In the first of two email communications that we’ll be issuing to you this Friday afternoon – the second of which is due to arrive in your inbox shortly and covers the Self-Employment Income Support Scheme – we examine the latest guidance on the Coronavirus Job Retention Scheme (CJRS).
The Government has published further detail relating to CJRS, which we’ve digested and highlighted the key points below that we feel are most important and relevant to our clients, and help to answer some of the unknowns that remain about the scheme.
The full transcript from Government can be viewed here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
We would advise our clients to keep referring to this URL as the Government continues to add further detail.
What we already know and what we have since learnt
- CJRS is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020.
- The aim is to have the scheme up and running by the end of April.
- Employers can use a 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 and minimum automatic enrolment employer pension contributions on that wage.
- Employers can use the scheme anytime during this period.
- The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.
Any UK organisation with employees can apply, including:
- 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 CJRS.
Furloughed employees must have been on your PAYE payroll on 28 February 2020 and can be on any type of contract, including:
- Full-time
- Part-time
- Agency contracts
- Flexible or zero-hour contracts
- Agency contracts who are not working
There is still no definitive confirmation that a sole Director can be furloughed, and we are seeking clarification of this.
You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.
Those employees whose salary varies and if the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, then you can claim for the higher of either:
- The same month’s earnings 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. Whilst if the employee only started in February 2020, use a pro-rata for their earnings so far to claim.
All employers remain liable for associated Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.
What you’ll need to make a claim
To claim, you will need:
- Your PAYE 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
You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.
How often can an employer submit a claim?
You 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 2020, if applicable.
Once HMRC has received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.
Tax treatment of the CJRS grant
Payments received by a business under the scheme are made to offset these deductible revenue costs. They must, therefore, be included as income in the business’ calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.
Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.
For more information, contact your Champion advisor or your local Champion office.
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