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COVID-19
Coronavirus Job Retention Scheme (CJRS)
Update as at November 2020
The CJRS is being extended until December. The level of the grant will mirror levels available under the CJRS in August, so the government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions (NICs) and pension contributions only for the hours the employee does not work.
This extended Job Retention Scheme will operate as the previous scheme did (full details below).
As under the current CJRS, flexible furloughing will be allowed in addition to full-time furloughing.
If you haven’t used CJRS before, you can do this time under certain conditions.
Who is eligible?
Employers
All employers with a UK bank account and UK PAYE schemes can claim the grant.
Employees
To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
Employees can be on any type of contract. Employers will be able to agree any working arrangements with employees.
Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. Such calculations will broadly follow the same methodology as currently under the CJRS.
When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.
For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.
How much is the grant?
For hours not worked by the employee, the government will pay 80% of wages up to a cap of £2,500. The grant must be paid to the employee in full.
Employers will pay employer NICs and pension contributions, and should continue to pay the employee for hours worked in the normal way.
As with the current CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.
The Government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.
Updates as at 17th April:
Workers who do not use all of their statutory annual holiday allowance because of the coronavirus pandemic will be allowed to carry days over for the next two years.
This applies to all those directly affected by the epidemic and required to work during the crisis and unable to take leave. Whether this will also be true for all industries and sectors, including workers in furlough, has yet to be announced.
Limited company directors are allowed to furlough themselves as employees on their PAYE element of their income, even if they are sole director companies. They cannot continue business trading but must and are allowed to continue their fiduciary obligations as directors, such as filing of accounts to Companies House.
Rotation of staff on furlough: Furlough leave must be taken in blocks of at least three weeks or employees can be furloughed for the entire length of the Scheme. This enables some short-term gaps in the furlough period if required by the business. Employers can rotate furlough leave amongst employees so that employees come on and off the Scheme.
Scheme has been extended to the end of June and covers 1st March to 30 June 2020 inclusive.
WHo can claim?
The government wants the support to be as inclusive as possible.
Owner-managed businesses can make a claim from the CJRS, effectively they will be furloughing themselves and the understanding is that they do no income generating work for their business but can continue to run the business from a statutory perspective, for example preparing their accounts and returns.
Any UK organisation with employees can apply, including:
businesses
charities
recruitment agencies (agency workers paid through PAYE)
public authorities
You must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account. Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme.
Employees you can claim for
Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including:
full-time employees
part-time employees
employees on agency contracts
employees on flexible or zero-hour contracts
The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
To be eligible for the subsidy, when on furlough, an employee can not undertake work for or on behalf of the organisation. This includes providing services or generating revenue. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.
This scheme is only for employees on agency contracts who are not working.
If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.
Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.
Note: Furloughed workers are allowed to conduct training or other voluntary work that does not relate to revenue generating tasks.
Employer National Insurance and Pension Contributions
All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.
You can claim a grant from HMRC to cover wages for a furloughed employee, equal to the lower of 80% of an employee’s regular salary or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.
You can choose to provide top-up salary in addition to the grant. Employer National Insurance Contributions and automatic enrolment contribution on any additional top-up salary will not be funded through this scheme. Nor will any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income above the lower limit of qualifying earnings (which is £512 per month until 5th April and will be £520 per month from 6th April 2020 onwards).
What is the process of furloughing?
To be eligible for the subsidy, employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
Some businesses may choose to continue to pay full salary even though they can only reclaim 80% up to the cap. Other employers may only be able to pay 80% of regular salary or even less than that, until the CJRS grant arrives.
An employee can be furloughed for a minimum of three weeks at a time and for a maximum of three months from 1 March, although the government might extend the scheme. The individual could remain furloughed even if the CJRS is not extended, but then the employer would not have any grant funding to cover their wages.
You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.
You can rotate workers on furlough, but employees and directors must be furloughed for at least three weeks at a time.
When is CJRS available?
HMRC will administer the payments via an online portal which will be available week beginning 20th April.
Payments will be backdated to 1st March 2020.
You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for.
The Scheme is available from 1st March to 30 June 2020 inclusive.
What you’ll need to make a claim
To claim, you will need:
your ePAYE reference number
the number of employees being furloughed
the claim period (start and end date)
amount claimed (per the minimum length of furloughing of 3 weeks)
your bank account number and sort code
your contact name
your phone number
Deciding how much to claim
Employers will need to calculate the amount to claim.
To decide how much to pay, employers will need to calculate how much the CJRS grant will cover. The £2,500 cap refers to regular wages as at 28 February, excluding bonuses, fees and "compulsory" commission and tips paid from a tronc.
The HMRC guidance update on 4 April confirmed that overtime is to be included, but not discretionary bonuses (including tips not from a tronc) and commission payments, nor non-cash payments.
For an individual with variable pay ie 28 February was not an indicative week or month, their average earnings over 2019/20 or the period of employment during that year can be used.
The figure that is agreed with the employee to be paid in the period of furlough will treated as normal earnings, subject to all statutory and voluntary deductions, reported under RTI with the remittances paid over to HMRC by the normal deadline.
What is paid through the payroll will not necessarily equal what can be reclaimed from HMRC.
Example
Arthur has normal monthly gross pay of £3,500 and the employer agrees to continue to pay this. Arthur is also a member of a pension scheme for which his employer pays 9% contributions on all basic pay, which amounts to £315 per month.
The employers’ class 1 NIC due on Arthur’s gross pay is £383.78.
Arthur’s employer can reclaim from the CJRS: £2,500 plus £245.78 NIC plus £59.64 pension contributions (£2,500 - £512 qualifying earnings threshold x 3%).
This example uses the 2019/20 NIC thresholds, which will change on 6 April 2020
HMRC will retain the right to retrospectively audit all aspects of your claim.
What to do after you’ve claimed
Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.
You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted. You can choose to top up the employee’s salary, but you do not have to.
How long will the payments last?
As at 17th April, the scheme will pay furlough payments from 1st March to 30 June inclusive and if the crisis continues, payments will be continued indefinitely.
Employees that have been furloughed
Employees that have been furloughed have the same rights as they did previously. That includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.
Once the scheme has been closed by the government, HMRC will continue to process remaining claims before terminating the scheme.
Tax Treatment of the Coronavirus Job Retention Grant for employers
Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.
Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.
Mirandus Recommendation
It is important to note that you are required to keep your staff on payroll and continue to submit PAYE information to HMRC to be eligible for this funding and they can continue in the same employment after the health crisis is over.
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