The Coronavirus Job Retention Scheme (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.
What you need to know
Who can claim: Any employer with a UK PAYE scheme and a UK bank account.
How much can be claimed: For claim periods up until 31 July a grant of 80% of furloughed employees' pay up to a maximum of £2,500 per month, plus employers national insurance and auto-enrolled pension contributions.
For employees on a regular salary, the grant is based on the employee’s gross salary in the last pay period before 19 March 2020 (salary as at 28 February 2020 can also be used). If the employee has not been paid for a full pay period up to 19 March 2020 the earnings should be pro-rated to establish the base. For employees on variable pay who have been employed for more than 12 months the base pay is the higher of the same month’s earnings from the previous year and the average monthly earnings for the tax year 2019/20. If the employee has been employed for less than 12 months the base pay is the average monthly earnings since they started work. Discretionary payments, where there is no contractual obligation, cannot be included when calculating the grant.
For claim periods from 1 July flexible furlough is possible with the grant covering only furloughed hours.
For claim periods from 1 August to 31 October grants do not cover national employers national insurance or auto-enrolled pension contributions.
For claim periods from 1 September to 30 September grants of 70% of furloughed employees' pay or £2,187.50.
For claim periods from 1 October grants of 60% of furloughed employees' pay or £1,875.
How long does the scheme run: From 1 March 2020 until 31 October 2020 - the scheme changes from 1 July to allow for flexible furlough and from 1 August there are also changes to government support levels.
From 1 July, employers using the scheme will have more flexibility to bring their furloughed employees back to work part time while still receiving support from the scheme.
This revised scheme will run for four months from July 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.
Which employees can be claimed for: Employees who were on payroll (ie on an RTI report) as of 19 March 2020, and have been put on furlough. This can include: domestic employees such as nannies, company directors, agency workers, employees on fixed term or zero hours contracts, foreign nationals (on any type of visa), contingent employees in the public sector and members of limited liability partnerships.
HMRC accepts that assigned or seconded employees who are included by an employer within a normal, appendix 6, or dedicated expatriate PAYE scheme, are employees of the UK entity for the purposes of the CJRS. So long as the UK entity is the employer it doesn’t matter who physically pays the employee. HMRC’s view is that businesses should only access the scheme in order to maintain their current workforce and if the UK employer can continue to recharge costs to an overseas entity it is not eligible to claim for those employees.
How much do I have to pay the employee: The employee must be paid in accordance with their employment contract (which may be amended by agreement) and they retain their usual rights at work. The employee much be paid at least as much as the gross pay element of the grant received from HMRC but the grant is based on pay in the base period and so will not necessarily match the employee’s gross pay. Minimum wage rules do not apply when an employee is on furlough, other than in respect of hours when they are undertaking training.
When will grants be paid: Within six working days of a claim being submitted.
Is there a deadline for claims: Claims under the first version of CJRS, covering periods up to 30 June, must be made by 31 July 2020. Claims under CJRS V2, period covering 1 July to 31 October, must be made by 30 November 2020.
How long do staff have to be furloughed: Under CJRS V1, three weeks minimum, although this can be extended. Under CJRS V2, there is no minimum furlough period.
How to apply
What data do you need?
- UK bank account number and sort code (only provide bank account details where a BACS payment can be accepted).
- Billing address for your bank account.
- Employer PAYE scheme reference number.
- The number of employees being furloughed.
- Each employee’s national insurance number (see Requirement for a national insurance number if you have employees with no national insurance number).
- Each employee’s payroll or employee number (optional).
- The start date and end date of the claim.
- The full amount you’re claiming for including employer national insurance contributions and employer minimum pension contributions.
- Contact name and phone number for any queries.
- Your name (or the employer’s name if you’re an agent).
- Your corporation tax unique taxpayer reference, self assessment unique taxpayer reference or company registration number (see Requirement for an SA UTR, CT UTR or CRN if you do not have any of these references).
- Check if you can claim.
- HMRC guidance
- Check which employees you can claim for.
- HMRC guidance
- Prepare your calculations.
- HMRC calculator
- HMRC guidance
- HMRC examples
- Set up your data in a spreadsheet.
- Set up your PAYE online services account or, if you are an agent, ensure that you are authorised for the client.
- Start application.
- Upload or enter data (100+ employees upload spreadsheet, fewer than 100 manual entry).
- Submit application.
Employment law matters
Employment law matters will arise for employers considering furloughing their employees and employers should seek guidance or advice as appropriate. For instance:
- Employers will need to consider how to select employees for furlough leave (for instance, seeking volunteers in the first instance).
