Update: 1 November 2020
UK Government have announced that the Coronavirus Job Retention Scheme (CJRS) which was due to end on 31 October, will now be extended with the UK Government paying 80% of wages for the hours furloughed employees do not work, up to a cap of £2,500 for periods from 1 November.
Employers will need to pay all employer National Insurance Contributions (NICS) and pension contributions. They can choose to top up their furloughed employees' wages beyond the 80% paid by the UK Government for hours not worked, but they are not required to do so.
Employers can claim for employees who were on their PAYE payroll on 30 October 2020 and a Real Time Information (RTI) submission must have been made to HMRC between 20 March and 30 October 2020 notifying a payment of earnings for that employee.
If employees were on an employers' payroll on 23 September 2020 (notified via RTI submission on or before 23 September) and were made redundant or stopped working afterwards, these employees can also qualify for the scheme if their employers re-employ them.
Neither the employer nor the employee needs to have previously used the CJRS. Further details on eligibility will be provided by mid-November.
Next steps:
Claimed too much in error?
If you have claimed too much for a CJRS grant and have not repaid it, you must notify HM Revenue & Customs (HMRC) and repay the money by the latest of whichever date applies below:
If you do not do this, you may have to pay a penalty.
To notify HMRC of any CJRS overclaim, you can include the amounts as part of your next online claim without needing to contact HMRC. The online system will prompt you to add details where and if you have received too much.
Where no further claims are planned, you can find more information on contacting HMRC here.
Job Retention Bonus (JRB) updated 31 July 2020
On 8 July 2020, the Chancellor announced the introduction of the Job Retention Bonus.
This is a one-off payment of £1,000 to employers that have used the Coronavirus Job Retention Scheme (CJRS) for each furloughed employee who remains continuously employed to the end of 31 January 2021. The bonus will provide additional support to retain employees.
To be eligible, employees will need to:
Employers will be able to claim the bonus from February 2021 once accurate RTI data to 31 January 2021 has been received.
As the scheme is designed to protect jobs, those who are serving notice for redundancy will not be eligible for the bonus.
Where a CJRS claim for an employee was incorrectly made, a Job Retention Bonus will not be payable
Full guidance will be published in the Autumn with the Budget and Comprehensive Spending Review and further details on the JRB can be found here.
CJRS V2 updated 30 July 2020
HM Government have announced here that the Coronavirus Job Retention Scheme will be extended and remain open until the end of October 2020 with new flexibility introduced from August to get employees back to work and boost economy - including furloughed workers able to return to work part-time with employers being asked to pay a percentage to wards the salaries of their furloughed staff (this ensures staff will still receive 80% of their salary up to £2,500 per month).
HM Government will reduce its contribution over the remaining months of the scheme – August to October 2020 – with a corresponding increase in the employer contribution.
CJRS V2 will end on 31 October 2020 and final claims for CJRS V2 must be made on or before 30 November 2020.
31 July 2020 is the last day you can submit claims for periods ending on or before 30 June 2020.
Further details on the extended scheme CJRS V2 can be found here.
Click here to find out which employees you can put on furlough to use the Coronavirus Job Retention Scheme.
Click here for examples of how to calculate your claim under CJRS V2.
Summary on the extension of the scheme CJRS V2
The revised scheme has many of the same features as the current scheme which runs between 1 March and 30 June 2020, but there will be some significant changes intended to encourage those previously furloughed back to work. In summary, these are:
Employers who have yet to submit claims up to and including 30 June 2020 under the 'old' scheme are urged to do so now as a matter of urgency.
Contribution breakdown summary under CJRS V2
The scheme updates mean that the following will apply for the period people are furloughed:
Eligibility criteria for CJRS V2
Claims from 1 July 2020 onwards will be restricted to employers currently using the scheme and previously furloughed employees. As there is a three-week minimum furlough requirement under the current rules, it follows that any new period of furlough leave must have started by 10 June to be complete when the current scheme ends on 30 June and so ensure the employee remains eligible from 1 July 2020.
