Coronavirus Job Retention Scheme (Furloughed Workers)

Coronavirus Job Retention Scheme (Furloughed Workers)

The Coronavirus Job Retention Scheme is being extended until 31 March 2021.

30 November 2020 is the last day employers can submit or change claims for periods ending on or before 31 October 2020.

The online service you'll use to claim under the Coronavirus Job Retention Scheme is now available: www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme.

If you cannot maintain your workforce because your operations have been affected by coronavirus (COVID-19), you can furlough employees and apply for a grant to cover a portion of their usual monthly wage costs where you record them as being on furlough.

The Coronavirus Job Retention Scheme will remain open until 31 March 2021. From 1 November 2020 you can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month.

You can claim for employees who were employed on 30 October 2020, as long as you have made a PAYE RTI submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. This may differ where you have made employees redundant, or they stopped working for you on or after 23 September 2020 and you have subsequently re-employed them. The government will review the scheme in January 2021.

All employers with a UK bank account and UK PAYE schemes can claim the grant. You do not need to have previously claimed for an employee before the 30 October 2020 to claim for periods from 1 November 2020.

Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.

Employers can continue to claim for periods ending on or before 31 October 2020 until the deadline on 30 November 2020. You might need to contribute towards the cost of your furloughed employees’ wages for these periods. For periods from 1 November 2020, you will only need to pay for the cost of employer NICs and pension costs. Find out more information on employer contributions to the Coronavirus Job Retention Scheme.

If you’ve already worked out how much you can claim, you can claim for wages online through the Coronavirus Job Retention Scheme. For claim periods starting on or after 1 November 2020, you’ll be able to claim from 11 November 2020.

HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information.

Coronavirus Job Retention Scheme grants are not classed as state aid.

 

Who can Claim

If you’re claiming for a period that ends on or before 31 October 2020, you can only claim if you have previously furloughed your employee before 1 July 2020 and you have submitted a claim for this by 31 July 2020. This may differ if you have an employee returning from statutory parental leave

If you are claiming for a period that starts on or after 1 November 2020, then you can only claim for furloughed employees that were employed and on payroll on 30 October 2020. This means you must have made a PAYE RTI submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. This may differ where you have made employees redundant, or they stopped working for you on or after 23 September 2020 and you have subsequently re-employed them.

Maximum number of employees you can claim for in claim periods ending on or before 31 October 2020

If you’re claiming for a period that ends on or before 31 October 2020, the amount you can claim for in any single claim period starting from 1 July 2020 cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June 2020. There is no maximum number of employees you can claim for from 1 November 2020.

There are some exceptions explained in this guidance for employees returning from parental leave and military reservists, where this cap may not apply.

If you receive public funding

If you have staff costs that are publicly funded (even if you’re not in the public sector), you should use that money to continue paying your staff, and not furlough your staff.

Organisations can use the scheme if they are not fully funded by public grants and they should contact their sponsor department or respective administration for further guidance.

If you’re an administrator

Where a company is being taken under the management of an administrator, the administrator can furlough and claim for employees.

If you’re claiming for a period that ends on or before 31 October 2020, then your employee must have been furloughed by their previous employer for at least three consecutive weeks taking place any time between 1 March 2020 and 30 June 2020.

Administrators should only use the scheme if there is a reasonable likelihood of retaining the workers. For example, this could be as a result of an administration and pursuit of a sale of the business.

Employees you can claim for

Find out which employees you can put on furlough and claim for.

Agreeing to furlough employees

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

To be eligible for the grant, employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed. You must:

The employee does not have to provide a written response and you do not need to place all your employees on furlough.

You can:

If you flexibly furlough employees, you’ll need to agree this with the employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement. You’ll need to:

You do not need to place all your employees on furlough and you can continue to fully furlough employees if you wish. Employees cannot undertake any work for you during time that you record them as being on furlough.

Where consistent with employment law, any flexible furlough or furlough agreement made retrospectively that has effect from 1 November 2020 will be valid for the purposes of a Coronavirus Job Retention Scheme claim as long as it is made according to the conditions above. Only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of a claim.

Flexible furlough agreements

There is no minimum furlough period, agreed flexible furlough agreements can last any amount of time. Employees can enter into a flexible furlough agreement more than once.

Although flexible furlough agreements can last any amount of time, unless otherwise specified the period that you claim for must be for a minimum claim period of seven calendar days.

When your employees are on furlough

During hours which you record your employee as being on furlough, you cannot ask them to do any work for you that:

Your employee can:

Paying employee taxes and pension contributions

Your employees will still pay the taxes they normally pay out of their wages.

You must deduct and pay to HMRC income tax and employee National Insurance contributions on the full amount that you pay the employee, including any scheme grant.

You must also pay to HMRC the employer National Insurance contributions on the full amount that you pay the employee, including any scheme grant.

