UPDATE – Announced 29 May 2020 The Chancellor announced changes to the Coronavirus Job Retention Scheme on the 29 May 2020 which will come in to effective from 1 July 2020. From this date, employers can bring back employees that have previously been furlough on a part-time basis as required for the business needs whilst still claiming the CJRS grant for the hours not worked.
The scheme will close to new entrants from the 30 June 2020. The final date that employers can furlough a member of staff is 10 June 2020, as there is the 3 week minimum furlough period which would need to be in place to the 30 June 2020.
They will announce further information regarding the flexible furlough on 12 June 2020
The level of support is to be reduced from August as follows:
Support in June and July
The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything
Support in August
The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
Support in September
The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed
Support in October
The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed
The Coronavirus Job Retention Scheme means that the Government will pay 80% of salary for staff who are temporarily not working due to the virus. All employers can obtain grants from HMRC, covering wages of up to £2,500 a month.
The scheme, announced Chancellor Rishi Sunak, started from March 1, 2020, and has been extended in it’s current form until the end of July to provide clarity amidst the lockdown extension. From August, employers currently using the scheme will have more flexibility to bring their furloughed employees back to work part time whilst still receiving support from the scheme.
This will run for three months from August through to the end of October. Employers will be asked to pay a percentage towards the salaries of their furloughed staff. The employer payments will substitute the contribution the government is currently making, ensuring that staff continue to receive 80% of their salary, up to £2,500 a month.
Who can claim
- Any UK organisation with employees can apply, including:
- 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.
The maximum grant will be calculated per employee and is the lower of:
- 80% of ‘an employee’s regular wage’ and
• £2,500 per month
Plus the associated employers’ national insurance contributions (NIC) on this amount and the minimum automatic enrolment employer pension contributions on that wage.
Fees, commission and bonuses should not be included.
This gives a maximum cap of £2,500 +£245 (employers’ NIC) + £59 (auto- enrolled pension contribution) = £2,804 of total possible grant that can be applied for per employee per month.
What you’ll need to make a claim
To claim, you will need:
- your PAYE 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
You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.
You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1 March if applicable.
The application system for the new scheme went live on April 20 and the first payments through the system were made by April 30. To claim for wages through the portal, click here.
For employers to submit a claim for furlough pay for an employee through the scheme, new starters who were on payroll for March 19, 2020 are now included, as opposed to the initial ruling of February 28.
Around 200,000 new starters are now eligible. Employers still need to have included any newly appointed employees on a Real Time Information (RTI) submission notifying a payment in respect of the employee made to HMRC on or before March 19.
Employers furloughing fewer than 100 employees will just need to enter relevant employee details directly into HMRC’s system, however, those with more than 100 furloughed staff will be required to upload a file with furlough claim information containing each employee’s details. This includes their full name, NI number, payroll number (optional), furlough start and end dates (if latter known) and full amount claimed. The HMRC system will accept files in .xls, .xlsx, .csv and .ods formats and all employers must retain all records and calculations in respect of the claims they make.
Employers must designate affected employees as ‘furloughed workers’ and notify the employees of this change, who should not undertake work while furloughed.
Auto-enrolment contributions and national insurance liabilities covered
Employer auto-enrolment contributions and national insurance liabilities are covered under the Coronavirus Job Retention Scheme.
The Department for Work and Pensions has clarified this further to alleviate pressure on employers, stating that it can also be used to claim employer national insurance contributions and minimum auto-enrolment employer pension contributions (3%) on that wage. This will alleviate any pressure to suspend auto-enrolment contributions and will avoid affecting individuals & longer-term finances.
When the government ends the scheme
When the government ends the scheme, you must make a decision, depending on your circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).
Tax Treatment of the Coronavirus Job Retention Grant
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.
If your employee is on Statutory Sick Pay
Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this. Employees who are shielding in line with public health guidance can be placed on furlough.
For further resources, valuable support and HR information, you can also keep up-to-date with CIPD – access their website here.
Please also see gov.uk for up to date information on the scheme