Further points of note about CJRS V2
Key policy objectives of the scheme
The overall objective is to keep people at home while enabling employers to retain staff who will be needed when they begin to rebuild their businesses in the future. This will enable work to begin again with a critical core who have the necessary knowledge.
HM Treasury updated its guidance on the grants available under the Coronavirus Job Retention Scheme as published 4 April 2020 to address:
See also: full official guidance published 26 March 2020 from HM Revenue & Customs. An update to guidance was last published on 17 April 2020.
An online system to make a claim under the Coronavirus Job Retention Scheme went live on Monday 20 April 2020.
Use HMRC's online calculator to help you work out how much you can claim.
A simple step-by-step guide to make a claim is available to view here
Updated guidance (released 17 April 2020) on how to calculate your claim under CJRS V1 is available to view here
Summary of rules as outlined in official statements released:
Work out what you can claim
Any entity with a UK payroll and a UK bank account will be able to claim, including individuals, businesses, charities, recruitment agencies and public authorities.
Employers need to make a claim for wage costs through this scheme.
You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage.
Employers can claim for any regular payments they are obliged to pay employees - this includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonuses (including tips) and commission payments and non-cash payments should be excluded.
At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.
The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable benefits in kind. Benefits provided through salary sacrifice, such as pension contributions, should not be included in the reference salary.
HMRC guidance makes it clear that where an employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.
Illustrations based on extended understanding of how the scheme will work can be found here.
Company directors
HMRC guidance indicates that directors, including those who are directors of their own personal service company, can be furloughed.
HMRC guidance reminds companies that:
"company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors' furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned."
"Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided that they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provide services to or on behalf of their company.
Full time and part time employees
For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February 2020 should be used to calculate the 80%.
Employers 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.
Employers will be liable to pay Employer National Insurance contributions on wages paid, as well as automatic enrolment contributions on qualifying earnings unless an employee has opted out or has ceased saving into a workplace pension scheme.
Income tax and Employee National Insurance
Wages of furloughed employees will be subject to Income Tax and National Insurance as usual. Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt-out or to cease saving into a workplace pension scheme.
What you’ll need to make a claim
Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.
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)
the relevant bank account number and sort code
claimant's contact name
a contact phone number
The claimant - not HMRC - will need to calculate the amount you are claiming. HM Government will retain the right to retrospectively audit all aspects of your claim.
How to claim
The only way to make a claim is online and claims will be paid within 6 working days.
Employers 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.
Once HMRC have received a claim and checked eligibility for the grant, they will pay it via BACS payment to a UK bank account.
The intention is that employers should make a claim in accordance with actual payroll amounts at the point at which payroll is run or in advance of an imminent payroll.
The employer must pay the employee all the grant received for the employee's gross pay. No fees can be charged from the money that is granted.
The employer can choose to top up the employee’s salary, but does not have to.
Grants will only accrue once the employee finishes work and starts furlough, not when the decision to furlough is made or when they are written to confirming their furloughed status. Grants will be prorated if the employee is only furloughed for part of a pay period.
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.
Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.
UK Government have announced that the Coronavirus Job Retention Scheme (CJRS) which was due to end on 31 October, will now be extended with the UK Government paying 80% of wages for the hours furloughed employees do not work, up to a cap of £2,500 for periods from 1 November.
Employers will need to pay all employer National Insurance Contributions (NICS) and pension contributions. They can choose to top up their furloughed employees' wages beyond the 80% paid by the UK Government for hours not worked, but they are not required to do so.
Employers can claim for employees who were on their PAYE payroll on 30 October 2020 and a Real Time Information (RTI) submission must have been made to HMRC between 20 March and 30 October 2020 notifying a payment of earnings for that employee.
If employees were on an employers' payroll on 23 September 2020 (notified via RTI submission on or before 23 September) and were made redundant or stopped working afterwards, these employees can also qualify for the scheme if their employers re-employ them.