You must report these payments via a Full Payment Submission (FPS) to HMRC on or before the pay date.

Your employee will also still pay pension contributions (both employer and automatic contributions from the employee), unless the employee has opted out or stopped saving into their pension. From 1 August 2020 employers will not be able to claim for employer NICs and pension contributions.

Keeping employee rights

Employees still have the same rights at work, including:

You can continue to claim for a furloughed employee who is serving a statutory notice period, however grants cannot be used to substitute redundancy payments. HMRC will continue to monitor businesses after the scheme has closed.

Holiday pay

Furloughed employees continue to accrue leave as per their employment contract.

The employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below.

Employees can take holiday whilst on furlough. If an employee is flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours.

Employees should not be placed on furlough for a period simply because they are on holiday for that period. Working Time Regulations (WTR) require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the last 52 working weeks (twelve weeks in Northern Ireland). Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations.

Employers will be obliged to pay employees who are on holiday additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need and the correct notice is given. This applies for both the furlough period and the recovery period.

If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their usual holiday pay, or give the employee a day of holiday in lieu.

Employees working for a different employer

If contractually allowed, your employees are permitted to work for another employer whilst you have placed them on furlough.

For any employer that takes on a new employee, the new employer should ensure they complete the starter checklist form correctly. If the employee is furloughed from another employment, they should complete ‘statement C’ on the list.

If your employee does volunteer work

A furloughed employee can take part in volunteer work during hours which you record your employee as being on furlough as long as it is for another employer or organisation.

If your employee does training

Furloughed employees can engage in training during hours which you record your employee as being on furlough, as long as in undertaking the training the employee does not provide services to, or generate revenue for, or on behalf of their organisation or a linked or associated organisation. Furloughed employees should be encouraged to undertake training.

Where training is undertaken by furloughed employees during hours which you record your employee as being on furlough, at the request of their employer, they are entitled to be paid at least their appropriate national minimum wage for this time. In most cases, the furlough payment of 80% of an employee’s regular wage, up to the value of £2,500, will provide sufficient monies to cover these training hours. However, where the time spent training attracts a minimum wage entitlement in excess of the furlough payment, employers will need to pay the additional wages (see National Minimum Wage Section for more details).

Furloughed employees working as union or non-union representatives or as pension trustees

During hours which you record your employee as being on furlough, employees who are union or non-union representatives may undertake duties and activities for the purpose of individual or collective representation of employees or other workers. However in doing this, they must not provide services to or generate revenue for, or on behalf of your organisation or a linked or associated organisation.

During hours which you record your employee as being on furlough, employees who are pension scheme trustees or trustee directors of a corporate trustee may undertake trustee duties in relation to the pension scheme. However, a professional, independent pension scheme trustee who has been furloughed by the independent trustee company cannot undertake trustee work that would provide services to or generate revenue for, or on behalf of, the independent trustee company or any organisation linked or associated with that independent trustee company during hours which you record them as being on furlough.

Before you claim

You will need to work out how much you can claim through the scheme. HMRC will retain the right to retrospectively audit all aspects of your claim.

Employers should discuss with their staff and make any changes to the employment contract by agreement.

Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

HMRC cannot provide your employees with details of claims you make on their behalf. Please help us by keeping your employees informed, answering any questions that they might have. Please ask them not to contact HMRC.

Employer claim information that HMRC will make public

From December 2020, HMRC will publish employer names and for companies and Limited Liability Partnerships (LLPs), the company registration number of those who have made claims under the scheme for the month of December onwards.

Deciding the length of your claim period

Before you can calculate how much you can claim from the Coronavirus Job Retention Scheme you’ll need to work out your employees’ wages. To do this you must work out:

Your claim period is made up of the days you are claiming a grant for. The start date of your first claim period is the date your first employee was furloughed.

Claim periods starting on or after 1 July 2020 must start and end within the same calendar month. All claim periods starting on or after 1 July 2020 must last at least seven days.

For claim periods starting on or after 1 July 2020, you can claim for a period of less than seven days if you’re claiming for the first few days or the last few days in a month. You can only claim for a period of fewer than 7 days if the period you are claiming for includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it.

You should match your claim period to the dates you process your payroll, if you can. You can only make one claim for any period so you must include all your furloughed or flexibly furloughed employees in one claim even if you pay them at different times. If you make more than one claim, your subsequent claim cannot overlap with any other claim that you make. Where employees have been furloughed or flexibly furloughed continuously (or both), the claim periods must follow on from each other with no gaps in between the dates.

You can claim before, during or after you process your payroll as long as your claim is submitted by the relevant claim deadline. You can usually make your claim up to 14 days before your claim period end date and do not have to wait until the end of a claim period to make your next claim.

