Coronavirus Job Retention Scheme (CJRS)
More detail provided on the Coronavirus Job Retention Scheme (CJRS)
As originally announced the CJRS was, perhaps understandably, lacking in detail but HMRC has now provided more details of the scheme. These include:
- government to cover employer National Insurance and pension contributions of furloughed workers – on top of 80% of salary and over and above the £2500/mth/worker cap
- salary (or wage) does NOT include fees, commission or bonuses
- there is no requirement to ensure that furloughed employees are paid the National Living Wage (NLW) or National Minimum Wage (NMW); they must be paid the lower of 80% of their salary or £2500 even if, based on their normal working hours, this would be below the NLW/NMW
- those furloughed can volunteer for the NHS without risking their pay
- employees made redundant after 28th February 2020 can be re-employed and placed on furlough
- employees must be furloughed for a minimum of 3 weeks but an individual employee may be furloughed multiple times. This means that employers can rotate furloughed workers as long as they keep to the minimum 3 week furlough period
- furloughed employees will accrue holiday because they are still employed
- employees on sick leave can be furloughed when they are fit to return to work but not before
- employees who are shielding (i.e. self-isolating because they are in the “high-risk” group) can be furloughed
- furloughed employees retain all the same rights they did previously including SSP entitlement, redundancy pay, maternity and other parental rights, etc.
The following information will be required:
- your PAYE reference number
- the number of employees being furloughed
- the claim period (start and end date)
- amount claimed (per the minimum length of furloughing of 3 weeks)
- your bank account number and sort code
- your contact name
- your phone number
If your payroll is handled by HullJady then we will be in touch with you about making the claims.
HMRC retain the right to retrospectively audit all aspects of each claim.
Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.
Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.
The delay in obtaining reimbursement for furloughed employees is causing significant problems for some business owners who simply do not have the capital available to pay employees’ wages until the end of April. Unfortunately for such business owners the only options currently available under the Covid-19 support schemes would seem to be the cash grants of £10K for all businesses in receipt of small business rate relief or £25K for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000 or the Coronavirus Business Interruption Loan Scheme (CBILS) providing loans of up to £5M for SMEs.
The grants are being disseminated to businesses by the local authorities and our experience is that how quickly the process is happening depends very much on which local authority you come under. If you envisage having issues in meeting your salary costs in the short term then do get in touch with your local authority to chase up your grant if you are entitled to one.
If you believe that the CBILS may be of assistance to you then contact us and we will be happy to discuss this and help with the process. More information on the scheme and how to apply can be found here: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/for-businesses-and-advisors/