Coronavirus Job Retention Scheme Updates
We bring you the latest updates on policy and guidance that we have gathered this past month to keep you updated.
Wednesday 17th June at 10am Mica Bristow and Katie Linstead in collaboration with Croner HR held a webinar on the CJRS changes and guidance with a live Q&A!
CJRS updated numbers
Value of CJRS claims hit £21bn.
Since the final cut-off for furloughing employees for the first time, the number of jobs claimed for has risen from 8.9 million to 9.1 million.
As of June 7, the number of jobs furloughed stood at 8.9 million with the total value of claims coming to £19.6bn.
The number of employers using the scheme has remained at 1.1 million since the end of May, but the number of jobs furloughed is now 9.1 million with a total value of claims hitting £20.8bn.
It’s important to note that the scheme will close to new entrants from 30 June. From this point onwards, you will only be able to furlough employees that you have furloughed for a full three-week period prior to 30 June.
This means that the final date that you can furlough an employee for the first time will be 10 June for the current three-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.
From 1 July 2020, you’ll have the flexibility to bring previously furloughed employees back to work part-time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced to help people get back to work.
You can decide the hours and shift patterns that your employees will work on their return and you will be responsible for paying their wages in full while working. This means that employees can work as much or as little as your business needs, with no minimum time that you can furlough staff for.
Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week. You can choose to make claims for longer periods such as on monthly or two weekly cycles if you prefer. You will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.
If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.
Flexible working to increase 45% post-pandemic!
Nearly half (44 percent) of UK workers will request their employer provides permanent flexible working arrangements after COVID-19 restrictions are fully lifted, research finds.
Have my workplace pension duties changed?
Your automatic enrolment (AE) duties continue to apply as normal, including your re-enrolment and re-declaration duties and paying contributions. This is the case whether your staff are still working or are being furloughed as part of the Coronavirus Job Retention Scheme.
For claims starting on or after 1 August, employers will no longer be able to claim a grant for the statutory minimum automatic enrolment employer contributions – from this date, they will need to pay for their own pension contributions and National Insurance contributions for all staff. Through the Coronavirus Job Retention Scheme, they will still be able to claim the lower of 80% of staff wages or £2,500 a month, reducing to the lower of 70% or £2,187.50 a month in September and the lower of 60% or £1,875 in October, with the scheme closing on 31st October.
Maintaining pension contributions
Do I have to continue paying pension contributions?
The obligation for you and your members of staff to make contributions is set out in your pension scheme’s rules or other governing documentation.
Your staff may choose to either reduce their contribution level (if the scheme rules allow this) or opt out or cease active membership of the scheme if they decide that is right for them at this time. However, you must not encourage or induce them to choose this option. If staff choose to reduce their contributions your scheme rules may allow you to reduce your employer contributions or retain them at the current rate.
Any member of staff who reduces their contribution below the statutory minimum, or opts out, or ceases active membership, must be put back into the pension scheme at the next re-enrolment date provided they:
- Meet the criteria for re-enrolment.
- reduced their contribution below the statutory minimum, opted out or ceased active membership more than 12 months before the re-enrolment date. If they have opted out or ceased active membership within the 12 months before the re-enrolment date you can choose to re-enrol them, but you don’t have to.
Any member of staff who reduces their contribution below the statutory minimum, or opts out, or ceases active membership, can also choose to opt back in to pension saving before the re-enrolment date if they wish.
Unless a member of your staff asks to opt out of their workplace pension or reduces their contributions, you and your staff members must continue to make the contributions required under the scheme at the correct time.
Any staff contributions you deduct from their wages must be paid to the scheme and not used for any other purposes.
Government Business support packages
We know that these are challenging times. If your business is struggling with cashflow as a result of the coronavirus, the government has published information about the support available for employers such as:
- the Coronavirus Job Retention Scheme for staff furloughed on or before 10 June 2020, if you are struggling with maintaining your current levels of staff
- deferring VAT and Self-Assessment payments
- a Statutory Sick Pay relief package for small and medium sized businesses
- a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in Great Britain
- small business grant funding of £10,000 for all businesses in receipt of small business rate relief or rural rate relief
- grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
- the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for small and medium sized business through the British Business Bank
- a new lending facility from the Bank of England to help support liquidity among larger firms
- the HMRC Time To Pay Scheme.
Find out about the different support packages available on the Business Support website.
Parents returning to work after extended leave
People on paternity and maternity leave who return to work in the coming months will be eligible for the government’s furlough scheme, HM Treasury announced on the 9th of June.
