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Coronavirus Job Retention Scheme

/ 27 March 2020

Chris Smith

Access our Coronavirus Job Retention Scheme Claim Form

Updated: 15 November 

The Coronavirus Job Retention Scheme (CJRS), also known as the furlough scheme, is a temporary scheme open to all UK employers. It started from 1 March 2020, finished at the end of July 2020 in its current form and continues in a revised form until the end of March 2021.

As of Monday 20 April, employers have been able to use an online HMRC portal to claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance Contributions (NICs) and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period.

The scheme is open to all UK employers that had created and started a PAYE payroll scheme on or before 19 March 2020.

CJRS in July 2020 – March 2021: flexible furloughing

As part of the government’s original intention to wind down of CJRS, the scheme allowed flexible part-time working from July. CJRS will pay employee costs (up to the threshold) for the time they are furloughed, while employers will pay employees for the time they are working.

This is how the Job Retention Scheme changed:

  • In June and July, CJRS continued to pay 80% of wages up to £2,500 per month plus Employer NICs and minimum auto enrolment employer pension contributions for the hours employees don’t work.
  • In August, CJRS paid 80% of wages up to £2,500 for the hours employees don’t work. Employers were required to pay Employer NICs and pension contributions.
  • In September, CJRS paid 70% of wages up to £2,187.50 for the hours employees don’t work. Employers were required to pay a minimum of 10% of wages for the hours employees don’t work plus Employer NICs and pension contributions.
  • In October CJRS paid 60% of wages up to £1,875 for the hours employees don’t work. Employers were required to pay a minimum of 20% of wages for the hours employees don’t work plus Employer NICs and pension contributions.

For periods ending on or before 31 October 2020, the last date that employers can submit or change claims is 30 November 2020.

CJRS extension

CJRS was due to end on 31 October. It has been extended and is now due to end on 31 March 2021.

In the five-month period from November 2020 to March 2021, CJRS will pay 80% of wages up to £2,500 for the hours employees don’t work. Employers will pay employer NIC and pension contributions.

Employees did not need to have been previously furloughed to be eligible for the scheme from 1 November, and the scheme remains open in respect of flexi-furloughed employees. Employees are eligible if the RTI covering their payroll was submitted before 31 October.

Claims for furlough days in November 2020 must be submitted by 14 December 2020.

Job Retention Bonus

The government announced a one-off taxable payment of £1,000 to UK employers for every employee furloughed under CJRS who remains continuously employed from the end of the claim period of the last CJRS claim in respect of each employee until 31 January 2021.  Employers may keep the Job Retention Bonus (JRB) – it is not designed to be passed on to employees.

With CJRS has been extended to March 2021, JRB will now not be paid in February 2021. The government said they will redeploy a retention incentive at the appropriate time.

Employers who have repaid CJRS grant amounts will be ineligible for the JRB.

Details of how to claim will be published at the end of January 2021.

Qualifying employees

For periods ending on or before 31 October 2020, furloughed employees must have been on your PAYE payroll on or before 19 March 2020 and notified to HMRC on an RTI submission on or before 19 March 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020.

For the 1-30 November extension period, employees must be on an employer’s PAYE payroll on or before 30 October 2020. This means an RTI submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020.

Furloughed employees can be on any type of contract, including:

  • Full-time employees
  • Part-time employees
  • Employees on agency contracts
  • Employees on flexible or zero-hour contracts

The scheme also covers employees who were made redundant between 28 February 2020 and 19 March 2020, if they are rehired by their employer.

To be eligible for the subsidy, when on furlough, an employee cannot undertake work for or on behalf of the organisation. This includes providing services or generating revenue but training is permitted, as is volunteering outside work.

To be eligible for the subsidy, employers should write to their employee confirming that they have been furloughed and keep a record of this communication. We have more information on the related HR issues here.

Employees hired after 19 March 2020 cannot be furloughed or claimed for in accordance with this scheme.

There are specific provisions dealing with employees on maternity leave, contractual adoption pay, paternity pay or shared parental pay. Let us know if you need further details.

While on furlough, the employee’s wage will be subject to usual income tax and other deductions, as explained below.

Work out what you can claim

If you’re an employer, you can claim for wage costs through this scheme.

You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer NICs and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.

At a minimum, you must pay your employee the lower of 80% of their regular wage or £2,500 per month. You can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.

Full-time and part-time employees

For full-time and part-time salaried employees, the employee’s actual salary before tax, as of 28 February, should be used to calculate the 80%. Fees, commissions and bonuses should not be included.

Employees whose pay varies

If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:

  • The same month’s earning from the previous year
  • Average monthly earnings from the 2019/20 tax year

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.

Once it has been established how much of an employee’s salary can be claimed for, the employer or its agent must then work out the amount of Employer NICs and minimum automatic enrolment employer pension contributions can also be claimed.


Office holders (including directors), salaried members of LLPs and agency workers are eligible for the scheme as long as they are properly furloughed and do not, for example, undertake any revenue generating function during their period of furlough. This also applies to salaried individuals who are directors of their own personal service company. However, they can perform statutory duties including record keeping, such as preparing VAT returns and annual accounts.

The furloughing should be ratified by formal decision of the board/LLP. HMRC may require evidence of this and we are able to assist you in that.

National Living Wage/National Minimum Wage

Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.

