Coronavirus Job Retention Scheme: Making a Claim

Employers across the UK are now able to make claims under the Coronavirus Job Retention Scheme (CJRS) for March and April, after HMRC’s new, online claim portal went live on Monday.

What’s more, if your accountant is currently enrolled as your HMRC agent for PAYE, they should able to make the claim on your behalf. To determine your eligibility for this scheme, and whether you’d like to make a claim, we’ve pulled together some more information on the CJRS to help you come to a decision.

What is the Coronavirus Job Retention Scheme?

The government launched the CJRS back in March, in an unprecedented attempt to help businesses – and their employees – affected by the financial fallout of COVID-19 (Coronavirus). The scheme will reimburse 80% of a furloughed workers’ regular wage costs, up to a maximum of £2,500 per month.

The CJRS will run for four months from 1st Marchst and will be extended further if necessary. Pay will be backdated to the start of that period. Qualifying organisations include:

  • UK businesses
  • UK charities
  • UK recruitment agencies
  • Other public authorities

To register, “you must have created and started a PAYE payroll scheme on or before 19th March 2020 and have a UK bank account”.

Am I eligible for the Coronavirus Job Retention Scheme?

The qualifying conditions for the CJRS are as follows:
  • Your PAYE scheme must have been active on or before 19thth March 2020.
  • Your Director and/or Employee must have been on the payroll on or before 19thth March 2020.
  • Your Director and/or Employee must be formally ‘furloughed’ as a result of COVID-19 (Coronavirus).
It must be remembered, though, that the central purpose of the CJRS is to provide emergency support to employers’ whose operations have been severely affected by COVID-19 (Coronavirus). It aims to enable them to retain employees who would otherwise be made redundant as a result of the pandemic’s economic impact.

It’s an essential lifeline for businesses in need. Therefore, a business is only expected to make a claim for the CJRS if they have suffered a reduction in trading income due to COVID-19 (Coronavirus).

Ultimately, the decision to make a claim rests with yourself. If you choose to go ahead we’re, of course, here to assist you.

However, we must make it clear that, as HMRC have indicated, all claims will be audited in the future and, should your claim later be rejected, you will be liable for any repayments to HMRC.

How much can I claim?

The amount you’re entitled to claim for this grant is dependent on whether your Director and/or Employee is paid a fixed salary, or receives variable pay.

Where a fixed monthly salary is paid, the grant will amount to 80% of the payroll for February 2020, or £2,500, whichever is lower.

If the amount of pay differs month-by-month, as is the case for many seasonal workers, the calculation is dependent on the length of time the employee has worked for you and is based on average earnings. If applicable, this can be calculated for you when submitting your claim.

Please note, if your Director and/or Employee is furloughed part way through the month, your grant will be pro-rated accordingly. And, while you’ll still need to pay Employer’s National Insurance and pension contributions on behalf of your furloughed employees, you can also make a claim for these too.

To find out more about what you can and cannot claim, click here.

What does it mean to be ‘furloughed’?

  1. Employees
An American term, to ‘furlough’ someone is to temporarily grant them a leave of absence. The term has been adopted by the government to apply to employees being laid off as a result of COVID-19 (Coronavirus).

No work should be undertaken by employees whilst under furlough. The furlough period needs to last for at least three weeks. After that, the employee can be reinstated.

  1. Directors
For a Director, the statutory duties required under the Companies Act 2016 override furlough rules. So, on that basis, a Director is able to continue with their statutory duties whilst under furlough. These duties include aspects relating to: company accounts, paying creditors and collecting overdue funds.

However, this does not extend to undertaking ‘income generating’ work, as well as marketing, business plans, etc. This is an important distinction for a Director to consider before deciding whether or not to furlough themselves.

Tax & the Coronavirus Job Retention Scheme

Please note, payroll will run as normal at the amounts instructed by yourself. The usual tax and National Insurance deductions apply, as do RTI submissions to HMRC.

Payments received by a business under the CJRS are made to offset employee costs. They must therefore be included in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with the ‘normal’ principles.

How can I make a CJRS claim?

HMRC have created a secure online portal, which went live in April, to enable claims for this scheme to be submitted.

If Danbro are currently enrolled as your agent for PAYE, we can make the claim on your behalf.

Alternatively, you can make a claim yourself and should receive more information by email directly from HMRC.

In readiness for your claim, HMRC have provided a list of required information. This includes:

  1. The bank account number and sort code you’d like to use.
  2. Your Self-Assessment UTR (Unique Tax Reference), Company UTR or CRN (Company Registration Number).
  3. The name, employee number and National Insurance number for each of your furloughed employees.
  4. The total amount being claimed for all employees.
  5. The furlough period in total.

Once your claim is submitted, you should receive the funds into your nominated bank account within six working days.

However, given the volumes HMRC are dealing with at the moment, it may take slightly longer. To read HMRC’s guidance in full, click here. In addition, you can find more guidance on our exclusive Business Support Hub, here.

In the meantime, from everyone at Danbro, we hope you and your family are keeping safe and well during these testing and unfamiliar times.

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