Owner Kate Upcraft Consultancy Ltd
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Chancellor Rishi Sunak
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CJRS extension: Get the details right

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Kate Upcraft explains what employers and tax agents need to know about the new version of the coronavirus job retention scheme (CJRS.3) which will apply from November 2020 to 30 April 2021.

17th Dec 2020
Owner Kate Upcraft Consultancy Ltd
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Chancellor Sunak’s announcement on 5 November provided us with only a little information about the CJRS extension, further details are found in: "check if you can claim for your employees' wages through CJRS" guidance.  

On 17 December 2020 Chancellor Sunak announced that the CJRS would be extended again until 30 April 2021. Also the government will continue to contribute 80% of the employee's salary for time the employee is not working. The employer must cover the employer's NI and pension contributions for all salary paid. 

Sunak also announced the date of the next Budget as 3 March 2021.

Weekly payrolls

The first weekly payrolls for November have already been run, when there was no indication of what reference pay or usual hours calculation was to be used for employees who had not been furloughed previously. Hopefully the new guidance will allow corrections to be made next week and before the vast majority of monthly payrolls are run.

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Replies (41)

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By tom123
06th Nov 2020 15:49

Hi Kate,

Is it possible to be on furlough and on holiday at the same time? Or has that changed.

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Replying to tom123:
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By Paul Crowley
09th Nov 2020 10:19

Good question
To be reasonable to employers it should be.
If no action taken there will be employers that owe an entire year of holiday pay on an employee who has not worked for an entire year.

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By JHC
07th Nov 2020 13:32

CJRS1 seems a long time ago now. To check, someone who was employed, fixed salary, but was still working so didn't claim, will be classed as an eligible employee for CJRS1? So their reference salary will be February 2020 rather than the new updated reference dates. They had a pay rise in September, so assume this won't be taken into account?

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By ireallyshouldknowthisbut
08th Nov 2020 18:05

So if you have an annual directors scheme on call it £9k for 19/20, reported on 20th March.
Then you switch to monthly PAYE for April through to October, at a rate of £750/month for 7 months.

What is the reference salary?

is it simply £750/month being the October PAYE?
Is it £14,250 divided by 8 (or may be 7) pay periods, so £1,781? Or over 19 months so back to £750?

How about if you have £9k for a 20th March payroll, ran April & May salary with £500 in, then nothing but blanks since? Are we averaging £10k over 3 pay periods, so a reference salary of £3,333? Or perhaps 14 months, so £714, or 19 month to October, so £526?

The legislation is going to be key here and could throw out some odd results given directors payroll tends to be anything but regular.

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Replying to ireallyshouldknowthisbut:
blue sheep
By Nigel Henshaw
09th Nov 2020 06:11

according to what we have so far it depends on whether they have previously been furloughed or not - if they have, the reference pay is the same as it always was, if not the reference pay is the October salary or average if variable

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Replying to NH:
By ireallyshouldknowthisbut
09th Nov 2020 08:57

@NH, I was assuming in my example no previous furlough, as you say or it would be Oct salary.

The question I have is "which average exactly?"

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Replying to ireallyshouldknowthisbut:
By Duggimon
09th Nov 2020 10:05

Fixed salary - October amount is the reference
Variable salary - the average from April to October.

So in your £500 a month it'd be (£500 + £500) / 7 or £142.86

At least that's my thoughts on it so far, please someone correct me if I'm wrong.

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Replying to NH:
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By kathyk0410
09th Nov 2020 10:18

Think it is based on eligibility rather than whether they were furloughed - however it shouldn't make a difference to annual directors as they weren't eligible.

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Replying to kathyk0410:
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By stuartb
11th Nov 2020 07:11

Why do you say annual directors were not eligible? If they had an RTI submission between 6 April 2019 and 19 Match 2020, surely they were?

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Replying to kathyk0410:
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By stuartb
11th Nov 2020 07:11

Why do you say annual directors were not eligible? If they had an RTI submission between 6 April 2019 and 19 Match 2020, surely they were?

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Replying to stuartb:
Morph
By kevinringer
11th Nov 2020 07:54

I have an annual director RTI'd 16 March and HMRC have accepted furlough claims.

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Replying to kevinringer:
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By stuartb
13th Nov 2020 07:54

Thanks for confirming. I wonder if I've misunderstood the point kathyk0410 was trying to make.

P.s. sorry about the duplicate comment above. Don't know how it happened nor how to delete.

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Replying to ireallyshouldknowthisbut:
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By JHC
09th Nov 2020 10:25

I would say £750 the reference salary if paid that rate from April to October.

If paid only in April and May, then who knows!! It would appear that they fall under the variable pay banner (but in the guidance so far it says "employed after 20th March) so it's obviously expecting this section to relate to new starters only and not those who simply had RTI filed after the 19/3 RTI cutoff date. Wonder if it will be "the higher of" scenario again.

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Replying to JHC:
By ireallyshouldknowthisbut
09th Nov 2020 11:51

Its a muddle all right.

