CJRS extension: What you need to know

9th Nov 2020
Brought to you by
Sage is the market leader for integrated accounting, payroll and payment systems, supporting the ambition of the world’s entrepreneurs. Sage began as a small business in the UK 30 years ago and over 13000 colleagues now support millions of entrepreneurs a
Share this content

The Job Retention Scheme has been extended in light of new lockdown restrictions being announced by the government. It’s due to conclude at the end of March 2021, although the government will review the policy in January.  

Below, we attempt answer some of the essential questions around the Coronavirus Job Retention Scheme (CJRS), using the government guidance as a source. Read this article to find out if you’re clients are eligible and how to help them make a claim.

How much can you claim under the CJRS extension? 

You can claim up to 80% of a furloughed employee’s gross salary per month (that is, before tax, employee National Insurance and other statutory deductions such as student loan repayments are deducted). 

The amount you can claim per employee as an earnings contribution is capped at £2,500 per employee, even if they have more than one job with you. This is known as the reference earnings.  This is 80% of £3,125.  

Who can claim under the CJRS extension? 

Employers do not need to have used the CJRS previously. 

Employers across the UK can claim, whether their businesses are open or closed. 

Which employees are eligible under the CJRS extension? 

Employers can claim for employees who were employed and on their PAYE payroll on 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between the 20 March 2020 and 30 October 2020. 

As under the current CJRS rules, employees can be on any type of employment contract. 

How do I claim under the CJRS extension? 

Employers will be able to claim from 8am on Wednesday 11 November 2020. 

The extended CJRS will operate as the previous scheme did, in several respects: 

  • employers must report and claim for a minimum period of 7 consecutive calendar days 
  • employers will need to report actual hours worked and the usual hours an employee would be expected to work in a claim period 
  • for hours worked, 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 

The claim period must start and end within the same calendar month. If the pay period includes days in more than one month. Each of those claims will need to be calculated separately. Claim periods cannot overlap, and employees claimed for will need to be included in each separate claim made. 

Can an employee demand or ask to be furloughed under the CJRS extension? 

No. Under employment law, employers must allow time off to help someone who depends on them in an unexpected event or emergency. 

The government has confirmed that situations related to coronavirus would qualify, but there is no legal obligation for employers to pay employees for this time, or furlough them. 

Employees who are shielding in line with public health guidance (or need to stay at home with somebody who is doing this) can also be furloughed if they can’t work from home and you would otherwise have to make them redundant. 

When do I get repaid the money for the CJRS extension? 

You’ll need to claim via an online service provided by HMRC, which opened on 20 April 2020. HMRC says that applicants can expect a payment to be in their bank account within six working days after submission of the claim. 

However, HMRC adds that you should allow at least 10 working days for the payment to arrive before raising a query via the helpline due to high call volumes at its call centres. 

If you face cash flow issues running your payroll, it’s also worth considering the other coronavirus schemes. 

What is the employer – employee agreement? 

Employers do not need to place all of their employees on furlough and they can fully furlough employees if they wish. However, during periods of furlough employees cannot undertake any work for their employer. 

HMRC has stated that there is no minimum furlough period. Employees can enter into a flexible furlough agreement more than once. Although flexible furlough agreements can last any amount of time, unless otherwise specified the period claimed for must be for a minimum claim period of 7 consecutive calendar days. 

Employers can: 

  • fully furlough employees – this means the employee does no work for the employer 
  • flexibly furlough employees – this means employees can work for any amount of time, and any work pattern and claim the grant for the furloughed hours, with reference to hours the employee would usually have worked in that period 

To be eligible for the grant, employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed or flexibly furloughed. 

What taxes are paid with the CJRS? 

There are two sides to this question, relating to the employer and the employee. 

Employer: Money you claim under the scheme must be included as income in your calculation for Income Tax and Corporation Tax, in accordance with normal principles. 

You can deduct employment costs as normal from your taxable profits. 

Employee: You must deduct employee tax and NICs as usual via the payroll on the salary you pay them under the scheme. 

You must pay employer NICs too, and the minimum mandatory pension contributions, although until 31 July 2020, you can claim these back under the scheme along with the salary as outlined in question one (How much can I claim under the Coronavirus Job Retention Scheme?). 

What is the closing date that employers can claim on? 

This policy paper applies for CJRS claims for periods starting on or after 1 November 2020. 

The closing date for claims up to and including 31 October remains 30 November 2020, using existing CJRS guidance. 

How are staff on statutory leave or pay affected by the CJRS (e.g. maternity leave)? 

Employees continue to have the same rights at work during the furlough. They can still claim Statutory Sick Pay (SSP), maternity leave and other parental rights. 

You must pay statutory pay as usual (with the exception of the first two weeks of SSP, for which the rules are different for those affected by coronavirus). 

Should the employee be claiming a statutory payment then you can’t claim for them under the scheme. 

Visit our Coronavirus Hub to stay up to date with all the latest business advice and support around UK’s second lockdown