Budget 2021: Coronavirus Job Retention (Furlough) Scheme extension

Budget 2021: Coronavirus Job Retention (Furlough) Scheme extension

Andy Hamman, Director and Nick Irvin, Manager, Employment Tax
Budget 2021: Coronavirus Job Retention (Furlough) Scheme extension

At the Budget 2021 on 3 March, Rishi Sunak confirmed that the government will extend the Coronavirus Job Retention Scheme (CJRS) – also referred to as the Furlough Scheme – until 30 September 2021.

This latest extension represents 19 full months of the scheme since March 2020. The CJRS operates slightly differently in different periods, and this article sets out how the scheme will work.

The Chancellor also announced a new HMRC ‘taskforce’ to tackle fraud in relation to the COVID-19 support measures, so it is vital to understand how the extension works so that all claims are fully compliant with the new law.

How much can be claimed?

Under the extended CRJS from 1 November 2020 through to 30 June 2021, employers will be able to claim for 80% of an employee’s wage costs (capped at £2,500 per month pro rata) for any hours that they do not work. The scheme will then be phased out as follows: 

From July 2021, employers will be required to fund part of the wage costs for the hours that furloughed employees do not work. 

  • In July, employers will be able to claim 70% of the wages (capped at £2,187.50), but will be required to top up the remaining 10%.
  • In August and September, employers will be able to claim 60% of the wages (capped at £1,875), but will be required to top up the remaining 20%.

The employer will be required to fund 100% of wages for any hours employees do work, as well as all employer National Insurance Contributions (NICs) and pension contributions – this replicates the level of support provided in August 2020 under the scheme.

In July, August and September 2021, employers will continue to be responsible for all employer NICs and employer pension contributions.

Employers are free to top up wages for hours not worked to 100% if they wish.

Who is eligible?

All UK employers with a UK bank account and UK PAYE scheme can claim through the CJRS (except those who are fully publicly funded).

To be eligible for the scheme from 1 November 2020 to 30 April 2021, an employee must have been on an employer’s PAYE payroll at 23:59 on 30 October 2020 and a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made between 20 March 2020 and 30 October 2020.

For periods from 1‌‌ ‌May 2021 onwards, employers will be able to claim for eligible employees who were on employers’ PAYE payrolls on 2 March 2021. This means they must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying us of earnings for that employee.

An employee does not have to be eligible for the original CJRS or have previously been furloughed, to be eligible from 1 November 2020 or from 1 May 2021.

Employees made redundant since 23 September 2020 can be re-employed and included in claims, subject to being on the payroll on 23 September 2020, and included on an RTI submission between 20 March and 23 September 2020.

For claim periods starting on or after 1 December 2020, employers cannot claim for any days on or after 1 December 2020 during which the furloughed employee was serving a contractual or statutory notice period for the employer (this includes people serving notice of retirement or resignation).

Can I use CJRS to pay for holiday leave?

HMRC have confirmed that employees can only be placed on furlough if an employer cannot maintain their workforce because their business has been affected by coronavirus, and not just because they are on paid leave. This also applied during any peak holiday periods in late December and early January. If an employee is flexibly furloughed, any time taken as holiday should be counted as furloughed hours rather than working hours.

The key consideration is the reason for furloughing the employee. They should not be furloughed because they are on annual leave, but they can be furloughed while on annual leave.

If a furloughed employee takes holiday, their employer should pay them their normal rate of pay in line with the Working Time Regulations.

What about employees serving their notice periods?

For claim periods from 1‌‌‌ ‌December 2020, employers cannot claim CJRS grants for any days that their employee is serving a contractual or statutory notice period, including notice of retirement or resignation.

Can employers re-employ someone and furlough them?
If employees were on an employers’ payroll on 23 September 2020 (i.e. notified to HMRC on an RTI submission on or before 23 September) and were made redundant or stopped working for them afterwards, they can qualify for the scheme if they re-employ them and then place them on furlough.
Claim process

Claims will need to cover a minimum period of seven days (unless it includes the first or last day of a calendar month). All claims must be for the same calendar month and each claim must be submitted by the 14th day of the following month (unless that falls on a weekend, in which case it is the next working day).

If an employer under claims through the scheme, they can only amend the claim up to 28 days after the month to which the claim relates (unless that falls on a weekend, in which case it is the next working day).

Deadlines for submitting and amending claims for each claim period can be found here.

What information on claims will HMRC publish?

From February 2021, HMRC will publish employer names for claims (for December 2020 onwards), an indication of the value of the claim and, for companies and Limited Liability Partnerships (LLPs) the company registration number of those who have made claims under the scheme. The published value of a claim will be shown within a banded range.

HMRC will also be improving the information available to furloughed employees by including details of claims made for them, (for claim periods starting on or after 1 December 2020) in their Personal Tax Account GOV.UK

Evolution of the CJRS 
March to June 2020  Employers can claim for 80% of wage costs plus associated employer NICs and pension contributions.
July 2020 - CJRS  Flexible furlough option: Employees can work part-time and claim 80% of wages plus the associated employer NICs and pension contributions for hours that the employee doesn't work.
August 2020 - CJRS The claim stays at 80% of wage costs, but no longer covers employer NICs or pension contributions.
September 2020 - CJRS The claim amount reduces to 70% of wage costs.
October 2020 - CJRS The claim amount reduces to 60% of wages costs.
November 2020 to June 2021 - Extension of CJRS Claim 80% of wage costs, but no employers NICs or pension contributions.
July 2021 - Extension of CJRS Claim 70% of wage costs, but no employers NICs or pension contributions.
August to September 2021 - Extension of CJRS Claim 60% of wage costs, but no employers NICs or pension contributions.
Under claims
If you have made a mistake in a claim that means you received too little money, you’ll need to amend it within 28 calendar days after the month the claim relates to – unless this falls on a weekend or bank holiday, in which case the deadline is the next weekday. For example, the deadline to amend claims for employees furloughed in February 2021 is Monday 29 March.
Over claims

If you have claimed too much CJRS grant and have not already repaid it, you must notify HMRC and repay the money by the latest of whichever date applies below:

  • 90 days from receiving the CJRS money you’re not entitled to
  • 90 days from the point circumstances changed so that you were no longer entitled to keep the CJRS grant.
HMRC checks

HMRC has the authority to check claims for all wage support schemes. On 3 March 2021, Rishi Sunak announced a new Taxpayer Protection Taskforce to tackle COVID-related fraud, which will be made up of £100 million and around 1,250 HMRC investigators.

Grants may be withheld or need to be paid back if any claim is found to be fraudulent, based on incorrect information or calculated incorrectly. 100% penalties can and will be applied where appropriate.

Grants for the CJRS can only be used as reimbursement for wage costs actually incurred.

Employers must agree any changes to working arrangements with their employees, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.

It is important that all claims are valid and are calculated in accordance with the guidance. HMRC has the ability to charge interest and penalties of up to 100% and can also use criminal powers for fraudulent claims. Even in cases of innocent mistakes, employers will be required to pay back any amounts that have been over claimed.

How can Crowe help?

Crowe can assist with calculating the amounts to claim under the CJRS and/or submitting the claims on your behalf, as well as any other ad hoc queries relating to the schemes.

Crowe can also offer a checking service to review claims that have already been submitted to ensure they are accurate and guide employers on how to repay any over claimed amounts.

If you would like any assistance with the CJRS, please speak to your usual Crowe contact.

Budget 2021

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