- Equality and discrimination laws apply in this context so, for instance, employees should not be selected for furlough leave on discriminatory criteria (for example, age) except for where discrimination is justified under employment law.
- Collective consultation requirements may need consideration (broadly, where 20 or more employees are to be put on furlough leave and would be dismissed if they do not agree to resulting changes in terms of employment).
- In most cases, furloughing will require the agreement of the employees (for example, because it involves a reduction in pay) and amendment of contracts of employment.
- To be eligible for the subsidy employers should write to their employees confirming that they have been furloughed and keep a record of this communication.
On 22 May and 25 June, the Chancellor made further Treasury Directions under Sections 71 and 76 of the Coronavirus Act 2020 to reflect the extensions of the CJRS needed to make sure the government's support scheme worked as intended.
Among the changes, this makes it clear that the written agreement for the employee to cease all work must be retained by the employer until at least 30 June 2025.
ICAEW recommends that employers should be able to demonstrate they have used a fair and reasonable process to decide which employees to furlough, documented by a suitable audit trail.
Further support from the CIPD
The Chartered Institute of Personnel and Development, has published an extensive set of answers to frequently asked questions around furlough leave from its HR experts. The FAQs cover selecting employees for furlough, furloughing special categories of employee, applying for furlough, managing employees on furlough, pay during furlough, annual leave during furlough, sickness during furlough and what happens after furlough.
Furlough letter templates
The Advisory, Conciliation and Arbitration Service (acas) have produced a set of templates for an agreement to furlough an employee because there's no work, to extend furlough and to end furlough. These are free to download and use.
The ICAEW Library can also provide members and students with furlough letter templates for employers covering a wide range of situations:
- furloughing employees;
- extending the furlough period;
- ending the furlough period and return from furlough; and
- denying a furlough request.
Get in touch with the library at email@example.com to request these template letters.
Who isn't covered by CJRS
The scheme isn't open to those businesses that:
- Use annual payrolls where 2019/20 RTI report made after 19 March 2020.
- Have no UK bank account, for example those whose payroll is handled through a UK representative's UK bank account.
The scheme doesn't cover employees who:
- Started a job by 19 March 2020, but had no payment of earnings by that date.
- Are directors who take most income as dividends (any salary they take is covered).
- Are put on reduced hours instead of being furloughed. This may change when the second phase of the CJRS begins in August 2020, although currently, ie as at 22 May 2020, this is unconfirmed.
HMRC is still working on developing the functionality to allow claims to be amended. In the meantime it has asked that employers do not correct errors by adjusting subsequent claims.
The CJRS portal is rejecting claims from some annual payrolls. Read more
HMRC has confirmed the step-by-step process to enable agents to submit claims on behalf of their clients. Read more.
Definition of a claim period
A claim period is whatever the employer wants to make - so it can be a week or a month, for example. Read more.
By making a claim, the employer agrees that the grant they receive can only be used to pay the employee’s salary and the employer NICs and pension contributions and that they will immediately return to HMRC any grants not used for these purposes. HMRC interprets this to mean that it is not possible to defer payment of employers PAYE which has been reimbursed by a CJRS grant.
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.
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.
On 12 November 2020 a Treasury Direction was published extending and modifying the CJRS for the period 1 November 2020 to 31 March 2021. The schedule to this direction sets out the scheme applying for the period ending on 31 January 2021. T
The scheme to apply after 31 January 2021 will be set out in a further direction in due course.
Help and support
- Check if you can claim for your employees' wages through the CJRS
- CJRS: step-by-step guide for employers
- Check which employees you can put on furlough to use the CJRS
- Steps to take before calculating your claim using the CJRS
- Find examples to help you work out 80% of employees' wages
- Calculate how much you can claim using the CJRS
- Claim for wages through the CJRS
- Reporting payments in PAYE Real Time Information from the CJRS
- If you've claimed too much or not enough from the CJRS
- Pay Coronavirus Job Retention Scheme grants back
- Updated template for 16–99 employees
- Updated template for 100 or more employees
- CJRS claim template - Excel document
- Get help with the CJRS - webchat and phone
- Holiday entitlement and pay during coronavirus
The Pensions Regulator
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Example claim form - CJRS V1
HMRC has shared this example claim form for the CJRS which can be used as a template for claims up to 1 July.Download
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
HMRC support on CJRS
HMRC is asking for people to contact the phoneline only when strictly necessary. (Monday to Friday 8am to 4pm)
Support for ICAEW members
The best way to contact ICAEW for real-time support is via live web chat. (Monday to Friday: 9am to 5pm, Wednesday: 10am to 5pm)