Coronavirus Job Retention Scheme extension details

Earlier this month the Chancellor, Rishi Sunak, announced an extension to the Coronavirus Job Retention Scheme (CJRS). In this blog, HM Revenue & Customs (HMRC) explains the details of part time furloughing and key dates of the scheme as announced on 29 May 2020.

Flexible furlough

From 1‌‌ July 2020, businesses have the flexibility to bring previously furloughed employees back to work part-time. The government will continue to pay 80% of wages for any of their normal hours they do not work up until the end of August.

Employers can decide the hours and shift patterns that employees will work on their return. As the employer, you are responsible for paying their wages in full while working.

Any agreed working hours arrangement must cover at least one week and be confirmed to your employee in writing.

When claiming the CJRS grant for furloughed hours, you need to report and claim for a minimum period of a week. Data on the usual hours an employee would be expected to work in a claim period and actual hours worked will need to be submitted by employers.

If your employees are unable to return to work, or you don’t have work for them, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.

An employee must be furloughed for the first time by 10th June to be able to submit any subsequent claim for them.

This is edited from information provided by HMRC, read further information about CJRS.

Employer contributions

Here are the next steps as laid out by the government of the phased plan:

• June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work.
• August: The government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed.
• September: The government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
• October: The government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500.

This information can be found via gov.uk – read the full details here about frlexible furlough next steps.

Smaller business employers

If you are a smaller business owner and employer, some or all of your employer NIC bills will be covered by the Employment Allowance.

Approximately a quarter of CJRS monthly claims relate to wages below the threshold where employer NICs and auto enrolment contributions are due. In which case, no employer contribution will be required for these furloughed employees in August.

Scheme to close for new entrants

The scheme will close to new entrants from 30‌‌ June. From then on, employers will only be able to furlough employees that have furloughed for a full three-week period prior to 30‌‌ June. Therefore, 10 June is the final date you can furlough an employee for the first time to allow the current three-week furlough period to be completed by 30‌‌ June.

Employers have until 31‌‌ July to make any claims for the period to 30‌‌ June.

This information has been sourced and edited from HM Revenue & Customs bulletin from the Chief Executive and Permanent Secretary – HMRC.

Make informed accounting decisions

At McKenzies, we often talk about helping our clients navigate their financial journey to their chosen destination. With so much uncertainty and constant change, now is the time to make informed accounting decisions for your business. We help our clients by being proactive and guiding them through all the different compliance and advisory challenges on their journey.

If you feel you need some guidance and business support, then contact our team of chartered accountants in Oxted, Surrey to discuss our accountancy services. We can help with any outsourcing tax services such as payroll, bookkeeping or VAT returns. Or provide strategic advisory services such as budgets & forecasts, tax planning reviews or business valuations. HM Revenue & Customs are set to announce more details of how the furlough scheme interacts with work on Friday 12 June.