At the time of writing the Coronavirus Job Retention Scheme (CJRS) has supported over 1 million employers and 9 million jobs at an estimated cost to the treasury of £25 billion.
The extension of the scheme until 31st October and the introduction of flexible furloughing was a welcome move which will see a tapered removal of government support, rather than the cliff edge some had feared. However, the combination of flexible furloughing and the reduction in the amount that can be claimed has added additional complexity to an already confusing scheme that has seen many revisions to official government guidance.
Tapered withdrawal of furlough support
The below table summarises how the grant available will be reduced in the coming months:
|Month||Grant available||Top up from the business|
|July||80% of the worker’s salary up to £2,500 per month plus any associated employer’s NI and minimum employers workplace pension contribution.||Optional|
|August||80% of the workers salary up to £2,500 per month||Employer must pay any employer’s national insurance and workplace pension contributions.|
|September||70% of the workers salary up to £2,187.50 per month||Employer must top up pay by 10% and pay any employer’s national insurance and workplace pension contributions.|
|October||60% of the workers salary up to £1,875 per month||Employer must top up pay by 20% and pay any employer’s national insurance and workplace pension contributions.|
Assuming you had a director’s salary in place for the 19/20 tax year of £719 per month you will have no employers NI or workplace pension to consider. Provided you meet the requirements of the scheme and had furloughed yourself prior to 10th June and remained furloughed full time until 31st October 2020 you could claim as follows:
- July - £575.20
- August - £575.20
- September - £503.30 (Your business must top this up by a minimum of £71.90)
- October - £431.40 (Your business must top this up by a minimum of £143.80)
Flexible furlough was introduced from 1st July and means businesses can bring back furloughed workers part time, whilst still making a claim under the scheme for usual hours not worked. This much needed flexibility means that if you do not have enough work to justify a full time return to work you are able to work the hours you can, and remain furloughed for the hours you cannot. This could be useful if you are offered a contract with a reduced number of hours/days.
This can make calculating the amount of your claim more complicated and accurate record keeping here is essential. You will need to keep a record of the days or hours worked and your usual hours not worked. You should also retain evidence for the basis of your calculation e.g. if you usually invoice for 4 days each week you should use that as the basis of calculating usual days worked.
Taking the example above; if you ordinarily bill for 5 days per week however only have enough work to justify returning 2 days per week as a result of the coronavirus crisis, you will be able to claim for the days you remained on furlough. Assuming throughout August you work for 8 days out of a usual 20, you could claim for the 12 days you did not work. This would reduce the amount of your claim from £575.20 to £345.12.
When making a claim under the CJRS it is vital that you keep a copy of all records for 6 years. This should include:
- the amount claimed and claim period for each employee
- the claim reference number for your records
- your calculations in case HMRC need more information about your claim
- usual hours worked, including any calculations that were required, for employees you flexibly furloughed
- actual hours worked for employees you flexibly furloughed
It is essential that you have the information to support your claim as in the event of an investigation HMRC will expect to see it.
With you all the way
At ClearSky Contractor Accounting we have been keeping up to date with government guidance and are able to help you to calculate your claim. If you need assistance with calculating your flexible furlough claim, please speak with your accountant who will be happy to help.