Guide for government furlough scheme implementation

The government’s furlough scheme allows for 80% of salary up to £2,500 to be reclaimed by the employer per month.

Many companies are now taking advantage of this scheme in order to protect cash and ensure the longevity of the business when social distancing restrictions can be lifted later in the year, says tax and advisory firm Blick Rothenberg

David Hough, a partner at the first said: ‘For many employees this is a far better outcome than losing their job altogether, maintaining a slightly reduced income and in all likelihood being able to return to the same place of work later.

‘However, many families will still feel the impact of this over the next few months whether it be from being placed on furlough, reduced income from the government’s self-employed income support scheme or loss of income altogether.

He suggested that: ‘There are some things that many people can do to help manage over the next few months.

Remove your salary sacrifice deductions

  • Employees contribute into a pension pot through salary sacrifice deductions.
  • Save for your retirement, and the government encourages this by making such deductions tax free.
  • Removing or reducing these payments will increase your take home pay in the next few months.
  • Top up your pension later in the year when you have more certainty over your income.

Review your direct debits

  • Review your direct debits with your family to check you aren’t paying for things that you don’t really need.
  • Gym memberships cannot be used at the moment and should be cancelled or deferred.
  • Families should make sure they are not paying for multiple streaming services, or sports packages for which there is no live action.
  • Companies like Spotify offer family memberships which will save money if a household has more than one account holder.

Defer some payments

  • Payment deferrals, including mortgage deferrals and other loan holidays, should be agreed with the other party but this approach should mean that you can continue pay for crucial items whilst catching up on other payments later in the year.
  • Many of us pay for our utilities on a monthly basis which is helpful because it means we can predict our monthly spend.
  • However, you might have built up a credit for gas and electric or contributing more than you will actually use in the warmer months coming up.
  • There is an opportunity to schedule these costs differently to help manage through this more challenging time.

Prepare a six-month budget

  • If you feel that your available cash is going to be less than normal for the next few months you should aim to make a six-month plan and budget your income and expenses over that period.
  • If restrictions are lifted in the early summer many people will gradually see their incomes return to a normalised level in months four to six.
  • You will find it helpful to see that your payments can be managed over a longer period and it will also highlight if there are items you are spending money on that you may need to cut back on at early stage.


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