The Coronavirus Job Retention Scheme (CJRS) will now expire at the end of September 2021 and employers will have limited time following this deadline to correct any claims. Preparing for when furlough ends.
HMRC has restated that it will check all claims before payments are made and from December 2020 will publish details of all companies and LLPs making furlough claims. It is important to make sure that all claims you have made are checked as any errors must be reported to HMRC and corrected – read more on the HMRC’s CJRS enforcement rules and powers.
CJRS version 4 – 1 May to 30 September 2021
Basic employee eligibility rules
Any individual employed at 2 March 2021 (on a full time, fixed period or variable contract) who had their earnings notified to HMRC via an RTI submission between 20 March 2020 and 2 March 2021.
Employees must not carry out any duties whilst on furlough; however, they could undertake training provided this did not make money or services available to the employee (or any associated employer).
Claim dates and deadlines
For version 4, claims have to cover at least a seven day period and can only cover days within the same calendar month, eg only days in December 2020. The exception to this is where the claim covers the last or first day of the month and you have already claimed for the period ending immediately before it.
The claim must be made within 14 days of the end of the calendar month (unless this falls on a weekend, then it is the next working day) - eg 14 July 2021 for June 2021.
Correcting errors under version 4
It is possible to delete a claim from the online service provided it is done within 72 hours of starting it. If you notice an error after this, then a different approach needs to be taken, depending on when the error is noticed and whether the error results in an under or overclaim:
- Within 28 days of claim period end – an adjustment made be made through the online portal to correct regardless of whether the error results in an under or overclaim.
- After 28 days - it isn’t possible to correct the claim online, but there are different rules depending on whether the error is an under or overclaim,
Underclaims – it’s not possible to correct an underclaim after 28 days; however, the employer is still required to make good to the employee any underpayment of grant within a “reasonable time frame”. This applies even though they are unable to claim this back. Failure to do so puts at risk the whole employee’s claim for that claim period.
Overclaims – must be notified to HMRC directly and either deducted from the next claim being made or arrangements made to make direct repayment to HMRC.
There is a requirement to notify HMRC within 90 days of either:
- The date they ceased to be entitled to the payment
- The time the payment is received.
Failure to notify within this timeframe could lead to significant penalties.
With effect from April 2021 HMRC also provided the opportunity to make an overclaim disclosure via corporation tax and self-assessment tax returns.
CJRS grant available
The grant available drops over the period to September 2021, but there is still a requirement to pay the employee 80% of their reference pay.
|
|
May 2021 |
June 2021 |
July 2021 |
August 2021 |
September 2021 |
|---|---|---|---|---|---|
|
Pay |
80% of reference salary (subject to cap of £2,500)
|
80% of reference salary (subject to cap of £2,500)
|
70% of reference salary (subject to cap of £2,187.50)
(10% top up by employer) |
60% of reference salary (subject to cap of £1,875)
(20% top up by employer) |
60% of reference salary (subject to cap of £1,875)
(20% top up by employer) |
Unlike earlier versions of CJRS it isn’t possible to make a claim for employer national insurance or pension contributions.
Calculation rules for reference pay and usual hours
As in other versions, the reference pay rules for version 4 depend on whether an employee is engaged on a fixed salary or paid variably and when the last RTI submission before furlough was for that individual.
For employees on a fixed salary
|
Last RTI submission for employee |
Reference pay |
Usual hours |
|---|---|---|
|
On or before 19 March 2020 |
Amount in last pay period ending on or before 19 March 2020 |
Contracted hours in last pay period ending on or before 19 March 2020 |
|
Between 20 March 2020 and 30 October 2020 |
Amount in last pay period ending on or before 30 October 2020 |
Contracted hours in last pay period ending on or before 30 October 2020 |
|
Between 31 October 2020 and 2 March 2021
|
Amount in last pay period ending on or before 2 March 2021
|
Contracted hours in last pay period ending on or before 2 March 2021
|
For variably paid employees
|
Last RTI submission for employee |
Reference pay |
Usual hours |
|---|---|---|
|
On or before 19 March 2020
|
The higher of: 1. Average wages payable from later of date of employment started and 6 April 2019 and the day before being furloughed. and 2. Wages earned in corresponding calendar period in 2019/20 |
The higher of: 1. Average number of hours from later of date of employment started and 6 April 2019 and the day before being furloughed. and 2. Hours in corresponding calendar period in 2019/20 |
|
Between 20 March 2020 and 30 October 2020 |
|
Average hours from later of date of employment started and 6 April 2020 |
|
Between 31 October 2020 and 2 March 2021
|
|
Average hours from earlier of date employment started and 6 April 2020 to first day spent on furlough after 1 May 2021 |
Changes to Average Pay Calculation – version 4 only
When calculating the averages noted above it should exclude any days and corresponding amounts relating to the following types of leave:
- Statutory sick pay related leave and any subsequent reduced rate paid leave.
- Family related statutory leave and any subsequent reduced rate paid leave
This is unless the individual was on one of these kinds of leave for the whole of the period used to calculate their average wages, in which case you should include these days and corresponding amounts.
Please contact our team should you have any queries.
Subscribe to receive the latest BDO News and Insights
Please fill out the following form to access the download.