When claiming for employees who are flexibly furloughed you should not claim until you are sure of the exact number of hours they will have worked during the claim period. This means that you should claim when you have certainty about the number of hours your employees are working during the claim period. If you claim in advance and your employee works for more hours than you have told us about, then you will have to pay some of the grant back to HMRC. If you make an error in your claim, you can find out how to correct it.

Payments will be made six working days after you make your claim.

If the pay period you are claiming for includes days in more than one month

Claim periods starting on or after 1 July 2020 must start and end within the same calendar month. For these months, if your pay period includes days in more than one month, you’ll need to submit separate claims covering the days that fall into each month. You should calculate each of those claims separately.

Claim periods cannot overlap, so you will need to make sure you include all of the employees you want to claim for in each claim you make.

 

What to include when calculating wages

If you’ve already claimed for an employee who was on furlough during October, and they are paid a fixed salary, you will follow the same usual wage calculation for claim periods after 31 October 2020.

The amount you should use when calculating 80% of your employees’ wages for hours not worked, is made up of the regular payments you are obliged to make, including:

You cannot include the following when calculating wages:

The entirety of the grant received to cover an employee’s subsidised furlough pay must be paid to them in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.

Where the employer provides benefits to furloughed employees, including through a salary sacrifice scheme, these benefits should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

Normally, an employee cannot switch freely out of most salary sacrifice schemes unless there is a life event. HMRC agrees that coronavirus counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.

Non-discretionary payments

When you’re working out if a payment is non-discretionary, only include payments which you have a contractual obligation to pay and to which your employee has an enforceable right.

When variable payments are specified in a contract and those payments are always made, then those payments may become non-discretionary. If that is the case, they should be included when calculating 80% of your employees’ wages.

Non-discretionary overtime payments

If your employee has been paid variable payments due to working overtime, you can include these payments when calculating 80% of their wages as long as the overtime payments were non-discretionary.

Payments for overtime worked are non-discretionary when you are contractually obliged to pay the employee at a set and defined rate for the overtime that they have worked.

Apprenticeship Levy and Student Loans

You should continue to pay the Apprenticeship Levy as usual. Grants from the Job Retention Scheme do not cover the Apprenticeship Levy.

You should also continue to make Student Loan deductions from the wages you pay to employees.

National Minimum Wage

Individuals are entitled to the National Living Wage, National Minimum Wage or Apprentices Minimum Wage for the hours they are working or treated as working under minimum wage rules.

At least minimum wage rates must be paid for all hours worked. Furloughed workers who are not working can be paid the lower of 80% of their wages or £2,500 even if, based on their usual working hours, this would be below their appropriate minimum wage.

However, time spent training whilst furloughed is treated as working time for the purposes of the minimum wage calculations and must be paid at the appropriate minimum wage rate. As such, employers will need to ensure that the wages and furlough payment provide sufficient monies to cover all working time including these training hours. Where the pay is less than the appropriate minimum wage entitlement, the employer will need to pay additional amounts to ensure at least the appropriate minimum wage is paid for both working time and 100% of the training time whilst furloughed.

Where a furloughed worker is paid close to minimum wage levels and asked to complete training courses for a substantial majority of their usual working time, employers are recommended to seek independent advice or contact Acas.

If you’re claiming for a member of a Limited Liability Partnership (LLP)

If a member of an LLP is treated as an employee (because of salaried members rules), you must only include payments that are either:

Holiday Pay

Furloughed employees continue to accrue leave as per their employment contract.

The employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below.

Employees can take holiday while on furlough. If an employee is flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours. Employees should not be placed on furlough for a period simply because they are on holiday for that period. Working Time Regulations require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the previous 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations (WTR).

Employers will be obliged to pay additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need. This applies for both the furlough period and the recovery period.

If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their usual holiday pay, or give the employee a day of holiday in lieu.

Employees returning from family-related statutory leave

Family-related statutory leave includes maternity leave, paternity leave, shared parental leave, adoption leave, parental bereavement leave and unpaid parental leave.

For employees on fixed pay, claims for full or part time employees furloughed on return from family-related statutory leave should be calculated against their salary, before tax, not the pay they received whilst on family-related statutory leave. The same principles apply where the employee is returning from a period of unpaid statutory family-related leave.

Employees returning to work after being on sick pay

For employees on fixed pay, claims for full or part time employees furloughed on return to work after time off sick should be calculated against their salary, before tax, not the pay they received whilst off sick.

Claims for those on variable pay, returning to work after time off sick, should be calculated using the normal rules for employees whose pay varies.

Unpaid sabbatical or unpaid leave

If your employee has been on unpaid sabbatical or unpaid leave, you’ll need to use the amount they would have been paid if they were on paid leave when calculating 80% of their wages.

