What is the Coronavirus Job Retention Scheme?

Definition of Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme (CJRS) is a temporary initiative that allows employers to access financial support to pay part of their employees' wages. The government introduced the initiative to enable employers to retain employees who they may otherwise have been forced to lay off during the Covid-19 pandemic.

In the Budget announcement on 3rd March 2021, the government announced an extension of the Coronavirus Job Retention Scheme until the end of September 2021. Under the extended scheme, employees will continue to receive a minimum of 80% of their current salary for hours not worked, up to a maximum of £2,500 per employee per month.

For July 2021, employers can reclaim 70% of furloughed employees’ wages from the government, up to a maximum of £2,187.50. For Au‌gu‌st and Se‌pt‌em‌be‌r, this will drop to 60%, up to a maximum of £1,875 per employee per month. Employers must make up the difference, so that they can continue to pay their furloughed employees at least 80% of their usual wages.

Employers should only reclaim money that is paid to an employee. Tax and National Insurance should be deducted at source through PAYE and paid to HMRC as normal. Employers must also continue to pay HMRC any employer’s National Insurance owed on the employee’s wages.

If the employer does not meet these obligations, HMRC may ask them to repay the money claimed through the CJRS.

The table below shows what employers can claim back under the scheme:

Furlough dates Percentage of wages paid by HMRC Maximum claim amount per employee per month Employer's National Insurance and pension contributions included in the claim?
1st March 2020 to 31st July 2020 80% £2,500 Yes
1st to 31st August 2020 80% £2,500 No, employers must pay these
1st to 30th September 2020 70% £2,187.50 No, employers must pay these
1st to 31st October 2020 60% £1,875 No, employers must pay these
1st November 2020 to 30th June 2021 80% £2,500 No, employers must pay these
1st to 31st July 2021 70% £2,187.50 No, employers must pay these
1st August 2021 to 30th September 2021 60% £1,875 No, employers must pay these

Employees who are paid through the scheme are classified as ‘furloughed workers’. Employees can either be placed on full-time furlough or they can work some of their normal hours and be furloughed for the remaining hours (this is known as flexible furlough).

Who is eligible for the Coronavirus Job Retention Scheme?

In order to make a claim for months prior to November 2020, businesses must:

  • have created and started a PAYE payroll scheme on or before 19th March 2020
  • have a UK bank account

The employees a business can claim for can be on any type of contract. However they must have received wages from the employer and been included on an RTI submission to HMRC on or before 19th March 2020.

In order to make a claim for a period after 1st November 2020, businesses must:

  • have created and started a PAYE payroll scheme
  • have a UK bank account

The employees a business can claim for can be on any type of contract. However they must have received wages from the employer and been included on an RTI submission to HMRC between 20th March 2020 and 30th October 2020.

There is no maximum number of employees that employers can claim for. Employers are eligible for the November extension regardless of whether they had previously taken advantage of the CJRS. Similarly, employers can use the extension to claim for any eligible employee regardless of whether they had claimed for that employee under the scheme prior to November 2020.

How can I apply for the scheme?

You can now access a portal on HMRC’s website in order to submit a claim. You'll need to know in advance how much you're claiming for each employee. We’ve created a handy furlough claim calculator for monthly payroll to help you work out the numbers you need.

Disclaimer: The content included in this glossary is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this glossary. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.

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