The references to 20th March for eligibility and then periods April to October for the computation seem to be contradictory. If for example you had an annual pay period of 30th March, and then nothing since, then what?

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By remhonps
09th Nov 2020 10:00

What about staff transferred on TUPE to new employer after 1st November? Can new employer furlough?

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By remhonps
09th Nov 2020 10:02

What about staff transferred on TUPE to new employer after 1st November? Can new employer continue to furlough?

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Replying to remhonps:
By Duggimon
09th Nov 2020 10:06

That's how it worked last time, I'm assuming for now that nothing that hasn't been specifically mentioned in the new guidance has changed.

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By petestar1969
09th Nov 2020 10:31

The £1,000 job retention bonus has been scrapped and anyone made redundant after 23 September can be re-hired and immediately furloughed?

So, the two reasons for this change?

Presumably the Chancellor's forecast of how much the £1,000 bonuses would cost is less than furlough? Its not like the government's forecasts/predictions to ever be miles out is it?

The main reason for the change though is obviously to fiddle the unemployment figures.....

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Replying to petestar1969:
blue sheep
By Nigel Henshaw
09th Nov 2020 10:44

petestar1969 wrote:

The £1,000 job retention bonus has been scrapped and anyone made redundant after 23 September can be re-hired and immediately furloughed?

The main reason for the change though is obviously to fiddle the unemployment figures.....

Yes its a strange one that, as it happens I know someone in this position, was made redundant end of October, can now be taken back on just to get furlough, and they will without a doubt be made redundant again in March or whenever the CJRS V3 actually ends!
Good news for them as they will now be paid almost a full time wage to do nothing at all for 5 more months!

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Replying to NH:
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By petestar1969
09th Nov 2020 10:49

And I wouldn't be surprised if your friend's ultimate redundancy in March next year were spun and blamed on Brexit....Call me a cynic, I won't disagree.

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Replying to petestar1969:
Morph
By kevinringer
09th Nov 2020 13:07

The Government supports Brexit so I can't see them blaming it.

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By Homeworker
09th Nov 2020 10:36

Can an employee due to start maternity leave soon postpone this and take furlough now and SMP later?

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Replying to Homeworker:
My photo
By Matrix
10th Nov 2020 19:19

Biology may prevent it though.

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By AndrewV12
09th Nov 2020 10:37

Extract above
'Claim deadline
One of the most concerning differences from the CJRS.2 is the fact that claims for the prior month have to be made by the 14th day of the following month. Thus, claims up to 30 November have to be claimed by 14 December.'

Lets all be sure we don't forget the above. One for the diary

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By cfield
09th Nov 2020 10:51

Shame about them scrapping the Job Retention Bonus. I knew that £1,000 was too good to be true. Trouble is, I've already told my eligible clients about it, so now I've got to un-tell them. It's getting to the point now where anything they announce in advance has to be taken with a pinch of salt. A new twist on What If analysis.

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Replying to cfield:
Morph
By kevinringer
09th Nov 2020 13:12

I've been sending newsletters to my clients: currently compiling covid newsletter number 35! I sent one on 1 November after the PM's announcement, much of which then changed when the Chancellor spoke 5 days later. I'd spent much of the last week of October doing JSS planning with clients, all of which turned out to be a waste of time, but not that we knew it at the time. And that's the point: we can't predict and can only communicate to our clients what is known. We're all having to get used to huge changes happening with no notice: us, clients, even HMRC.

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By User__Name
09th Nov 2020 14:19

We have a seasonal retail business and furloughed everyone on the payroll in March, beinging them back when we reopened in May. Now we have to furlough again but I cam concerned that some that had worked restricted hours for us before March and were furloughed at a low reference pay and then took on increased hours over the summer will be given a low furlough pay compared to those that joined since we reopened.

I cannot find much on the allowed calculation basis for this situation.

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By 3el Nd
09th Nov 2020 14:48

I cant believe the Job retention scheme has now beeen scrapped.

Correct me if im wrong but wasnt the bonus an incentive for Emp'ers to keep furloughed staff on where as they would have been made redundant??
So, employers that kept staff in their jobs were having to add to the 70% in Sept and 60% in Oct to make 80% as well as paying towards employees NICs and Pensions, now to be told to forget about the bonus, but thanks for keeping unemployment numbers down.

Im sure alot of them will not be happy now the scheme as been stamped out.

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Replying to 3el Nd:
Morph
By kevinringer
09th Nov 2020 16:59

Exactly. I've got an employer who has kept on a member of staff: there isn't really enough work for that employee's role but the employer decided to keep them on the books because the £1000 would pay for the shortfall. Of course, that employer now has the option to part-time furlough which didn't exist previously and this is likely to pay out more than £1000 between now and January.

The employers that are going to lose out are those with employees back to normal hours for whom the CJRS bonus really was going to be a bonus. I've got one client with 12 staff all back in full time working. That employer was looking forward to their £12k bonus. But what can the employer do? It's just another Government failed promise. And to be fair to the employer, they're glad their business (construction) is now back 100% and they don't have any of the worries so many other businesses have and consider the loss of £12k a small price to pay to still be in business.

