The Coronavirus Job Retention Scheme (CJRS) has been extended for the second time in a week, the Chancellor confirming that the CJRS will now run until the 31st March 2021.
This surprise announcement will be welcomed by many employees facing uncertainty as we enter national lockdown and whilst it offers minimal support to contractors working through their own limited company, it does offer some support to those with a salary in place.
Businesses across the UK can claim, whether their business is trading or temporarily closed and there is no requirement for the business or employee to have accessed the CJRS previously.
The government has confirmed that the scheme rules for this period will remain largely the same as they were in August 2020. Initially, the grant available is 80% of usual salary for the hours not worked, up to a maximum of £2,500 per month. The grant will not cover Employers National Insurance and workplace pension costs - businesses will need to pay this cost if applicable. The Chancellor has already confirmed that the scheme will be reviewed in January and at that point the grant available may decrease and the contribution required from businesses may increase.
As in August 2020 you can furlough flexibly, paying salary as usual for hours worked and claiming a CJRS grant for the hours not worked. This flexibility allows you or your employees to work reduced hours if your workload requires. For the hours furloughed, you cannot do any work for the business that makes money or provides services to the business. It has been confirmed previously that directors may complete statutory duties (e.g. statutory filing) whilst on furlough.
Am I eligible for the extended CJRS?
To make a claim under the extended CJRS you, or the employee you wish to make a claim for, must have been on your company’s PAYE payroll on 30 October 2020. You must have made a PAYE Real Time Information (RTI) submission to HMRC for the person you wish to make a claim for between the 20 March 2020 and 30 October 2020.
Neither the business nor the employee needs to have accessed the furlough scheme previously.
How much can I claim?
For claims between 1 November 2020 and 31 January 2021 the grant available is 80% of usual wages up to a maximum government grant of £2,500 per month per employee for the time the employee spends on furlough. The £2,500 cap is proportional to the hours not worked.
For employees on a fixed salary that were on payroll on or after 20 March 2020, so were not eligible for the CJRS previously, the last pay period prior to 30 October 2020 provides the basis for the calculation of usual wages.
For employees on a fixed salary who were previously eligible for CJRS, the calculation rules will remain the same as under the current scheme, this means the last pay period on or before 19th March 2020 provides the basis for the calculation of usual wages. This is the case even if a claim was not made in respect of that employee under CJRS to 31 October 2020.
Funds received from the CJRS are still regarded as taxable income, however as salary is an expense, this means the impact on your corporation tax liability is neutral. The salary is taxable in the usual way.
Making a claim
As is the case currently under the CJRS, claims can be made in advance of running payroll or in arrears. As the portal that facilitates these claims under the extended CJRS will open on 11th November 2020, businesses will need to claim in arrears for the period from 1st November to 11th November. HMRC expects to make payments within 6 working days of a successful claim once the portal is open.
If we are authorised as your agent for PAYE, we will be able to make the claim on your behalf.
There are now shorter deadlines for making a claim. All claims for periods from 1 July 2020 to 31 October 2020 must be submitted no later than 30 November 2020.
Claims from 1 November 2020 must be submitted by 11.59pm 14 calendar days after the month you’re claiming for. If this time falls on the weekend, then claims should be submitted on the next working day.
|Claim for furlough days in||Claim must be submitted by|
|November 2020||14 December 2020|
|December 2020||14 January 2021|
|January 2021||15 February 2021|
|February 2021||15 March 2021|
|March 2021||14 April 2021|
Impact on other coronavirus support schemes
The extension of the CJRS has meant that other support measures have now been postponed. The Job Support Scheme (“JSS”), which was scheduled to start on Sunday 1st November, has been delayed until the CJRS ends.
The Job Retention Bonus, which would see businesses paid £1,000 per employee that was furloughed and subsequently returned to work, has been withdrawn. This was due to be paid to eligible businesses in February and will be redeployed at an appropriate time.
Full guidance for the extended CJRS covering the period from 1st November 2020 to 31st January 2021 will be published on 10 November 2020. The portal that facilitates claims will not open until 11th November, until then no action is needed on your part.