Coronavirus Job Retention Scheme (CJRS) – More details of how the scheme will change from 1 July
Summary of main changes from 1 July
From 1 July, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim CJRS grant for the hours not worked.
From 1 August, the level of grant will be reduced each month. To be eligible for the grant employers must pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed.
The timetable for changes to the scheme is set out below. Wage caps are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours:
- For July, the government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICs) and pension contributions for the hours the employee is on furlough. Employers will have to pay employees for the hours they work.
- For August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough.
- For September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
- For October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
Employers will continue to be able to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked.
The table shows Government contribution, required employer contribution and amount employee receives where the employee is furloughed 100% of the time. Wage caps are proportional to the hours not worked:
The first time you will be able to make claims for days in July will be 1 July; you cannot claim for periods in July before this point. 31 July is the
last day that you can submit claims for periods ending on or before 30 June.
The CJRS will close on 31 October 2020.
How to make a claim
To make a claim, you will need:
- to be registered for PAYE online
- your UK bank account number and sort code (only provide bank account details where a BACS payment can be accepted)
- the billing address on your bank account (this is the address on your bank statements)
- your employer PAYE scheme reference number
- the number of employees being furloughed
- each employee’s National Insurance number (you will need to search for their number if you do not have it or contact HMRC if your employee does not have a number)
- each employee’s payroll or employee number (optional)
- the start date and end date of the claim
- the full amounts that you are claiming for including:
- employee wages
- employer National Insurance contributions (for claims up to 31 July)
- employer minimum pension contributions (for claims up to 31 July)
- your phone number
- contact name
If you are claiming for employees who are flexibly furloughed, you’ll need to have agreed the furlough arrangement with the employee (or reached a collective agreement with a trade union) and keep a written agreement that confirms the furlough arrangement.
For the claim period you will also need:
- the number of usual hours your employee would work in the claim period
- the number of hours your employee has or will work in the claim period
- you will also need to keep a record of the number of furloughed hours your employee has been furloughed in the claim period
After you have claimed
Once you have claimed, you will get a claim reference number. HMRC will then check that your claim is correct and pay the claim amount by BACs into your
bank account within 6 working days.
- keep a copy of all records for 6 years, including:
- the amount claimed and claim period for each employee
- the claim reference number for your records
- your calculations in case HMRC need more information about your claim
- for employees you flexibly furloughed, usual hours worked including any calculations that were required
- for employees you flexibly furloughed, actual hours worked
- tell your employees that you have made a claim and that they do not need to take any more action
- pay your employees their wages if you have not already
You must pay the full amount you are claiming to your employee and pay the associated employee tax and National Insurance Contributions, even if your company is in administration. If you are not able to do that, you will need to repay the money back to HMRC. The same applies in relation to employer NICs and pension contributions you claim regarding your employee. The full amount you claim in respect of these must be paid or you will need to repay the money back to HMRC.
Employers cannot enter into any transaction with the worker which reduces the wages below the amount claimed. This includes any administration charge,
fees or other costs in connection with the employment. Where an employee had authorised their employer to make deductions from their salary, these
deductions can continue while the employee is furloughed provided that these deductions are not administration charges, fees or other costs in connection
with the employment.
If you make an error when claiming
If you have made an error in a claim that has resulted in an overclaimed amount, you must pay this back to HMRC.
You can now tell HMRC about an overclaimed amount as part of your next claim. You will be asked when making your claim whether you need to adjust the amount
down to take account of a previous error. Your new claim amount will be reduced to reflect this. You do not need to take further action but should
keep a record of this adjustment for six years.
If you have made an error that has resulted in an underclaimed amount, you should contact HMRC to amend your claim. As you are increasing the amount of
your claim, they need to conduct additional checks.
If you have made an error in a claim and do not plan to submit further claims, HMRC is working on a process that will allow you to let them know about
your error and pay back any amounts that you have overclaimed.
When the government ends the scheme
When the scheme closes on 31 October, you must decide, depending on your circumstances, as to whether employees can return to their normal hours. If not,
it may be necessary to consider reducing their hours, or a termination of employment (redundancy). Normal redundancy rules apply to furloughed employees.
If you have any questions at all in relation to the above please do get in touch with our Tax Partners, Steve Crompton or Lucy Williams to discuss how we can help: