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Insights | Coronavirus

Guidance on Coronavirus Job Retention Scheme

Key information and support on the CJRS, including changes in September and October and the introduction of flexible furlough.

Last updated: 4 September 2020, 16:00

The CJRS is the UK government's flagship support measure for organisations during the COVID-19 pandemic. It offers grants to cover a proportion of the salaries of furloughed staff.

The CJRS will end on 31 October 2020 and claims must be made on or before 30 November 2020.

From 1 September 2020 the grant will continue to cover the salary cost for fully furloughed staff, but the percentage covered is reduced to 70%. From 1 October 2020 the percentage covered will be reduced to 60%.

HMRC has produced a summary of Changes to the Coronavirus Job Retention Scheme.

What you need to know

CJRS V2: 1 July 2020 to 31 October 2020

  • CJRS V2 is only available to employers that have used CJRS V1 and only for employees they have previously furloughed.
  • Employees can be flexibly furloughed, enabling part-time working.
  • No minimum furlough period.
  • Furlough claims become more specific and must contain details of usual working hours (based on calendar days) and actual hours worked. Hours furloughed will be the difference.
  • Each claim made by employer must be for a week or more.
  • No claim period can extend across a calendar month end.
  • 30 November 2020 is the final date for submitting claims under CJRS V2.

Changes from 1 September 2020

For fully furloughed staff, the grant will continue to cover the salary cost, but the percentage covered is reduced to 70%, from its original 80%. The monthly grant an employer can claim for salary cost is the lower of:

  • 70% of salary, and
  • £2,187.50.

For partially furloughed staff, the grant will continue to cover the relevant proportion of salary cost for the furlough period. The monthly grant an employer can claim for salary cost is the lower of:

  • 70% of salary for the furloughed time, and
  • £2,187.50 reduced pro rata for furloughed time.

Changes from 1 October 2020

For fully furloughed staff, the grant will continue to cover the salary cost, but the percentage covered is reduced further to 60%, from its original 80%. The monthly grant an employer can claim for salary cost is the lower of:

  • 60% of salary, and
  • £1,875.

For partially furloughed staff, the grant will continue to cover the relevant proportion of salary cost for the furlough period. The monthly grant an employer can claim for salary cost is the lower of:

  • 60% of salary for the furloughed time, and
  • £1,875 reduced pro rata for furloughed time.

CJRS V1: 1 March 2020 to 30 June 2020

  • Employees must be fully furloughed. No work allowed.
  • Minimum furlough period for each employee is 21 days.
  • No new employee can be admitted to the scheme after 30 June. This, combined with 30 June end date to CJRS V1, means the last date on which an employee can begin a period of furlough leave for the first time is 10 June.
  • 31 July is final date for submitting claims under CJRS V1.

Further ICAEW support on CJRS V1.

Flexible furlough: What is it?

CJRS entered its second phase on 1 July 2020. CJRS V2 allows complete flexibility for employees and employers to adopt whatever working/non-working pattern is agreed between them.

The furlough period can vary from day to day, or week to week, but accurate records must be maintained. Crucially, these records must be maintained in hours.

Employment law must continue to be observed and as in the first phase, contracts may need to be varied and amended, perhaps several times in the coming months.

The overriding principles remain that employees must be paid their contractual entitlement through the payroll, reported through the Real Time Information (RTI) system. The employer can then choose to apply for a CJRS government grant to offset all or part of this cost.

There are some constraints imposed by the claim system and some rules for the content of claims themselves, but, employers have almost total flexibility. There is no longer any minimum period requirement and the furlough period(s) can be for as little as an hour or, at the other extreme, as long as the entire scheme lasts.

This increased flexibility will accommodate flexible shift patterns, although calculating claims for varying periods will be more complicated.

When the CJRS was first announced, businesses clamoured for the rules to be more flexible, but at that time the government used the scheme to support its total lock-down policy. Employees were to stay at home if possible. If they couldn't work from home, they could be furloughed instead and the employer could claim a grant to cover all, or most, of the ongoing employment cost.

This new version of the scheme is to support the return to work while also being sufficiently flexible to adapt to business needs, as well as those of employees needing time for childcare or to look after other relatives. It also recognises that many offices will not be able to have their entire workforce in the workplace at the same time while they implement social distancing measures.

While furlough becomes much more flexible, it is important to note that the level of the CJRS V2 grant will be reduced and as we progress through August to October, it is less than CJRS V1.

  • In July the grant will be restricted by reference to furloughed hours where the employee is working only some of the time.
  • During August to October the grant will be restricted to furloughed hours where the employee is working only some of the time, but also because the grant itself is being reduced.

Latest news

Who is covered?

Which employers

An employer must have accessed the scheme under CJRS V1 to claim under CJRS V2. This means that effectively the scheme is closed to new employer entrants after 30 June 2020.

Employers can agree any working arrangements with previously furloughed employees from 1 July onwards. Employment law requirements must continue to be observed. 

Which employees

From 1 July 2020 onwards, employers can only furlough employees who are already in the scheme; that is those who have completed at least one full 21 day furlough period prior to 30 June. The effect of this is that an employee cannot be furloughed for the first time after 10 June.