Neither the employer nor the employee needs to have previously used the CJRS. Further details on eligibility will be provided by mid-November.
Next steps:
- Check if employees are eligible for the scheme based on the above information;
- Agree working hours with employees, so they know if they are furloughed fully or part-time during November;
- Keep records that support the amount of CJRS grant claimed, in case HMRC need to check it.
Claimed too much in error?
If you have claimed too much for a CJRS grant and have not repaid it, you must notify HM Revenue & Customs (HMRC) and repay the money by the latest of whichever date applies below:
- 90 days of receiving the CJRS money you are not entitled to
- 90 days of when circumstances changed so that you were no longer entitled to keep the CJRS grant
- 20 October 2020 if you received CJRS money you’re not entitled to, or if your circumstances changed, on or before 20 July.
If you do not do this, you may have to pay a penalty.
To notify HMRC of any CJRS overclaim, you can include the amounts as part of your next online claim without needing to contact HMRC. The online system will prompt you to add details where and if you have received too much.
Where no further claims are planned, you can find more information on contacting HMRC here.
Job Retention Bonus (JRB) updated 31 July 2020
On 8 July 2020, the Chancellor announced the introduction of the Job Retention Bonus.
This is a one-off payment of £1,000 to employers that have used the Coronavirus Job Retention Scheme (CJRS) for each furloughed employee who remains continuously employed to the end of 31 January 2021. The bonus will provide additional support to retain employees.
To be eligible, employees will need to:
- earn at least £520 per month (above the National Insurance Lower Earnings Limit) on average for November, December and January
- have been furloughed at any point and legitimately claimed for under the Coronavirus Job Retention Scheme
- have been continuously employed up until at least 31 January 2021.
Employers will be able to claim the bonus from February 2021 once accurate RTI data to 31 January 2021 has been received.
As the scheme is designed to protect jobs, those who are serving notice for redundancy will not be eligible for the bonus.
Where a CJRS claim for an employee was incorrectly made, a Job Retention Bonus will not be payable
Full guidance will be published in the Autumn with the Budget and Comprehensive Spending Review and further details on the JRB can be found here.
CJRS V2 updated 30 July 2020
HM Government have announced here that the Coronavirus Job Retention Scheme will be extended and remain open until the end of October 2020 with new flexibility introduced from August to get employees back to work and boost economy - including furloughed workers able to return to work part-time with employers being asked to pay a percentage to wards the salaries of their furloughed staff (this ensures staff will still receive 80% of their salary up to £2,500 per month).
HM Government will reduce its contribution over the remaining months of the scheme – August to October 2020 – with a corresponding increase in the employer contribution.
CJRS V2 will end on 31 October 2020 and final claims for CJRS V2 must be made on or before 30 November 2020.
31 July 2020 is the last day you can submit claims for periods ending on or before 30 June 2020.
Further details on the extended scheme CJRS V2 can be found here.
Click here to find out which employees you can put on furlough to use the Coronavirus Job Retention Scheme.
Click here for examples of how to calculate your claim under CJRS V2.
Summary on the extension of the scheme CJRS V2
The revised scheme has many of the same features as the current scheme which runs between 1 March and 30 June 2020, but there will be some significant changes intended to encourage those previously furloughed back to work. In summary, these are:
- Employees who were previously furloughed will be able to return to work on a flexible part-time basis from 1 July 2020 while remaining on furlough for the rest of the time - this means you can bring your employees back to work for any amount of time, and any work pattern.
- For those staff who are furloughed part-time, employers will be required to pay for the cost of the time staff are working. A grant will be available for the cost of their furloughed hours.
- From 1 July 2020, agreed flexible furlough agreements can last any amount of time and employees can enter into a flexible furlough agreement more than once.
