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The Coronavirus Job Retention Scheme is changing

The Coronavirus Job Retention Scheme has been extended further till 30 April 2021.  It has both similarities and differences to the previous version of the Scheme.  Here's what you need to know.

Updated 2 February 2021

 

What's new on 2 February

  • Employers who want to claim for furlough days in January must have made their submission by 15 February 2021.   

 

Background

The Coronavirus Job Retention Scheme has helped employers retain staff during the pandemic via a Government grant which covers 80% of the wages for employees not working, up to £2,500 a month.

The Scheme had closed to new entrants on 30 June and employers had until 31 July to make any claims in respect of the period to 30 June.

From 1 July, employers could bring furloughed employees back to work for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked. From this date, only employees that employers had successfully claimed a previous grant for will be eligible for more grants under the scheme. The first time employers were able to make claims for days in July was 1 July 2020.  They could notclaim for periods in July before this point.

From 1 August 2020, the level of Government grant provided through the Scheme was slowly tapered to reflect people returning to work. It tapered as follows:

June and July 2020: The Government paid 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.

August 2020: The Government paid 80% of wages up to a cap of £2,500. Employers paid ER NICs and pension contributions – for the average claim, this represented 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.

September 2020: The Government paid 70% of wages up to a cap of £2,187.50. Employers paid ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represented 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.

October 2020: The Government paid 60% of wages up to a cap of £1,875. Employers paid ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represented 23% of the gross employment costs the employer would have incurred had the employee not been furloughed

 

The Job Retention Scheme from 1 November 2020

The extended Job Retention scheme is running from 1 November 2020. Originally announced to end on 31 March 2021, this was then extended in December to close on 30 April 2021. See here. The version of the Scheme running since November generally operates as the previous one did.  Businesses are paid upfront to cover wages costs. The level of the grant will revert to the amount available under the Scheme in August.

This means the Government pays 80% of wages up to a cap of £2,500. Employers pay employer National Insurance Contributions (NICs) and pension contributions only for the hours the employee does not work.  

 

Similarities to the previous Job Retention Scheme

Both flexible and full-time furloughing will be allowed. Employees can be on any type of contract and employers will be able to agree any working arrangements with employees. Employers are still able to choose to top up employee wages above the Scheme grant at their own expense if they wish.

Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. These calculations are expected to broadly follow the same methodology as the previous Scheme.

When claiming the Job Retention Scheme grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days. They will need to report hours worked and the usual hours an employee would be expected to work in a claim period. For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.

Agents, like accountants and tax advisers, are still permitted to process claims on a client's behalf.

 

Differences in this new version of the Scheme:

  • There is no requirement for employers to have previously furloughed employees they now want to include in the scheme.
  • Employees who were previously excluded, as they were not included in a payroll RTI submission before 19 March 2020, can now be brought into the scheme provided they were included in a payroll RTI submission before midnight on 30th October 2020.

This should mean mean all employees included on a payroll in September 2020 are eligible and, provided the RTI submission for the October payroll was made on or before 30 October, new employees who started in that month can be included. If the October RTI submission was submitted on or after 31 October 2020 or has not yet been submitted by an employer, their new starters in October will not be eligible for the scheme.

 

Is the Scheme open to your organisation?

The Job Retention Scheme from 1 November is open to all employers with a UK bank account and UK PAYE schemes. Neither the employer nor the employee needs to have previously used the Scheme.

The Government expects that publicly funded organisations will not use the Scheme, as has already been the case, but partially publicly funded organisations may be eligible where their private revenues have been disrupted.

All other eligibility requirements apply to these employers. This means the Scheme is open to:

  • businesses
  • charities
  • recruitment agencies (agency workers paid through PAYE)
  • public authorities

Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme. 

The Scheme is applicable to company directors.  They too can be furloughed and still continue to perform their obligations as a statutory director (provided they don’t provide any executive services to their employer).  Salaried individuals who are directors of their own personal service company (PSC) can also benefit from the Scheme. This is expected to help freelancers, contractors etc who have a limited company. See more information here.

 

How and when to claim

The Government has released information on how and when to claim. Employers will need their Government Gateway user ID and password they received when they registered for PAYE online. If you do not finish your claim in one session, you can save a draft. You must, however, complete your claim within seven days of starting it.

All claims for periods from 1 July 2020 to 31 October 2020 had to be submitted by 30 November 2020.

Claims from 1 November 2020 must be submitted by 11.59pm 14 calendar days after the month you’re claiming for. If this time falls on the weekend then claims should be submitted on the next working day.  See this timetable published by the Government:

Claim for furlough days in Claim must have been submitted by:
November 2020 14 December 2020
December 2020 14 January 2021
January 2021 15 February 2021
February 2021 15 March 2021
March 2021 14 April 2021
April 2021 14 May 2021

There's more detail on the extended scheme here and how to claim here

 

Job Support Scheme - postponed

In his Winter Economy Plan statement, the Chancellor announced a replacement for Coronavirus Job Retention Scheme in the form of the Job Support Scheme (JSS). Given the Job Retention Scheme has now been extended till 30 April 2021, the Job Support Scheme is unlikely to be introduced until Spring 2021.   For more information about what had been intended for the Scheme see here.

 

Job Retention Bonus - cancelled

In his Summer Statement, the Chancellor announced a Job Retention Bonus would be introduced to encourage employers to support those people who have been furloughed.  The Job Retention Bonus was intended to give a one-off payment of £1,000 to UK employers for every previously furloughed employee who remained continuously employed through to the end of January 2021.

On 5 November the Chancellor extended the Coronavirus Job Retention Scheme (CJRS) till 31 March 2021 and as a result cancelled the introduction of the Job Retention Bonus Scheme scheduled for February 2021. The 31 March 2021 CJRS end date was extended further in December, and will close on 30 April 2021.

For details on what had been planned for the Scheme, see here.

 

 

Can we help?

Our specialist team have been helping employers successfully apply for the Coronavirus Job Retention Scheme grant.  For help and guidance, please do get in touch with your usual Shipleys’ contact one of the team shown on this page.

 

Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary. If you would like advice or further information, please speak to your usual Shipleys contact.

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