Chartered Certified Accountants
Chartered Tax Advisers
Registered Auditors

blog

Coronavirus Job Retention Scheme Mark 2

On 29 May 2020, the Chancellor announced three future changes to the current Job Retention Scheme:

  1. The scheme will close to new entrants from 30‌‌ June. So, employers will only be able to claim going forward if they have previously claimed under the pre-1 July scheme.
  2. 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.
  3. 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.

 

 Important dates

It’s important to note that the scheme will close to new entrants 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.

 The proposed changes also introduce a new limit to the number of staff who can be included on a claim. This will be based on the maximum staff ever included in any single pre 1 July claim.

 

Part time furloughing

From 1‌‌ July 2020, businesses using the scheme will have the flexibility to bring previously furloughed employees back to work part time – with the government continuing to pay 80% of wages for any of their 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.

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.

For those staff who are furloughed part-time, employers will be required to pay for the cost of the time staff are working. The grant will only be available for the cost of their furloughed hours.

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 be confirmed to the employee in writing.

When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of a week. 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.

 

The furlough grant and employer contributions

From August, the government grant provided through the job retention scheme will be slowly tapered down.

In June and July, as at present, the government will reimburse 80% of gross wages up to a cap of £2,500 as well as employer National Insurance Contributions and pension contributions for the hours the employee doesn’t work.

In August, the government will continue to reimburse 80% of gross wages up to a cap of £2,500 but employers will pay the Employers’ National Insurance Contributions and pension contributions. (According to HMRC, for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed.)

In September, the government will reimburse 70% of gross wages up to a cap of £2,187.50 and employers will pay the Employers’ National Insurance Contributions, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500.

In October, the government will reimburse 60% of gross wages up to a cap of £1,875 and employers will pay the Employers’ National Insurance Contributions, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500.

In all cases, the cap on the furlough grant will be proportional to the hours not worked.

 

 Guidance and support

A new factsheet giving further details on the changes to CJRS and SEISS is available from gov.uk.

HMRC is hoping to publish detailed guidance on 12 June 2020.

Our last article on the current Job Retention Scheme is here: https://crozierjones.co.uk/blogs/the-coronavirus-job-retention-scheme-making-a-claim/

 

Protect yourself from scams

Stay vigilant about scams, which may mimic government messages as a way of appearing authentic and unthreatening. Search ‘scams’ on GOV.‌‌UK for information on how to recognise genuine HMRC contact. You can also forward suspicious emails claiming to be from HMRC to phishing@hmrc.gov.uk and texts to 60599.

Crozier jones Newsletter
Subscribe to our newsletter to receive the latest industry and company news