Work out your employee’s usual hours and furloughed hours

If your employee is fully furloughed, you do not need to work out their usual and furloughed hours and you should work out the maximum wage amount. An employee is fully furloughed if they do not do any work for you during the claim period.

If your employee is flexibly furloughed, you’ll need to work out your employee’s usual hours and record the actual hours they work as well as their furloughed hours for each claim period.

You can calculate the usual hours for the entire claim period or for each pay period, or part of a pay period, that falls within that claim period. This guidance assumes that you will calculate on a pay period basis but either method is acceptable.

If you calculate the usual hours for the entire claim period and the result is not a whole number, you should round it up to the next whole number. If you calculate the usual hours on a pay period basis you should round the result up or down to the nearest whole number.

There are two different calculations you can use to work out your employee’s usual hours, depending on whether they work fixed or variable hours.

You should work out usual hours for employees who work variable hours, if either:

your employee is not contracted to a fixed number of hours
your employee’s pay depends on the number of hours they work

If neither of these apply, you should work out your employee’s usual hours for an employee who is contracted for a fixed number of hours.

The employee’s working pattern does not have to match their pay period (for example, an employee could be contracted to fixed 40 hours a week, but be paid a variable monthly amount because of shift allowances). HMRC will not decline or seek repayment of any grant based solely on the particular choice between fixed or variable approach to calculating usual hours, as long as a reasonable choice is made.

Work out your employee’s usual hours for an employee who is contracted for a fixed number of hours and whose pay does not vary according to the number of hours they work

You’ll work out your employee’s usual hours (for employees with fixed hours), by looking at their contracted hours at the end of their reference period.

The reference period is the last pay period ending on or before 19 March 2020 for employees who either:

For all other employees, the employee’s reference period will be their last pay period ending on or before 30 October 2020. These employee’s will only be eligible for periods starting on or after 1 November 2020.

To calculate the number of usual hours for each pay period (or partial pay period):

  1. Start with the hours your employee was contracted for at the end of their reference period.
  2. Divide by the number of calendar days in the repeating working pattern, including non-working days.
  3. Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
  4. Round up or down if the result isn’t a whole number.

If an employee with fixed hours was on annual leave, off work sick or on family related statutory leave at any time during the last reference period, the usual hours should be calculated as if the employee had not taken that leave.

Work out your employee’s usual hours for an employee who works variable hours

Where the pay varies by the amount of time worked, you will have shown the number of hours worked on your employees’ payslips in line with legislation introduced by BEIS in April 2019 (Employment Rights Act 1996, section 8). You are therefore likely to have records of the number of hours worked.

Employers should identify the hours the employee worked using pay records, time sheets and other records which show time worked. If these aren’t available then use other records, such as rotas or work diaries. If these records are not available, employers may use the pay rate to work back from gross pay.

You will use differing approaches to calculate your employee’s ‘usual hours’ for an employee who works variable hours depending on whether the employee has received a payment of earnings from you in tax year 2019-20 which was reported on a Real Time Information (RTI) Full Payment Submission (FPS) to HMRC on or before 19 March 2020. For those who did, calculate ‘usual hours’ based on the higher of either:

This also applies to employees for whom you made a valid claim in a claim period ending any time on or before 31 October 2020.

Otherwise calculate the average number of hours worked from 6 April 2020 and up to the employee’s first day spent on furlough on or after 1 November 2020.

If your employee has variable pay you will complete a similar comparison to calculate their usual wages but the result may be different.

When you calculate the usual hours, you should include:

If you are calculating the usual hours for an employee who is part of a flexible work time arrangement (“flexi-leave”), you should:

To work out the usual hours for each pay period (or partial pay period) based on the average number of hours worked in the tax year 2019 to 2020:

  1. Start with the number of hours actually worked (or on paid annual leave or flexi-leave) in the tax year 2019 to 2020 before the employee was furloughed, or the end of the tax year if earlier.
  2. Divide by the number of calendar days the employee was employed by you in the tax year 2019 to 2020, up until the day before they were furloughed, or the end of the tax year if earlier.
  3. Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
  4. Round up or down if the result isn’t a whole number.

When you calculate the number of calendar days in step 2, you should not count any calendar days where the employee was on a period of:

To work out the usual hours for a pay period or partial pay period based on the corresponding calendar period in the tax year 2019 to 2020:

  1. Identify the pay periods in the 2019 to 2020 tax year that correspond to at least one calendar day in the pay period (or partial pay period) you are claiming for.
  2. If the pay period (or partial pay period) you are claiming for starts and ends on the same calendar days as the identified pay period in the tax year 2019 to 2020 - use the number of hours they actually worked in that pay period.
  3. If the pay period (or partial pay period) you are claiming for does not start and end on the same calendar days as the identified pay periods in the tax year 2019 to 2020 – you’ll need to add together a proportion of the hours worked in each of the pay periods you’ve identified.