The qualifying 21 day furlough period does not need to be the last 21 days in June. It can have been any 21 day furlough period claimed for under CJRS V1. Where a CJRS V1 21 day furlough period spans 30 June, the entire period qualifies for the grant, but flexibility can only start after the 21 days have elapsed.

The only exceptions to the prior qualification rule announced so far, allows claims for employees who are now returning to work after a period of parental leave or military reservists, who might not have been furloughed previously. For example, some women may have been furloughed during their maternity leave and employers may have been claiming grants for enhanced contractual maternity pay. Others may not. It is these who can now be brought into CJRS V2 for the first time.

Form and content of claims

Number of employees restriction

Claims under CJRS V2 will be made in the same way as CJRS V1.

There is a new limit to the number of employees who can be claimed for in a single claim. This is set at the maximum number ever claimed for in a single claim for that payroll in CJRS V1. This strict limit may restrict some claims.

ICAEW anticipates employers who have been rotating staff on furlough under a shift pattern, perhaps using a two-team approach eg, red team work for three weeks, while blue team staff are furloughed, then blue team work for three weeks while red team are furloughed, will need to think about this carefully. If claims had been made for red and blue teams separately, the maximum limit rule will mean that only half of all total staff ever furloughed can be included in a future single claim period. Of course, if a claim was made every six weeks listing the entire workforce, this won't be a problem.

ICAEW does not know whether this limit will be extended to automatically include extra claims for employees who were not previously furloughed and who are now returning to work after a period of parental leave, nor to allow extra claims for businesses and their employees who have been transferred under Transfer of Undertakings (Protection of Employment) regulations, TUPE agreements. We may need to submit information for these additional cases by phone.

Calendar month restrictions

From 1 July, claim periods will not be allowed to overlap calendar months. This is necessary because the scheme grant calculations change each month between July and October.

Each claim period should normally be for at least one calendar week, although some claim periods could be for longer than a week. The days in the month falling before and after the whole week claims in the month will be “orphan days” and any furlough in those periods will have to be the subject of separate shorter claims. They can't be claimed for at the same time as days in the previous or following calendar month.

Example:

An employer wishes to make calendar week claims for July. This could be made as five claims:

Date period Number of days
1-4 July 4 days
5-11 July 7 days
12-18 July 7 days
19-25 July 7 days
26-31 July 6 days

It could equally well be three claims:

Date period Number of days
1-11 July 11 days
12-18 July 7 days
19-31 July 13 days

Or anything else convenient as long as the basic period rules are observed.

Where furlough is part-time, the calculation must factor in the cost of hours worked to hours furloughed. This must be calculated for a specified claim period and by reference to calendar days.

CJRS V2 will end on 31 October 2020.

Periods overlapping 1 July 2020

An employee who was already being furloughed under CJRS V1 may be on a period of furlough leave which includes days in the old and new schemes. For example, the 21 day period starting on Monday 15 June ends on Sunday 5 July. Flexible furlough cannot start until this 21-day period ends, so from Monday 6 July in this example.

It would appear that 16 days have to be included in a claim under CJRS V1 rules and six days in a separate claim under CJRS V2 rules.

To claim

Claims for flexible furlough will now also have to include number of hours furloughed , as opposed to hours the employee is expected to work in the claim period.

As before, to claim for 100 or more furloughed employees, a file will be uploaded containing the following for each employee:

  • full name;
  • National Insurance number;
  • payroll number (optional);
  • furlough start date;
  • furlough end date (if known); and
  • full amount claimed.

And also for flexibly furloughed employees:

  • hours they actually worked in the claim period; and
  • usual hours worked in the claim period.
There is some question as to exactly how to calculate hours. 
Find out more.

Claims for fewer than 100 employees will still need each employee to be entered into the government system separately. A partial claim can be saved as a draft, but must be completed within seven days.

Time limit for submission

We understand that HMRC may introduce a new time limit for claims. We await confirmation on whether claims for a period in a calendar month must be submitted before the end of the following calendar month. 

It was announced on an HMRC webinar on 18 June that final claims for CJRS V2 must be made on or before 30 November 2020.

Amendments

Grants overpaid can be repaid by deducting the overpayment from future grants. No further action is needed, but a record of this adjustment should be kept for six years.

HMRC has published the process for repaying grants if no further claims are going to be made. The employer needs to contact HMRC to obtain a reference number. 

Contact HMRC directly to amend an error that has resulted in an under claim. HMRC is expected to conduct additional checks on these.

If you want to delete a claim in the online service, you must do this within 72 hours.

Record keeping

As with any aspect of CJRS, the employer must keep a written agreement confirming the furlough arrangement. Records of these employee agreements must be kept for until 30 June 2025.

How much can be claimed?

The first rule is that the employer must continue to pay an employee in accordance with the employment contract. Some employment contracts were renegotiated when CJRS V1 was first announced and employees agreed to a salary reduction to 80% of their previous salary.

Illustration:

For a salary of £37,500, an 80% agreed salary reduction gives a new salary of £30,000.

