CJRS has updated over 50 times: here’s some key details contractors may have missed

It’s clear that we’re not alone in our belief that when it comes to the Coronavirus Job Retention Scheme (CJRS), making sense of the government’s guidance has not always been an easy task.

In fact, while others have understandably lost track of how many versions of the CJRS there have been since it was introduced back in March, we can reveal that information on the scheme has been edited more than 50 times, writes Joanne Harris, technical commercial manager at employment services provider Parasol Group.

The flexible (and more financially onerous) furlough phase is here

Perhaps more concerning to contractors, and affecting greater swathes of them than ‘furlough fraud,’ the ‘flexible’ phase of the scheme started on July 1st 2020, ushering in major changes such as bringing workers back from furlough, and increasing the required financial contributions from employers for employees still on furlough.

As is often the case with key government policies, technical details are only revealed after the initial headline announcement. The government had very little time to roll out this unprecedented support package, and so updates after the fact were to be expected. .

Although the scheme is now officially scaling down, updates are continuing to be made to the CJRS guidance, bringing new information on redundancies, overtime pay and National Insurance. Let’s explore each of these in turn.

Redundancy pay for employees clarified

With a reported one in three UK firms planning to make redundancies due to the coronavirus pandemic, a new CJRS update has been released clarifying redundancy pay for those on furlough. 

In particular, HMRC has now made the important clarification that redundancy pay should be calculated at 100 per cent of an employee’s usual wage -- not the reduced rate under the CJRS.

In Northern Ireland, this currently does not apply, but employers operating there should keep a close eye on updates which may bring them in line with England, Wales and Scotland.

Claiming for overtime earnings

Calculating how much you can claim for furloughed employees can be complicated, and the latest CJRS guidance provides an important date for employees who work regular overtime.

Employers can now calculate a claim for fixed pay staff who have worked enough overtime in the 2019/20 tax year to have a significant impact on the amount they need to claim.

If overtime pay has a ‘significant’ effect on an employee’s earnings, employers can now claim as if the worker had varied pay as opposed to a fixed wage.

The issue for many in this situation is that they have already claimed and paid employees under the former CJRS guidelines, which did not state this. Therefore, this will only apply to any claims being made in the future, not retrospectively.

National Insurance numbers matter more than ever

Within the new CJRS information on claiming for wages, there’s more important detail for employees that do not have a National Insurance number.

Specifically, HMRC will no longer accept claims concerning under 100 employees where National Insurance numbers are missing. And they say that its tax helpline staff should only be contacted if an employee has a temporary number or has genuinely never had one.

The best way to avoid this is, of course, to ensure all numbers are supplied, and contact HMRC before you have started the claim process if any details are missing.

What action should employers take?

Despite the ongoing changes to the CJRS, employers who claimed through the scheme shouldn’t run into any issues, providing their claim was in line with current guidance at the time.

However compliance, as always, is the key. HMRC have been clear that they will be auditing claims made under the CJRS and given the penalty for errors can be as much as 100% of the amount overclaimed, it is important that you check your claims and make corrections where appropriate.

Now and next

Currently, through August, employers should be making National Insurance and pension contributions for the hours an employee is on furlough, with the government still providing 80 per cent of their wage costs -- up to a maximum of £2,500 per month.

But in September, the government contribution to the furlough scheme drops to 70 per cent, leaving the employer obliged to top-up the remaining 10 per cent of pay. This again is reduced to 60 per cent in October, the final month of the CJRS.

Final thought

Whether it pertains to redundancy, overtime, or National Insurance, guidance on the CJRS should be checked by employers regularly and copies or screenshots of relevant government information, retained wherever possible. The act of keeping what you acted upon, for your records, could prove invaluable in the event of an HMRC investigation.

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Written by Joanne Harris

Joanne joined the Optionis Group in 2009 as an account manager, working closely with our agency partners. After developing an interest in the technical aspects of the role, she took the opportunity to train as a chartered accountant. She is now fully qualified, and a member of the Association of Chartered Certified Accountants (ACCA).
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