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Employers to face tax and pension furlough cost demands

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Companies could be asked to pay more in tax and employer pension contributions to keep staff on the government’s emergency wage support scheme.

Ministers are said to be considering forcing businesses that wish to continue using the state furlough programme to take responsibility for national insurance and pension payments if they wish to keep using it beyond the end of July.

The government is weighing up its options for how it can ask the private sector to share the cost burden of underwriting the salaries of furloughed staff.

The government has been paying 80 per cent of the wages of about eight million workers. The policy has cost more than £11 billion and the bill is expected to reach £50 billion by the end of July.

From August companies will be asked to contribute to the costs of the scheme but how much they will be asked to pay has not been announced. Employees have been promised they will continue to receive 80 per cent of their normal pay, up to a maximum of £2,500 a month.

The furlough programme was established in an attempt to convince businesses to keep employees on their books for when the economy restarts.

Employers’ groups have warned that many companies have had little or no revenues during the lockdown and that asking them to contribute significantly to the costs of the scheme would force them to make more redundancies at the end of July.

Bloomberg reported that options under consideration include making businesses pay all or some of the employer pension and national insurance contributions that the government has been picking up on their behalf.

It is understood that another approach being discussed is requiring employers to contribute 20 per cent of wages, with the government covering 60 per cent. A person familiar with the discussions, who asked not to be identified, said the thinking behind this was that it would allow the Treasury to say everyone is sharing the cost of the crisis.

Rishi Sunak, the chancellor, has said the government would continue to shoulder the “lion’s share” of the cost of the furlough scheme. The Treasury declined to comment.



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