Good afternoon,
I hope this email finds you well on a Monday afternoon. Today we are sharing an update on the Government's Job Retention Scheme from M J Goldman, a business which we have strong connections with and who work as the accountants for many of our clients.
If you would like us to put you into contact with M J Goldman, please let us know and we can arrange an introduction for you.
CHANGES TO THE CORONAVIRUS JOB RETENTION SCHEME.
As you will no doubt have seen, the Chancellor announced further changes to the Coronavirus Job Retention Scheme (CJRS) at Friday’s press briefing with the key objective being for the scheme to become more flexible and thus allow employees to work on a part-time basis as businesses begin to re-establish themselves and commence trading again.
From the 1 July 2020, employers will be able to put staff on part-time furlough, claiming the CRJS grant for a portion of their salary. However, employers will only be able to claim going forward if they have previously claimed under the pre 1 July scheme. Which therefore means that, due to a furlough period having to be a minimum of 3 weeks, that any new period of furlough leave must have started by the 10 June 2020 in order to be completed before the new scheme starts on the 1 July.
The changes announced also introduce a new limit to the number of staff who can be included in a claim, which will be based on the maximum number of staff ever included in any single pre 1 July claim. Whilst, from the 1 August the grant will no longer cover the cost of employers’ National Insurance nor pension contributions.
For July the grant will continue to be available on the same basis as now, i.e. the lesser of 80% of pay or £2,500. However, the Government’s intentions is that they will reduce their contribution over the remaining 3 months of the scheme, with a corresponding increase in employer contributions, on the following basis;
August – the CRJS will continue to pay 80% of wages (but not the related employer’s National Insurance and pension contributions)
September – the CRJS will pay 70% of wages while employers will pay the other 10%
October – the CRJS will pay 60% of wages while employers will pay the other 20%
The scheme itself still has many of the same features as the current scheme, which runs between the 1 March and 30 June 2020, however there are some important changes effective from the 1 July 2020;
Employees who were previously furloughed will be able to return to work on a flexible part-time basis;
For those employees who are furloughed part-time, employers will be required to pay for the cost of the time staff are working. The grant is then there to cover/partially cover their furloughed hours.
In order for an employee to be covered under the new scheme they need to have been furloughed under the present scheme. Thus the furlough scheme is effectively shut to new entrants after the 30 June 2020. Hence the need for any employees to have been furloughed by the 10 June to qualify.
Other key changes to point out are;
From the 1 July 2020, claim periods can no longer overlap months, in order to reflect the above changes. This will make the furlough calculations more complex for those employers whose pay period straddles one calendar month;
From the 1 August 2020, a new minimum reporting period of one week will be applied. This is currently three weeks, so this again provides more flexibility and also the ability to receive funds sooner;
The new calculations will be based on hours employees have not worked based on their usual working hours and employers will need to report this information as part of their claims. Therefore, it is important that this information is recorded so that it may be used when claims are being made;
There is a new maximum limit to the number of staff who can be included on a claim. This will be based on the maximum number of staff included in any single claim under the original scheme. Previously, the number of staff that could be claimed for was capped at the number of staff on the company’s payroll as at the 19 March 2020.
The above information is all that has been released at this time and HMRC are aiming to publish detailed guidance by the 12 June.
These changes are obviously significant, whilst the flexibility being brought forward one month is welcomed. We are aware, from speaking with our clients, that there is a strong desire to re-establish trading however the economic uncertainty is such that the ability to do this on a flexible basis will help with this. We also appreciate that these changes may well lead to important decisions needing to be made in regards to staffing and should you wish to discuss any of these matters please feel free to get in touch. As always, we are here to help.