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By slm09
11th Nov 2020 13:54

Hi there,
I'm pretty sure i know the answer to this but wanted to sense check.
We have 2 employees, employed before March, who haven't, to date, been on furlough. They've both taken a pay cut in recent months and are now going on to flexi furlough.
Can I use their new monthly salary as a reference salary or will a claim be based on their pre-covid pay?

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By birdman
11th Nov 2020 22:41

Hi Kate

I have a client who (don't ask why) purchased an existing business on 2 Nov, employees retained (TUPE rules applied). I assume furloughing won't be possible due to PAYE Scheme not even existing on cut-off date, but are there any applicable exceptions please?

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By Dream Baby
19th Nov 2020 09:34

'Employers will still be liable for employer’s NIC and pension contributions for any unworked hours.'
Does this mean what is appears to say, that a company which flexibly furloughs employees still has to pay the er NI and er pension contributions it would normally pay for the flexibly-furloughed employees? Paying er NI and er pension on the worked hours is fair enough but on the unworked hours as well?

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Replying to Dream Baby:
Morph
By kevinringer
19th Nov 2020 14:33

Yes, that's been the case since August. For September and October the employer also had to pay some of the furloughed pay (10% and 20%) but November we're back to where we were in August paying er NI and er pension contributions only.

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By stuartb
11th Dec 2020 14:47

You don't mention that the CJRS3 now excludes directors on annual payroll who were previously eligible.

If annual payroll was before 20 March 2020 (which if course it needed to be to be eligible for CJRS 1 and 2) and the director remained on annual payroll with the same frequency (e.g. annual payroll PAYE reported in Feb 2020), they are not eligible for CJRS3 as they have not reported anything between 20 March 2020 and 30 October 2020.

This sounds like it should be wrong, but is ICAEW's understanding from the 19 Nov. webinar and is pretty clear from

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus...

"You can claim for employees who were employed on 30 October 2020, as long as you have made a PAYE RTI submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. "

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By Moonbeam
18th Dec 2020 10:12

Thank you Kate. I find your articles calm me down and give me clarity, given what you know at the time.

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By beancounter27
22nd Dec 2020 17:02

Confusion here over the position with regard to a part time employee who cannot WFH and had to stay home to look after child self-isolating from school. Employee usually works 21 hours per week over 4 days. Before school Xmas holiday she was absent for 25.5 hrs to look after her child and asked to be furloughed for that period. Having done so I now find that we cannot claim the CJRS grant because she wasn't absent for 7 days but an alternative interpretation would be that although not absent for 7 of her working days she was abent from work for 7 normal working days. Which is correct?

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Replying to beancounter27:
By birdman
22nd Dec 2020 21:44

You can furlough for less than 7 days, it's the claim period that can't be less than 7 days; HMRC give an example of 1 day a week.

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By JonWright-ConceptAccounts
08th Jan 2021 11:43

We have a new client who registered for PAYE on 28 October. HMRC supplied codes for filing early November. They are saying that the employer cannot now claim furlough due to the cut off date, and no actual RTI returns had been submitted (although we are still arguing that the Act says RTI registration).

Anybody else with similar problems. The position has of course been exacerbated by the new January lockdown.

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Replying to JonWright-ConceptAccounts:
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By stuartb
09th Jan 2021 15:12

Not sure to which Act you're referring, but the relevant Treasury Direction is here. I believe it's the qualifying employee bit which dictates that a payment and RTI submission needs to have been made (6.2 c)).

https://www.gov.uk/government/publications/treasury-direction-made-under...

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Replying to stuartb:
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By JonWright-ConceptAccounts
11th Jan 2021 09:52

Thanks for your response.

I was referring to that Act under section 4.

An RTI could not be submitted as the PAYE codes had not been supplied by 30 October. We are attempting to argue that the scheme effectively was registered before 30 October (we have the receipt from 28 October) and should qualify. RTI's have been submitted since. The claim is in fact being assessed for January, as the recent lockdown has created the problem - October to December has been fine.

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Replying to JonWright-ConceptAccounts:
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By stuartb
12th Jan 2021 13:12

Both the employer (scheme) and the employee need to qualify. You're right that the Treasury Direction says registration of the scheme by 30 October to be a qualifying employer.

It sounds like you have a qualifying scheme but the employee won't qualify because no RTI payment and submission was made by 30 October.

You've not said whether the employee was paid before 30 October but you just couldn't submit RTI or they were neither paid nor RTI submitted.

If they were paid, but you couldn't submit the RTI due to the codes not being received, I guess you could try to argue that case (although I have no idea if there is any kind of appeal avenue). If neither were done, my understanding is that the employee does not qualify.

Similar question asked here with no resopnses yet: https://www.accountingweb.co.uk/any-answers/cjrs-appeals

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