Updates to Coronavirus Job Retention Scheme (CJRS) guidance

01 July 2020

As the online claim service for flexible furloughing became available from 1 July 2020, HMRC has updated the various guidance pages that employers should familiarise themselves with prior to calculating and submitting claims under the new style Coronavirus Job Retention Scheme (CJRS).

There have been multiple updates to the different forms of guidance.

Instruction has been provided for employers who have overclaimed through the CJRS, and who do not intend on submitting any further claims. Businesses in this position should contact HMRC to inform them of the error, and discuss how to pay back any overclaimed amounts. After contacting HMRC, a payment reference number will be provided, and the process for making a payment will be confirmed.

There is the reminder that, where an employee has commenced a period of furlough prior to 1 July, this must be for a minimum of three consecutive weeks. This is true regardless of whether the three consecutive week minimum period ends before, or after 1 July. Businesses are also reminded that the last date that they can submit claims for in relation to periods ending on or before 30 June is 31 July.

Any workers who are flexibly furloughed and taking holiday during the claim period should have those hours counted as furloughed hours, and not working hours. Employers should not, however, place workers on furlough just because they are on holiday for that period. As Working Time Regulations (WTR) mean that holiday pay must be paid at someone’s normal rate of pay, or where pay varies, calculated on the basis of the average pay they received in the previous 52 weeks, employers must pay workers their usual holiday pay in accordance with the WTR. Employers will therefore be required to pay the additional amounts over the grant but will have the option to restrict when leave can be taken, where there is a business need. This applies to both the furlough and recovery period.

Employees must still pay taxes out of their wages as they ordinarily would. Employers need to ensure that they deduct income tax and National Insurance (NI) contributions on the full amount, including any scheme grant, that they pay to the employee. The income tax and NI contributions must be paid directly to HMRC and reported on the Full Payment Submission (FPS) to HMRC, on or before the pay date. Pension contributions must also be treated in this way (for both employer and employee) unless the employee has opted out, or stopped contributing to their pension. Until 31 July, employers can continue to claim these costs for any hours an employee is on furlough, however, from 1 August, employers will no longer have the option to claim for employer NI and pension contributions.

Finally, a new example of a calculation has been added to the ‘Find examples to help you calculate your employees’ wages’ page. It is as follows:

An employee started work for an employer in 2013. The employee is paid every four weeks, and was furloughed on 31 March 2020.

The employee will be paid for the pay period 1 July 2020 to 28 July 2020, and the employer is looking to make a flexible furlough claim for the same period (1 July 2020 to 28 July 2020).

The employer calculates that the employee worked 616 hours between 6 April 2019 and 31 March 2020. This includes any hours that the employee received holiday pay for. The employee was on a period of statutory adoption leave between 1 June 2019 and 14 January 2020 – this is 228 days.

The number of days between 6 April 2019 and 30 March 2020 is 360 days (inclusive). The employer should not include the days where the employee was on statutory adoption leave, leaving 132 days.

The employer works out the average number of hours worked in the tax year 2019 to 2020 as follows:

  1. Start with 616 (the number of hours actually worked (or on paid annual leave or “flexi” leave) in the tax year 2019 to 2020 before the employee was furloughed)
  2. Divide by 132 (the number of calendar days the employee was employed by the employer in the tax year 2019 to 2020, up until the day before they were furloughed, not including the time that the employee was on statutory adoption leave)
  3. Multiply by 28 (the number of calendar days in the pay period (or partial pay period) which the employer is claiming for) = 130.66
  4. Round up to the next whole number because the outcome isn’t a whole number and because the calculation is for an entire claim period = 131

The employer will also need to work out the usual hours based on the corresponding calendar period in the tax year 2019 to 2020, and use the higher figure for the usual hours.

The updated guidance pages in full are as below:

Reporting employees' wages to HMRC when you've claimed through the Coronavirus Job Retention Scheme

Check if your employer can use the Coronavirus Job Retention Scheme

Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme

Changes to the Coronavirus Job Retention Scheme

Find examples to help you calculate your employees' wages

Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme