked to pay a percentage towards the salaries of their furloughed staff’.  This will be one area where care will need to be taken – increasing the proportion that is borne by business with add pressure at the time that businesses are struggling to return to full strength.

At a time when some businesses may be just be starting the long journey to recovery, shifting any significant financial burden back to employers, by too much and too soon, may undermine many of the positive effects the furlough scheme has contributed to date. Careful consideration needs to be given to how much businesses should be expected to share the burden, so not to put unnecessary pressure on their already fragile operations.

Business will be eagerly anticipating the fuller details at the end of this month.