In the second of our four Finance Directors' Bitesize Briefings we looked at the changes to the Job Retention Scheme (CJRS), the potential tax changes that…
The Government has announced an extension to the Coronavirus Job Retention Scheme (CJRS). While this scheme has been operating for some time now, there are still a few things that you need to think about.
The Coronavirus Job Support Scheme (CJRS) will now remain open until 31 March 2021.
We expect detailed guidance on how the extended CJRS will operate next Tuesday (10 November), but the latest information we have is that it will broadly follow the flexi-furlough CJRS scheme that applied to claims made for the month of August.
Details of the extended scheme:
- The scheme will provide a grant towards the cost of wages of 80%, capped at £2,500 per employee, per month (reviewed by the Government in January to decide whether economic circumstances are improving enough to ask employers to contribute more)
- Employers will have to cover the costs of employer national insurance and pension contributions
- Employers will also be allowed to top up employees wages, but there is no requirement for employers to contribute to the furlough wages
- The scheme can include all employees who had been included in a RTI submission for the employer on or before 30 October 2020
- There is no requirement for the employee to have been included in a previous CJRS claim
- There is no requirement for an employer to have previously submitted a CJRS claim
- Employees can be fully or flexi-furloughed under the extended scheme
- Employers will be able to re-hire and furlough employees who have been made redundant. This will be possible provided the former employee was included on an RTI submission on or before 23 September and were made redundant or stopped working for the employer after this date
If employers are thinking of using the scheme for the first time, or for employees not previously furloughed, they will need to ensure that a new furloughing agreement is in place with the employee. Employers who have previously used the scheme also need to consider whether the agreements used previously remain valid. For instance, was the agreement time limited or open ended? If the agreement was time limited to 31 October or earlier, employers will need to update their agreements. Similarly, many employees have returned to working their usual hours since their period of furlough, with their employers writing to tell them they are no longer subject to the furlough agreement. In these circumstances, employers are likely to be required to put in place a new furlough agreement.
While we wait on detailed guidance, the Government has confirmed that there will be no gap in eligibility between the previously announced end-date of CJRS (31 October) and this extension. The extended CJRS scheme will provide support from 1 November, as opposed to the 5 November when the England wide lockdown commences.
Unlike the JSS, the CJRS will continue to allow employers to make a claim ahead of paying the employee. Employers logging into their HMRC portal to make a claim for November will notice they are currently unable to do so. HMRC have confirmed that they are in the process of updating the portal to allow for employers to make claims for November onwards, with employers being able to make claims from 11 November. Unfortunately, this means employers operating weekly payrolls will need to cover the cost of furloughed employees wages until the portal opens for November claims.
In a significant departure from the previous CJRS scheme, employees will only need a 7 day qualifying period, down from 21 days under the old version of the scheme.
We are yet to have full guidance and details on the extended scheme, but we will be providing updates to this blog when we have more guidance. In the meantime, should you have any queries, please contact Steve Ashworth or myself.