Coronavirus: CJRS claim service for furloughed employees is live
The coronavirus job retention scheme (CJRS) claims service is open, but payroll managers and tax agents need to revisit their furloughed salary calculations after amended guidance was released on 17 April.
The CJRS claim guidance was published on 17 April in two different formats:
The CJRS claim calculator was made available on 20 April, and on 23 April it was updated so it caters for ‘fixed rate’ employees and those on variable levels of pay. It also appears to work out four-weekly pay incorrectly based on the calendar days in the month, not on 28 days.
Calendar days vs working days
When the software developers’ guidance was published in draft, it was clear that the claim for employees’ furloughed pay was to be calculated based on calendar days, whereas many employers contractually pay on working days (260/261 days pa). As no mention had been made in five versions of the CJRS guidance that this would be the basis for the formula, many employers simply worked out the part-period furlough amount for March (and for April for those who already run April payrolls) using their contractual payroll formulas.
Now payroll managers have reviewed the calculation guidance they will find they can claim less pay than they had paid out. It’s not a huge amount per employee. But as the guidance was used to make strategic financial decisions on how much an employer could afford in top-up pay and who could be working and not furloughed, for a large payroll this can soon start to add up.
NI and pension pro-rating
Those of us who had spreadsheets prepared in respect of the employer’s national insurance and pension contributions in the CJRS claim were pleasantly surprised by the new guidance on Friday 17 April. It became clear that we were going to be able to pro-rate both the NI and pension thresholds to allow some recovery for those with part-furlough payments below the relevant thresholds for 2019/20 and 2020/21 (£719/£732 national insurance and £512/£520 pensions). Over the weekend we amended our spreadsheets following the printed guidance from 17 April.
Imagine our surprise on 20 April when the CJRS calculator was provided and we found that we couldn't always match the pension and national insurance calculations. Then the penny dropped (literally), as well as ignoring the working days convention, the national insurance and pension calculations were being calculated by rounding down the furlough pay to the nearest pound ignoring the pennies where there were any pence.
Employee furloughed from 1 - 30 April 2020.
February 2020 normal pay £1,663.22. Furlough pay £1,330.58 (£1,663.22 x 80%).
NI via payroll: £82.60 and workplace pension contribution: £24.32
HMRC’s CJRS claim calculator:
Furlough pay = £1,330.58 - as above
Employer NI = £82.52 (based on £1,330)
Pension £24.30 (based on £1,330 - £520 x 3%)
Practical points for CJRS claims
- The service times out after 15 minutes of activity not 30 minutes as the guidance indicated
- You are asked to submit a UTR number, CT reference or Companies House reference, but see below for how to deal with care and support employers, employers of domestic staff and parents employing nannies.
- Employee payroll numbers are requested but are not validated so you can use any identifier that helps you to identify the employee.
- If you have less than 100 employees you must key in data at the employee level. This is hugely burdensome for weekly payrolls. If reporting over 100+ furloughed employees you can upload a file.
- There is currently no correction mechanism for CJRS claims. If you need to correct a mistake do this in the next furlough claim, so the total amount claimed over the two or more furlough periods is correct.
- HMRC has turned the validation off in respect to national insurance numbers for employers uploading files for 100 employees or more. It is not yet clear if this applies to employers with smaller payrolls a well.
- There is no confirmation email sent after the submission of the claim. You must therefore print the screen with the claim reference number on it as your proof that you made a claim in case of queries.
- You can only claim for furlough periods that end 14 days in the future – no more. This may be important to clients struggling with cash flow.
- You need the postcode associated with the client's bank account where the funds will be paid, ie the postcode that is shown as part of the customer's address on the bank statements. Accountants should not use their “client account” to receive the funds.
- It takes up to six working days for payments to be made following acceptance of a claim.
I'm not clear why the guidance says employers must tell employees they have made a claim. It really is nothing to do with employees as they should be paid through the payroll and have an expectation of receiving money based on their furlough letter.
The HMRC red cover guidance says that changes can’t be made to a claim. I presume that means corrections are outlawed as opposed to additions, for example: if you had missed somebody out completely. HMRC has said it is working on a solution to allow for amended claims.
Care and support employers
If the employer does not have a UTR number, CT reference or Companies House reference, because they are a private indiviudal and not a business, you should answer ‘no’ to the first 3 questions on the portal:
- Does the employer submit a company tax return?
- Is the employer registered for self-assessment?
- Is the employer registered at companies house?
The next question is: What is the name of the employer?. At this point a charity or individual can answer and continue with the claim.
The most common question I've been getting over the last two weeks is in respect to salary sacrifice.
Please ensure you read the Pension Regulator's guidance published on 17 April 2020 to make sure that you understand you cannot reduce the furlough pay any further in respect to salary sacrifices. The original contractual pay has already been reduced in respect of the sacrifice.
An employer is required to fund those benefits in kind at their own cost, if they reduce furlough pay further they will be paying less than the 80% required.