If you have to work out the usual hours based on the hours worked in more than one pay period in the tax year 2019 to 2020:

  1. Start with the number of hours worked in the first pay period identified in the tax year 2019 to 2020.
  2. Multiply by the number of calendar days in that pay period which correspond to at least one calendar day in the pay period (or partial pay period) you are claiming for.
  3. Divide by the total number of calendar days in the pay period in the tax year 2019 to 2020.
  4. Repeat steps 1, 2 and 3 for each subsequent identified pay period in the tax year 2019 to 2020.
  5. Add them all together.
  6. Round up or down if the result is not a whole number.

To work out the usual hours for each pay period (or partial pay period) based on the average number of hours worked in the tax year 2020 to 2021:

  1. Start with the number of hours actually worked (or on paid annual leave or flexi-leave) from 6 April 2020 and up to the employee’s first day spent on furlough on or after 1 November 2020.
  2. Divide by the number of calendar days the employee was employed by you in the tax year 2020 to 2021, up until the day before they were furloughed.
  3. Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
  4. Round up or down if the result isn’t a whole number.

When you calculate the number of calendar days in step 2, you should not count any calendar days where the employee was on a period of:

Work out your employee’s usual hours if they are paid per task or piece of work done

You should work out the usual hours for these employees in the same way as for other employees who work variable hours, if possible.

If you do not know what hours the employee worked, you can estimate the hours based on the number of ‘pieces’ they produced and the average rate of work per hour (which you should already have worked out to comply with National Minimum Wage rules).

Calculating the number of working and furloughed hours for each employee

You will have agreed how many hours your flexibly furloughed employee is going to work in the claim period. They will be furloughed for the rest of their usual hours.

To calculate the number of furloughed hours:

  1. Start with your employee’s usual hours.
  2. Subtract the number of hours they actually worked in the claim period – even if this is different to what you agreed.

If you claim in advance and your employee works for more hours than you agreed, then you’ll have to pay some of the grant back to HMRC. This means that you should not claim until you have certainty about the number of hours your employees are working during the claim period. If you make an error in your claim, you can find out how to correct it.

You must pay the employee their contractually agreed rate for any hours they work. Check the latest National Minimum Wage rates.

Calculating the number of working and furloughed hours for an employee that is furloughed or flexibly furloughed for part of a claim period

If your employee is only furloughed or flexibly furloughed for part of your claim period, when calculating the number of furloughed hours you can claim for make sure you:

This applies even if your claim period includes days before or after the employee’s furlough agreement (for example, because you’re claiming for multiple employees and some of them are furloughed for a different period).

You must prepare your claims on this basis for:

You do not need to amend any previous claims submitted prior to 14 September 2020 for these employees

If your employee takes leave while they are flexibly furloughed

You cannot claim for an employee under the scheme for any time they are on unpaid leave or statutory sick pay related leave.

You can claim for an employee who is on:

Any time they are on these types of leave while flexibly furloughed counts as furloughed hours and does not count as time actually worked.

Calculate how much you can claim using the Coronavirus Job Retention Scheme

For claim periods that end on or before 31 October 2020, you will:

For periods from 1 July 2020, you will also:

For the period 1 November 2020 to 31 January 2021 the government grant will revert to the full 80% of wages, employers will not be required to contribute or top-up for the hours not worked but will still not be able to claim for employer National Insurance contributions or employer pension contributions.

You’ll still need to pay the employer National Insurance and pension contributions on your furloughed employees’ pay. For claims ending on or before 31 July 2020 you can claim for these costs too.

Changes to the grant contributions from July 2020

The table shows changes to the grant contributions from July 2020.

MonthPercentage of reference pay employee gets for furloughGovernment contributionEmployer contributionGovernment contribution to employer NICs and pension contributions
July80%80%NilYes
August80%80%NilNo
September80%70%10%No
October80%60%20%No
November80%80%NilNo
December80%80%NilNo
January80%80%NilNo

You cannot claim for:

You can choose to top up your employees’ wages above the minimum 80% furlough pay amount but you do not have to. Employees must not work or provide any services for the business during hours which they are recorded as being on furlough, even if they receive a top-up wage.

Record keeping requirements

You must keep a copy of all records for 6 years, including:

Use the calculator

This calculator can be used to work out what you can claim. It can be used for most employees who are paid either regular or variable amounts each pay period (for example, weekly or monthly).

The calculator cannot be used if employees:

If you are claiming for an employee who is flexibly furloughed, you will need to work out their usual hours before you use the calculator.

HMRC Calculator

If you cannot use this calculator, you’ll need to work out what you can claim manually using the calculation guidance or by seeking professional advice from an accountant or tax adviser.  Our payroll department will be happy to help you with the calculations.