- parents on statutory maternity and paternity leave who return to work in the coming months will be eligible for furlough scheme even after 10 June cut-off date
- Coronavirus Job Retention Scheme will close to new entrants at the end of June as new flexibilities are introduced to support economy
The Coronavirus Job Retention Scheme (CJRS) has been extended until October, with new flexibilities introduced from 1 July to support the economy by allowing furloughed employees to return to work part-time.
To enable the introduction of part-time furloughing, and support those already furloughed back to work, claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees. This means people must be on the furlough scheme by 10 June.
However, the government today confirmed that parents on statutory maternity and paternity leave who return to work in the coming months after a long period of absence will be permitted to be furloughed.
This will only apply where they work for an employer who has previously furloughed employees.
Chancellor of the Exchequer Rt Hon Rishi Sunak MP said:
When I announced these changes to the furlough scheme last month, I was clear that we wanted to do this in a fair way, that supports people back to work as the country begins to re-open following coronavirus.
But for parents returning from leave, their circumstances has meant that they are still in need of support, and I’m pleased that they will be able to receive the financial assistance they and their family will need.
From August, the government grant provided through the job retention scheme will be slowly tapered.
- in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work
- in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed
- in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
- in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
- the cap on the furlough grant will be proportional to the hours not worked.
If you are a smaller employer, some or all of your employer NIC bills will be covered by the Employment Allowance, so you should not be significantly impacted by that part of the tapering of the government contribution.
Around a quarter of CJRS monthly claims relate to wages that are below the threshold where employer NICs and auto enrolment contributions are due, and so no employer contribution will be required for these furloughed employees in August.
Temporary exemption to income tax and NICs
A temporary exemption will operate from 11 June 2020 and for the remainder of the 2020-2021 tax year
Employers may have asked employees to purchase equipment and materials to enable their home-office set up due to the Coronavirus lockdown measures, which require employees to ‘work from home where they can’.
Employers will benefit from a temporary lifting of a reporting measures for Income Tax and NICs where the following two conditions are met:
- Equipment is obtained for the sole purpose of enabling the employee to work from home as a result of the coronavirus outbreak
- The provision of the equipment would have been exempt from income tax under section 316 of ITEPA if it had been provided directly to the employee by or on behalf of the employer
Section 316 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) provides a tax exemption where an employer provides home office equipment directly and retains ownership of that equipment, and the employee’s private use is not significant.
This current exemption does not extend to employer reimbursements for employee expenditure on home- office equipment. As required by section 210(2) ITEPA 2003, the exemption will be conditional on the benefit of any reimbursement in respect of home-office equipment expenses being made available to all of an employer’s employees generally on similar terms.
The exemption is a temporary measure that will apply from the day after regulations come into force until, stated to be from 11 June 2020 until the end of the tax year 2020-21. Meanwhile, HMRC will exercise its collection and management discretion and will not collect tax and NICs due on any reimbursed payments made from 16 March 2020 until the regulations take effect, provided the relevant conditions are met.
Some of you may have seen a television series called “Spring at Jimmy’s Farm”, which was recorded at the beginning of lock down. The programmes follows Jimmy around his estate, and shows what the lockdown has meant for Jimmy and his business, through having to furlough his staff, while the animals deal with not having many visitors. It is a great watch, and features an amazing meerkat called Steve McQueen, who keeps escaping his enclosure!
Jimmy’s farm has been part of the Pay Check family since the very beginning of his company. We have ran their payroll for many years as the business has grown from a tiny bit of land and a portacabin as his base, to the massive farm that we see today! We at Pay Check are all proud of Jimmy’s success, and to have supported Jimmy’s growth along the way by taking care of his payroll process.
Guidance and support
Further support for employers and agents on how to calculate claims with this extra flexibility will be available by 12 June, including webinars and detailed online guidance. For information about how to claim, go to GOV.UK and search 'Coronavirus Job Retention Scheme'.
Protect yourself from scams
Stay vigilant about scams, which may mimic government messages as a way of appearing authentic and unthreatening. Search 'scams' on GOV.UK for information on how to recognise genuine HMRC contact. You can also forward suspicious emails claiming to be from HMRC to firstname.lastname@example.org and texts to 60599.
Pay Check survey
And finally, we are trying to gather as much information from our clients as possible in order to serve them best - if you have 30 seconds we would really appreciate you completing this super quick survey on your intentions over the next few weeks
The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our COVID-19 Update page.
Updated: 23 June 2020
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