- Employees must have been furloughed under the current scheme (CJRS V1) for them to be eligible for a furlough grant under the revised scheme (CJRS V2). Only employees who have been included in a furlough grant claim made before 1 July 2020 can be furloughed under CJRS V2.
- The rules for CJRS V1 covered only the period 1 March 2020 to 30 June 2020. This means the furlough scheme is closed to new entrants after 30 June 2020.
- From 1 July, claim periods will not be allowed to overlap calendar months due to the change in scheme grant calculations each month between July and October 2020.
- From 1 August onwards, the scheme will no longer cover the costs of employers' National Insurance nor pension contributions with employers expected to cover the costs.
- There will be a new limit to the number of staff who can be included on a claim. This will be based on the maximum staff ever included on any single pre-1 July 2020 claim.
- Where an employee was furloughed under CJRS V1 for a period that spans across into CJRS V2 (ie from 1 July), flexible furlough can only start after the completion of the 21 day period (the minimum furlough period under CJRS V1).
- Employers will have to confirm the revised engagement in writing and ensure that this is consistent with employment, equality and discrimination laws. A written record of the agreement should be kept for 5 years (until 30 June 2025).
- Employers will need to keep records of how many hours your employees work and the number of hours they are furloughed.
- During hours where employees are recorded as being on furlough, employers cannot ask them to do any work that makes money for or provides services to the organisation (or one that is linked or associated thereto).
Employers who have yet to submit claims up to and including 30 June 2020 under the 'old' scheme are urged to do so now as a matter of urgency.
Contribution breakdown summary under CJRS V2
The scheme updates mean that the following will apply for the period people are furloughed:
- June & July 2020: HMG 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.
- August 2020: HMG will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions.
- September 2020: HMG 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.
- October 2020: HMG 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.
Eligibility criteria for CJRS V2
Claims from 1 July 2020 onwards will be restricted to employers currently using the scheme and previously furloughed employees. As there is a three-week minimum furlough requirement under the current rules, it follows that any new period of furlough leave must have started by 10 June to be complete when the current scheme ends on 30 June and so ensure the employee remains eligible from 1 July 2020.
Further points of note about CJRS V2
- A new minimum reporting period of one week will apply from 1 August 2020 for grants to be calculated accurately across working patterns. More frequent claims will not be accepted, but the reporting period can be longer.
- Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period and actual hours worked. The new calculation will apply from 1 July 2020 to factor in the cost of hours worked to hours furloughed ratio.
- From 1 July 2020, claim periods will no longer be able to overlap months, employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward.
- Throughout the duration of the furlough scheme it is important to remember that the employee will continue to receive their salary entitlement in full, as set out by the terms of their employment contract and employers will be responsible for paying the tax and NICs due on those amounts. The CJRS is a grant paid to the employer, and it is this grant which is now being scaled back, the calculation being based on the salary paid for any period while the employee is being furloughed.
- Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud hotline. HMRC will not hesitate to take action against those found to be abusing the scheme.
- Employers will have until 31 July 2020 to make any claims in respect of the period to 30 June 2020 (ie under CJRS V1).
Key policy objectives of the scheme
The overall objective is to keep people at home while enabling employers to retain staff who will be needed when they begin to rebuild their businesses in the future. This will enable work to begin again with a critical core who have the necessary knowledge.
HM Treasury updated its guidance on the grants available under the Coronavirus Job Retention Scheme as published 4 April 2020 to address:
See also: full official guidance published 26 March 2020 from HM Revenue & Customs. An update to guidance was last published on 17 April 2020.
An online system to make a claim under the Coronavirus Job Retention Scheme went live on Monday 20 April 2020.
Use HMRC's online calculator to help you work out how much you can claim.
A simple step-by-step guide to make a claim is available to view here
Updated guidance (released 17 April 2020) on how to calculate your claim under CJRS V1 is available to view here
Summary of rules as outlined in official statements released:
- 1) Furloughed members of staff must not work for the employer during the period of furlough.