It’s your responsibility to check that the amount you’re claiming for is correct.

Work out the maximum wage amount

The maximum wage amount is £2,500 a month, or £576.92 a week. This is the upper limit of the amount you can claim for your employee’s wages.

You will also need to work out 80% of your employee’s usual wage.

If the length of time you’re claiming for is not one week or one month, you’ll need to use the daily maximum wage amounts to work out the maximum amount for each employee.

To work out the maximum amount you can claim, multiply the daily maximum wage amount by the number of calendar days your employee is furloughed for in your claim.

MonthDaily maximum wage amount
July 2020£80.65 per day
August 2020£80.65 per day
September 2020£83.34 per day*
October 2020£80.65 per day*
November 2020£83.34 per day
December 2021£80.65 per day
January 2021£80.65 per day

*In September and October, this is the maximum amount you will have to pay a furloughed employee. The amount that you can claim for will be lower.

If you’re claiming for multiple pay periods in one claim, you can calculate the total maximum using a mixture of:

Work out 80% of your employee’s usual wage

You will need to work out 80% of your employee’s usual wages to determine:

You can use the calculator to help you work out how much you can claim, though there are some cases where this may not be suitable – it is your responsibility to check that the amount you are claiming for is correct.

You will need to identify the number of furlough days in the period. A furlough day means every calendar day within a period where the employee was either:

The way you should work out 80% of your employee’s usual wages is different depending on the way they’re paid. You must check what you can include as wages first.

Choose the calculation you think best fits the way your employee is paid, this might not be the same way that you have worked out their usual hours. For example, if you pay your employee a fixed regular salary, use the calculation for fixed pay amounts. HMRC will not decline or seek repayment of any grant based solely on the particular choice of pay calculation, as long as a reasonable choice is made.

Where a claim covers multiple pay periods, this calculation should be done for each and then added together.

If your employee received some statutory payments you should adjust your claim for this.

If your employee has fixed pay

You will need to identify the reference period that you will use to work out your employee’s usual wages.

The reference period is the last pay period ending on or before 19 March 2020 for employees who either:

For all other employees, the reference period is the last pay period ending on or before 30 October 2020; this will only apply for periods starting after 1 November 2020.

If your fixed pay employee has worked overtime

If your fixed pay employee has worked enough overtime to have a significant effect on the amount you need to claim, you should calculate 80% of their usual wages using the method for employees whose pay varies.

You do not need to amend any previous claims, however if these circumstances apply you should use the calculation for employees whose pay varies for any future claims (from August 2020).

Work out 80% of wages for employees on a fixed salary

To work out 80% of your employee’s wage:

  1. Start with the wages payable to your employee in their reference period - if you’re claiming for a full pay period, skip to step 4.

  2. Divide by the total number of days in the pay period.

  3. Multiply by the number of furlough days in the pay period.

  4. Multiply by 80%.

If your employee’s reference period is not a full pay period or the pay frequency has changed

You will need to work out your employees usual wages and then calculate 80% if:

To work out their usual wages and then calculate 80%:

1.Start with the wages payable to your employee in their reference period.

2.Divide by the number of days in that period (including non-working days).

3.Multiply by the number of furlough days in the pay period you are claiming for.

4.Multiply by 80%.

Employees whose pay varies

If your employee has variable pay, how you work out their usual wages depends on when they were on your payroll.

For employees’ who were on your payroll on 19 March 2020, that is you made a payment of earnings to them in the tax year 2019 to 2020 which was reported to HMRC on a Real Time Information (RTI) Full Payment Submission (FPS) on or before 19 March 2020 you should calculate 80% of the higher of:

This also applies to employees’ for whom you made a valid Job Retention Scheme claim in a claim period ending any time on or before 31 October 2020.

For all other employees’ you should calculate 80% of the average wages payable between 6 April 2020 (or, if later, the date the employment started) and the day before they are furloughed on or after 1 November 2020.

If your employee has variable hours you will have completed a similar comparison to work out their usual hours but the outcome may be different.

To calculate 80% of the wages from the corresponding calendar period in the tax year 2019 to 2020:

  1. Start with the amount they earned in the same period last year.

  2. Divide by the total number of days in this pay period - including non-working days.

  3. Multiply by the number of furlough days in this pay period.

  4. Multiply by 80%.

If your employee did not work for you in the corresponding calendar period in the tax year 2019 to 2020, you can only use the averaging method to calculate 80% of their wages.

To work out 80% of the average monthly wages for tax year 2019 to 2020:

  1. Start with the amount of wages that were payable to the employee in the tax year up to the day before they were first furloughed.

  2. Divide it by the number of days from the start of the tax year – including non-working days (up to the day before they were first furloughed, or 5 April 2020 – whichever is earlier).

