Coronavirus Job Retention Scheme(CJRS)

Covid 19 - Flexible Furloughing Starts on Job Retention Scheme

The coronavirus pandemic has taken a toll not only on world health but on businesses as well. The government with the introduction of the Coronavirus Job Retention Scheme(CJRS) earlier this year in March managed to save many employers from engaging in mass redundancies. However, the main criteria to furlough till the end of June was the assumption that the employee was ‘on temporary leave’ and thus, not doing any work i.e. not even working from home, for the employer. However, with the gradually easing down of the lockdown, employees are now going to rejoin the workforce. So, where does that leave us with furlough and the various business tax that employers have to pay?

Flexible Furlough starts from 1st July 2020 From July 2020 there is a dramatic change in furlough. You can still reclaim 80% on your employee’s wages upto the cap amount of £2500. However, this would be for the normal hours that they do not work.

The same applies to the Employer NIC and WPP contributions as well. When your staff does not work, you can claim for those hours. But, when your employees are working for you (even part time or flexi hours) you need to pay their wages as well as bear the cost of the employer’s NIC and pension contributions.

There are other differences too, like for instance furlough can even run for a week now. However, by making employees pay for the NIC and pension part of the working hours the government is clearly gradually shifting away from the total dependency that the grant formerly offered. Therefore, considering

this, it makes sense to ask your Payroll provider for some tax advice so that you know how much your PAYE and NIC liability will come to. Employment Allowance should help ease the burden.

Employer NIC and WPP will soon be non-reclaimable From August employers will no longer be able to re-claim on the Employer’s NIC and WPP contributions for the time that the employee is marked on furlough. This will cause an increase in the monthly liability amounts that you as an employer are paying to the HMRC. Thus, you might want to check the business tax implications as well.

Furlough will no longer be 80% From September to October (the last month of the scheme) the percentage contributed by the government falls from 70% to 60%. Your employee on the other hand is still to be paid at 80%. In short, the employer here would pay the deficit. Thus, you may want to get some tax advice to help you with the same.

Have you heard of the £1000 bonus?

Employers who continue to employ their employees on payroll till January and February 2021 will be entitled to a £1000 bonus per employee who remains on payroll. This clearly is a further incentive from the government to promote a stale job market.

Here’s a quick reference table which should assist you with the points mentioned above: Month

Furloughed

Cap

ER NIC

ER WPP

Description

June

80% (by govt.)

£2500

Reclaimable

Reclaimable

Employer can pay 20% top-up

July

80% for normal hours not worked i.e. apart from the part time hours

£2500

For the hours the For the hours the If employees are employee works employee works kept full month of it is the it is the furlough they need employer’s employer’s not work part-time liability for the liability for the and will receive the furlough it is furlough it is normal 80% reclaimable reclaimable

August

80% for normal hours not worked i.e. apart from the part time hours

£2500

Non-reclaimable Non-reclaimable

September

70% (by govt.)

October

60% (by govt.)

£2187.50 Non-reclaimable Non-reclaimable £1875

Non-reclaimable Non-reclaimable

Full NIC and WPP amount to be borne i.e. 5% emp cost 10% employer pays 20% employer pays