As expected, Rishi Sunak has announced changes to the furlough scheme affecting small business.

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  • August: small businesses will be expected to cover national insurance and pension contributions of workers on the Coranvirus Job Retention Scheme. For the average claim, this represents 5 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed
  • September: businesses will have to cover 10 per cent of the wage costs of furloughed workers on top of NI and pension contributions. For the average claim, this represents 14 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • October: businesses will have to cover 20 per cent of furloughed workers wage costs plus NI and pension contributions. For the average claim, this represents 23 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed

Previously, it was assumed that small business owners would only be on the hook for National Insurance contributions, not pensions as well.

>See also: Small businesses will have to cover a quarter of cost of furlough

In the heavily trailed move, chancellor Sunak will allow furloughed workers to come back on July 1 and work part time. The Treasury will maintain the old 80 per cent scheme for those days when staff are back on furlough.

To enable the introduction of part-time furloughing, claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees.

The CJRS will close to new entrants on June 30, with the last three-week furloughs before that point commencing on June 10.

There are currently 8.4m people being paid through the state through the furlough scheme, along with another 2m receiving support through the separate self-employed scheme.

Self-employed scheme extended again

The chancellor also announced that the parallel support scheme for self-employed small business owners running alongside furlough will be extended for a second three months.

The “second and final” grant will be worth 70 per cent of average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.

Emma Jones, founder small business support network Enterprise Nation, said: “The taper is much more generous than we had expected and gives more breathing room for firms to build up custom, with an eye on November when the scheme ends.”

However, some companies have already warned that they will struggle to cover the 20 per cent of furloughed workers’ wages, however. A quarter of company directors surveyed by the Institute of Directors say they won’t be able to afford to pay even the 20 per cent of the furlough scheme if asked – as well as having to pay national insurance and pensions, a combined 10 per cent, on top.