The monthly grant an employer can claim for salary cost is the lower of:

  • 80% of salary (by reference to previous salary level), so 80% of £37,500/12=£2,500, and
  • £2,500.

The monthly grant will also include employer National Insurance Contributions (NIC) and the employer’s minimum compulsory pension contribution. So under CJRS V1 the employer is fully reimbursed for all keeping the employer on the payroll and on full-time furlough.

CJRS grants under CJRS V2 are being slowly reduced between 1 July and 31 October.

July 2020

In July, the full grant will continue unchanged for fully furloughed staff.

For partially furloughed staff, the grant will only cover the relevant proportion of salary, employers’ NIC and employers’ minimum compulsory pension contribution on the part of salary cost which relates to the furlough period.

August 2020

From August onwards, some staff who were retained on full-time furlough at nil overall cost to the employer (those whose salary was below £37,500), will now give rise to a payroll cost to the business, even if they remain on full-time furlough.

Employers’ NIC and employers’ pension contribution

From August onwards, the employer cannot claim any grant at all for employers’ NIC nor for the employers’ compulsory pension contribution. So whatever employers’ NIC and employers’ pension contributions are payable on the salary are a cost in full to the employer. It doesn’t matter whether the employee is furloughed or not.

Salary cost

For fully furloughed staff, the grant will continue to cover the salary cost so the monthly grant an employer can claim for salary cost is the lower of:

  • 80% of salary, and
  • £2,500.

For partially furloughed staff, the grant will continue to cover the relevant proportion of salary cost for the furlough period. The monthly grant an employer can claim for salary cost is the lower of:

  • 80% of salary for the furloughed time, and
  • £2,500, reduced pro rata for furloughed time.

September – salary cost only

For fully furloughed staff, the grant will continue to cover the salary cost, but the percentage covered is reduced to 70%, from its original 80%. The monthly grant an employer can claim for salary cost is the lower of:

  • 70% of salary, and
  • £2,187.50.

For partially furloughed staff, the grant will continue to cover the relevant proportion of salary cost for the furlough period. The monthly grant an employer can claim for salary cost is the lower of:

  • 70% of salary for the furloughed time, and
  • £2,187.50 reduced pro rata for furloughed time.

October – salary cost only

For fully furloughed staff, the grant will continue to cover the salary cost, but the percentage covered is reduced further to 60%, from its original 80%. The monthly grant an employer can claim for salary cost is the lower of:

  • 60% of salary, and
  • £1,875.

For partially furloughed staff, the grant will continue to cover the relevant proportion of salary cost for the furlough period. The monthly grant an employer can claim for salary cost is the lower of:

  • 60% of salary for the furloughed time, and
  • £1,875 reduced pro rata for furloughed time.

Grants overclaimed

Taxpayers must notify HMRC if they have claimed a grant to which they are not entitled. This must be done within 90 days of Finance Act 2020 gaining Royal Assent (so by 20 October 2020), 90 days of receipt of the grant or 90 days of ceasing to be entitled to retain the grant, whichever is the latest.

HMRC has published guidance on how to repay overclaimed CJRS grants and a factsheet on how the penalty rules apply.

The penalty regime is based on the usual failure-to-notify penalties with an additional provision which means that if the taxpayer knew that they were not entitled to the grant at the time when they received it, the overpayment must be notified or repayment made in full by the end of the notification period. Any failure arising from this additional provision will be treated as deliberate and concealed. Failure to notify penalties could be as much as the entire amount overclaimed.

HMRC may issue assessments to recover overclaimed grants. If that does not occur and monies were not otherwise repaid previously then the overclaimed amount must be reported on the taxpayer’s income tax or corporation tax return and tax paid on time.

The factsheets do not mention that error penalties apply if a taxpayer makes a mistake when putting the grant figures on their tax return.

The key risks affecting entitlement to CJRS grants are detailed in TAXguide 12/20 Coronavirus Job Retention Scheme risks and include:

  • grants not used for the purposes for which they are intended;
  • calculation errors; and
  • employees working during periods that they are on furlough.

Legislation

The legislation that enacts the CJRS is: The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction. The original direction was signed by the Chancellor on 15 April 2020 and further directions were signed on 22 May 2020 and 25 June.

Help and support

ICAEW

ICAEW has provided a detailed overview of CJRS covering: 

  • Who can claim.
  • How to apply for a grant.
  • Employment law matters.
  • Furlough letter templates.
  • Who isn't covered by CJRS.

ICAEW has also provided a list of common issues with the scheme and the answers offered by HMRC to those queries.

ICAEW partners

HMRC

The Pensions Regulator

ICAEW Know-How from the Tax Faculty

This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

Example claim form - CJRS V2

HMRC has shared a second example claim form for the CJRS which can be used as a template. This form covers claims made after 1 July when staff can work part-time. 28 August: We understand there are currently problems with uploads of file types .xls

Further support

HMRC support on CJRS

HMRC is asking for people to contact the phoneline only when strictly necessary. (Monday to Friday 8am to 4pm)

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