  3. Multiply by the number of furlough days in this pay period.

  4. Multiply by 80%.

Each day after the employee commenced employment with you is counted in making this calculation. This includes non-working days.

If your employee started working for you on or after 6 April 2019, you should not include the days before their employment started in your calculation.

To work out 80% of your employee’s average earnings for an employee who started working for you on or after 6 April 2019:

  1. Start with the amount of wages that were payable to the employee in the tax year up to the day before they were first furloughed.

  2. Divide it by the number of days they’ve been employed since the start of the tax year – including non-working days (up to the day before they were first furloughed or 5 April 2020 – whichever is earlier).

  3. Multiply by the number of furlough days in this pay period.

  4. Multiply by 80%.

Every day after the employee commenced employment with you is counted in making this calculation. This includes non-working days.

To work out 80% of your employee’s average wages between 6 April 2020 (or, if later, the date the employment started) and the day before they are furloughed on or after 1 November 2020:

  1. Start with the amount of wages that were payable to the employee from 6 April 2020 and up to the employee’s first day spent on furlough on or after 1 November 2020.

  2. Divide it by the number of days they’ve been employed since the start of the tax year – including non-working days (up until the day before they were furloughed).

  3. Multiply by the number of furlough days in the pay period (or partial pay period) you are claiming for.

  4. Multiply by 80%.

Work out your employee’s minimum furlough pay

The minimum furlough pay is the lesser of either:

If your employee is flexibly furloughed the minimum furlough pay depends on their working and furloughed hours.

  1. Start with the lesser of:

  1. Multiply by the employee’s furloughed hours.

  2. Divide by the employee’s usual hours.

This is the minimum amount you must pay your employee for the time they are recorded as being on furlough. You can choose to pay more than this but you do not have to.

If any of the furlough hours are taken as paid holiday or annual leave, you need to top up the pay for these hours to the employee’s full contracted rate.

Calculating the number of working and furloughed hours for an employee that comes off furlough or flexible furlough partway through a claim period

If your employee stops being furloughed or flexibly furloughed partway through a claim period, when calculating the number of furloughed hours you can claim for, make sure you:

This applies even if your claim period includes days after the employee’s last day of furlough (for example, because you’re claiming for multiple employees and some of them stay on furlough).

You do not need to amend any previous claims submitted prior to 14 September 2020 for these employees. You should use this calculation for any claims from 14 September 2020, for an employee who stops being furloughed or flexibly furloughed partway through a claim period.

Work out how much you can claim for your employee’s furlough pay

For periods ending on or before 31 August 2020 you can claim a grant for the full amount of the minimum furlough pay.

For periods between 1 September 2020 and 31 October 2020 you will need to calculate the grant amount as follows:

  1. Start with the amount of minimum furlough pay.

  2. Divide by 80.

  3. Depending on which month you’re claiming for, multiply by:

For all other periods you can claim a grant for the full amount of the minimum furlough pay.

If your employee was paid a statutory payment in the claim period

You must subtract the amount which is paid to the employee for the claim period from the amount you claim under the scheme, if your employee is paid:

Your employee cannot be furloughed while they receive statutory sick pay and your employee cannot receive statutory sick pay while they are furloughed.

Work out how much you can claim for employer National Insurance contributions for periods up to and including 31 July 2020

You should calculate and pay Class 1 employer National Insurance contributions in the normal way.

For periods ending on or before 31 July 2020, you can claim for Class 1 employer National Insurance contributions you’ve paid on the grant for your employee’s wages.

If you choose to top up your employees’ wages, you cannot claim for employer National Insurance contributions on the amount you’ve topped them up by.

For periods starting on or after 1 August 2020 you will not be able to claim a grant towards the employer Class 1 National Insurance contributions you’ve paid on the grant for your employees’ wages.

If you’re claiming Employment Allowance

To make sure you do not claim too much from the scheme, you must adjust for the Employment Allowance.

Working out what you can claim – for claims between 1 July 2020 and 31 July 2020

From 1 July 2020, your employees will be able to return to work part-time and be furloughed for the rest of their usual hours. You should calculate the employer National Insurance contributions that you need to pay in the normal way.

For claim periods between 1 July 2020 and 31 July 2020, you can claim a grant towards these National Insurance costs but the amount you can claim is calculated differently than for periods before 1 July. You should do the calculation separately for each pay period that falls into your claim period. You cannot claim a higher amount than the employer National Insurance contributions that is due.

You can use either the direct percentage method or the tables method to calculate employer NICs. The difference between the results will be just a few pence. The examples in this guidance use the direct percentage method.

Before you calculate the amount you can claim, you will first need to adjust the amount of the relevant secondary National Insurance contributions threshold.