This means that furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.

However, if workers are required for example to complete training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

Statutory redundancy payments to furloughed employees who are made redundant are to be based on normal wage rather than on a reduced furlough rate.

What employers will need to make a claim

To claim, you will need:

  • Your ePAYE reference number
  • The number of employees being furloughed
  • The claim period (start and end date)
  • Amount claimed (per the minimum length of furloughing of three weeks)
  • Your bank account number and sort code
  • Your contact name
  • Your phone number

The employer must quantify the claim, subject to HMRC’s normal right to audit all aspects of the claim.

For claims from December onwards, HMRC will publish employer names and an indication of the value of the claim.


The employer can only submit one claim at least every three weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until 1 March if applicable.

CJRS closed to new entrants on 30 June. Employees on statutory maternity/paternity leave and military reservists who return to work after 10 June may still be furloughed, but only if they work for an employer who has previously furloughed employees.

From July, the number of employees an employer can claim for in a claim period, which cannot straddle month ends, cannot exceed the maximum number claimed for in an earlier claim period, so if some employees have alternated between working and being furloughed they should all be furloughed at some point in a June claim.

How July’s changes affect the claims process

If you have been making monthly CJRS claims to HMRC, it’s worth exploring the implications of ‘flexi-furloughing’:

Your practice may have been to start gathering the information for the claim at the start or middle of the month i.e. the June claim may have actually been prepared and submitted to HMRC on 16 June.  Knowing that staff would have to be on furlough for a minimum of three weeks stopped this process from becoming too uncertain.

As there is more flexibility from July, with staff able to return part-time or for days they are needed, you may have less certainty about the full working pattern for the month.

Therefore, in approaching the claims process, your options are:

  1. Complete your CJRS claim at the end of the month, once you are aware of the employees’ worked hours. This will affect cashflow as you will need to pay out the wages before HMRC make payment to you.
  2. Make your CJRS claim from the 16th of the month based on the hours you expect the employee to work in the month, and then make an adjustment in the later claim.
  3. Make more frequent CJRS claims i.e. weekly.

We’d be happy to discuss these options with you and the changes to the claims process which the new CJRS rules will require. We recommend doing this as soon as possible.

What to do after the claim has been submitted

Once HMRC have received your claim and processed it, they will pay it via BACS payment to a UK bank account.

You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.

You must pay the employee all the grant you receive for their gross pay; no fees can be charged from the money that is granted. You can choose to top up the employee’s salary, but you do not have to.

The end of CJRS

The employer must make a decision, depending on their circumstances, as to whether employees can return fully to their duties when the government ends the scheme. If not, it may be necessary to consider termination of employment (redundancy).

Income tax and Employee National Insurance

As mentioned above, wages of furloughed employees are subject to income tax and National Insurance as usual. Employees must also pay auto enrolment contributions on qualifying earnings, unless they have chosen to opt out or to cease saving into a workplace pension scheme.

Employers will be liable to pay Employer NICs on wages paid, as well as auto enrolment contributions on qualifying earnings unless an employee has opted out or has ceased saving into a workplace pension scheme.

Tax treatment of the CJRS grant

Payments received by a business under the scheme must be included as income in the business’ calculation of its taxable profits for income tax and corporation tax purposes, in accordance with normal principles.

Job Support Scheme

The most headline-grabbing announcement of the Chancellor’s Winter Economy Plan in September, and updated by his announcement on 22 October, was the introduction of the new Job Support Scheme (JSS). It was due to come into effect on 1 November after the end of CJRS and to run for six months, ending on 30 April 2021.

Since announcing JSS, the government extended CJRS to the end of March 2021. This makes the status of JSS is uncertain until the government clarifies its post-CJRS plans.

We have more information about JSS here.

How BKL can help

We can advise you on maximising your entitlement under the Coronavirus Job Retention Scheme and we can also process such claims on your behalf, so as to ensure you receive HMRC funding as soon as possible. Please get in touch with us using our enquiry form.

HMRC and CJRS fraud

The government, while noting the popularity of CJRS, is also concerned about misuse of the scheme.

In September, a spokesman for the Prime Minister said that HMRC are “looking into 27,000 high-risk claims where they believe a serious error or fraudulent claim has been made.”

Jim Harra, HMRC’s Chief Executive, elaborated on HMRC’s approach, saying:

“We are not going to try and find employers who have made legitimate mistakes in compiling their claims because this is obviously something new that everybody has to get to grips with in a very difficult time. We will expect employers to check their claims, and repay any excess amounts, but what we will be focused on is tackling abuse and fraud.”

HMRC have been writing to employers about suspected CJRS claim errors. However, these letters reportedly contain limited detail about what HMRC believes is wrong with the claim. If you receive a CJRS compliance letter from HMRC, please let us know so that we can advise you on what to do next.

Given the huge financial cost of the government’s coronavirus support schemes, it is understandable that HMRC are seeking to recover any overpayments that have been made, regardless of whether the overpayment was obtained deliberately or unintentionally by the recipient employer.

If you have made a CJRS claim then we would strongly recommend taking advantage of BKL’s Tax Fee Protection Service as the professional costs for corresponding with HMRC will be covered in full. We explain more about the service here.

Chris Smith

Director of Personal Tax Compliance

T +44 (0)20 8922 9160

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