- 2) Furlough is from 1 March 2020, so is to be backdated. It will last for at least 3 months and will be extended if necessary. Note that while the scheme is backdated to the beginning of March as it is intended to support all those employed then, a firm will only be eligible to claim the grant once they have agreed the furlough with their staff and staff have stopped working for the employer. This will of course be subject to employment law in the usual way. Acas furlough letter template available here
- 3) The scheme is available for employees on the payroll at 19 March 2020 (updated from original date of 28 February 2020). You can claim for employees that were employed as of 19 March 2020 and were on your PAYE payroll on or before that date; this means that you will have made an RTI submission notifying HMRC of payment of that employee on or before 19 March 2020.
- Employees that were employed as of 28 February 2020 and on payroll (ie notified to us on an RTI submission on or before 28 February ) and were made redundant or stopped working for you after that, and prior to 19 March 2020, can also qualify for the scheme if you re-emplooy them and put them on furlough.
- 4) 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.
- All UK businesses are eligible, 'any employer on the country, small or large, charitable or non-profit' to use the Chancellor's words.
- 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.
- 5) The scheme pays a grant (not a loan) to the employer.
- 6) The grant will be paid to the employer through a new online system which is being built for this purpose. There is no detail about the application process at the moment.
- 7) The employer will pay the employee through payroll, and report payments to HMRC using the Real Time Information (RTI) system as usual, as required by the employment contract. This contract may be re-negotiated, but that is a matter for employment law.
- 8) The scheme will be administered by HMRC:
• Relevant employees must be designated as furloughed employees. - • Employers will submit claims to HMRC through a new online portal.
- 9) The maximum grant will be calculated per employee and is the lower of:
- • 80% of ‘furloughed employees' usual monthly wage cost’ 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.
Work out what you can claim
Any entity with a UK payroll and a UK bank account will be able to claim, including individuals, businesses, charities, recruitment agencies and public authorities.
Employers need to make a claim for wage costs through this scheme.
You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage.
Employers can claim for any regular payments they are obliged to pay employees - this includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonuses (including tips) and commission payments and non-cash payments should be excluded.
At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.
The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable benefits in kind. Benefits provided through salary sacrifice, such as pension contributions, should not be included in the reference salary.
HMRC guidance makes it clear that where an employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.
Illustrations based on extended understanding of how the scheme will work can be found here.
Company directors
HMRC guidance indicates that directors, including those who are directors of their own personal service company, can be furloughed.
HMRC guidance reminds companies that:
"company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors' furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned."
"Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided that they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provide services to or on behalf of their company.
Full time and part time employees
For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February 2020 should be used to calculate the 80%.
Employers 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.
Employers will be liable to pay Employer National Insurance contributions on wages paid, as well as automatic enrolment contributions on qualifying earnings unless an employee has opted out or has ceased saving into a workplace pension scheme.
Income tax and Employee National Insurance
Wages of furloughed employees will be subject to Income Tax and National Insurance as usual. Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt-out or to cease saving into a workplace pension scheme.
What you’ll need to make a claim
Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.
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)
the relevant bank account number and sort code
claimant's contact name
a contact phone number
The claimant - not HMRC - will need to calculate the amount you are claiming. HM Government will retain the right to retrospectively audit all aspects of your claim.
How to claim
The only way to make a claim is online and claims will be paid within 6 working days.
Employers 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.
Once HMRC have received a claim and checked eligibility for the grant, they will pay it via BACS payment to a UK bank account.
The intention is that employers should make a claim in accordance with actual payroll amounts at the point at which payroll is run or in advance of an imminent payroll.
The employer must pay the employee all the grant received for the employee's gross pay. No fees can be charged from the money that is granted.
The employer can choose to top up the employee’s salary, but does not have to.
Grants will only accrue once the employee finishes work and starts furlough, not when the decision to furlough is made or when they are written to confirming their furloughed status. Grants will be prorated if the employee is only furloughed for part of a pay period.
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.
Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.
