Coronavirus Job Retention Scheme – The Final Countdown? Shipleys Tax Advisors

The Government today (29‌‌ May) announced what seemed like the final countdown further details about the extension of the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme, we’ve outlined these below for you.

The Chancellor announced three changes to the job retention scheme:

  1. From 1‌‌ July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working.
  2. From 1‌‌ August 2020, employers will have to start contributing to the wage costs of paying their furloughed staff and this employer contribution will gradually increase in September and October.
  3. The scheme will close to new claimants from 30‌‌ June.

Part time furloughing

From 1‌‌ July 2020, businesses using the CJRS scheme can bring previously furloughed employees back to work part time.

  • The government will continue to pay 80% of wages for any of the normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced to help people get back to work.
  • Employers will decide the hours and shift patterns their employees will work on their return and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that they can furlough staff for.
  • Any working hours arrangement agreed between a business and their employee must cover at least one week and must be confirmed to the employee in writing.
  • When claiming the CJRS grant for furloughed hours, they will need to report and claim for a minimum period of a week. They can choose to make claims for longer periods such as on monthly or two weekly cycles if preferred.
  • Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.

If employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough and the employer can continue to claim the grant for their full hours under the existing rules.

Employer contributions

From August, the CJRS grant will be slowly tapered with contributions made by employers as follows:

Month% of wages CJRSMax CJRS wages capWho pays NIC & Pension?Employer contribution
June & July80%£2,500GovtNIL

Note that many smaller employers have some or all of their employer NIC bills covered by the Employment Allowance so will not be significantly impacted by that part of the tapering of the government contribution.

Important dates

It’s important to note that the scheme will close to new claimants from 30‌‌ June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30‌‌ June.

This means that the final date by which an employer can furlough an employee for the first time will be 10‌‌ June for the current three-week furlough period to be completed by 30‌‌ June. Employers will have until 31‌‌ July to make any claims in respect of the period to 30‌‌ June.

Errors in CJRS claims

CJRS claims are not always straightforward to calculate: for example, they can be particularly complex where an employer has a salary sacrifice for a pension contributions scheme in place. If you are struggling with the calculation, you can always contact us for help.

HMRC has made it clear that if an employer identifies that they have made an error in a CJRS claim for a previous period, this should not be corrected by making an adjustment (i.e. deliberately under/over claiming) in a claim for a later period – HMRC says this could result in delayed payments.

HMRC is working on a process to allow employers to amend errors in submitted claims, and any corrections should be made when this service becomes available. Remember that all records supporting CJRS claims must be maintained for six years, as HMRC may later make enquiries where it appears that incorrect claims have not been rectified. It is also important to remember that only one CJRS claim should be submitted per period; each claim should include all furloughed employees paid during that period – employers cannot submit CJRS claims for overlapping periods.

What should employers do now?

  • If you intend to make use of the furlough scheme to assist with protecting the future viability of your business, if you have not already done so, you will need to ensure that you furlough staff for whom you want to claim the furlough grant by no later than 10 June and for at least 3 full weeks.
  • You need to ensure that that you make a claim for the furlough grant in respect of any member of staff furloughed up to 30 June through the government’s furlough scheme portal (click here) by 31 July.
  • You should start assessing your business needs and which staff are or will be furloughed by no later than 10 June and consider whether there is a need to bring furloughed staff back on a part time basis from July. Some staff may have been out of work since March and so this may be a useful way of easing them back into the workplace in line with any increase in business demand.

The government has stated that further guidance on flexible furloughing and how employers should calculate claims will be published by 12 June. Once this guidance is received, will let you know.

Self-Employment Income Support Scheme 

The Chancellor also announced plans to extend the Self-Employment Income Support Scheme (SEISS) for those people whose trade continues to be, or is newly, adversely affected by COVID-19 (coronavirus). Eligible self-employed people will be able to claim a second and final SEISS grant in August; this will be a taxable grant worth 70% of their average monthly trading profits for three months, paid out in a single instalment and capped at £6,570 in total.

The eligibility criteria for the second grant will be the same as for the first grant. People do not need to have claimed the first grant to claim the second grant: for example, their business may have been adversely affected by COVID-19 more recently.

Claims for the first SEISS grant, which opened on 13‌‌ May, must be made no later than 13‌‌ July. Eligible self-employed people must make a claim before that date to receive the first SEISS grant (a taxable grant of 80% of their average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total).

If you need help with the issues above, please call us on 0114 272 4984 or email – we are ready to assist.