Tax yearNational Insurance contributions thresholds
2020 to 2021£169 per week, £732 per month or £8,788 per year

To adjust the amount of the relevant secondary National Insurance contributions threshold:

  1. Start with the relevant secondary National Insurance contributions threshold that corresponds to the pay period.

  2. Divide by the number of days in the pay period.

  3. Multiply by the number of days in the furlough or flexible furlough claim.

If your employee is flexibly furloughed, you must also:

  1. Divide by the number of usual hours in the flexible furlough claim.

  2. Multiply by the number of furloughed hours in the flexible furlough claim.

Next you will need to use the adjusted secondary National Insurance contributions threshold to calculate the amount of your grant.

  1. Start with the amount you’re claiming for the employee’s wages.

  2. Deduct the relevant adjusted secondary National Insurance contributions threshold.

  3. Multiply by 13.8%.

If you claim the Employment Allowance, you must make sure you do not claim too much for Class 1 National Insurance contributions from the scheme.

Working out what you can claim – for claim periods starting on or after 1 August 2020

From 1 August 2020, you will no longer be able to claim a grant towards the employer National Insurance contributions that you pay.

Adjusting your claim because of Employment Allowance

You may be eligible to claim the Employment Allowance.

The rules for claiming and applying the Employment Allowance are not different because you are claiming a Job Retention Scheme grant for your Class 1 employer National Insurance contributions costs. You can claim for a grant towards your Class 1 employer National Insurance contributions costs in claims up to 31 July 2020.

Eligible employers can use the Employment Allowance to pay less employer National Insurance contributions, until the allowance runs out or until the end of the tax year, whichever comes first. The Employment Allowance cannot be manually spread out over the tax year if it would otherwise be used up sooner.

When working out how much employer National Insurance contributions you can claim back from the scheme, you should subtract any Employment Allowance you have used in that pay period.

If you’ve claimed the Employment Allowance and you do not have to pay any employer National Insurance contributions in a pay period, you should not claim for any employer National Insurance contributions costs through the scheme.

If the amount of Employment Allowance you can claim will not cover the total employer National Insurance contributions due, the grant you can claim is the lower of:

Eligible employers can claim the Employment Allowance at any point in the tax year they are claiming for, or for 4 years afterwards. If you have claimed or will claim the grant for employer National Insurance contributions, you must ensure that you do not receive relief for the same employer National Insurance contributions costs twice. To do this, you can either:

Employers who delay their Employment Allowance claim and have unused Employment Allowance available at the end of the tax year can use this to reduce other tax costs. Employers who have received a grant for employer National Insurance contributions costs through the scheme should deduct the amount of grant they have received from the amount of Employment Allowance they have left before they use it, if not doing so would result in receiving relief for the same cost twice. Attempting to get relief for the same costs twice is a fraud and may result in claims being investigated.

If your employee is a company director

There are two methods for calculating a director’s Class 1 National Insurance contributions.

The method you use may affect how much you can claim under the scheme.

For example, if you use the annual cumulative method, and you don’t have to pay employer National Insurance contributions for the director by the time you make your claim through the scheme, then you cannot claim a grant towards employer National Insurance contributions costs.

Work out how much you can claim for employer’s pension contributions for periods up to and including 31 July 2020

You’ll still need to pay pension contributions on behalf of your furloughed employees. Up to 31 July 2020 you can claim for these up to the level of the mandatory employer contribution, even if it’s not an auto-enrolment pension.

You cannot claim for any pension contributions:

You’ll need to work out how much you can claim for employer’s pension contributions.

Calculate your claim for pension contributions – claim periods from 1 July to 31 July 2020

From 1 July 2020, your employees will be able to return to work part-time and be furloughed for the rest of their usual hours.

For claims between 1 July 2020 and 31 July 2020, you’ll be able to claim towards pension contributions you make on the gross pay grant for the hours they are furloughed. You should do this calculation separately for each pay period that falls into your claim period. You cannot claim for more than you actually contribute to your employee’s pension.

Before you can claim, you will need to adjust the amount of the relevant Lower Level of Qualifying Earnings (LLQE).

Tax yearLower Level of Qualifying Earnings
2020 to 2021£120 per week, £520 per month or £6,240 per year

To adjust the amount of the LLQE:

  1. Start with the relevant LLQE that corresponds to the pay period.

  2. Divide by the number of days in the pay period.

  3. Multiply by the number of days in the furlough or part-time furlough claim.

If your employee is flexibly furloughed you must also:

  1. Divide by the number of usual hours in the flexible furlough claim.

  2. Multiply by the number of furloughed hours in the flexible furlough claim.

Next you will need to use the adjusted LLQE to calculate the amount of your grant.

  1. Start with the amount you’re claiming for the employee’s wages.

  2. Deduct the adjusted LLQE.

  3. Multiply by 3%.

You must not claim more towards pension contributions than you have paid into your employee’s pension.

Calculate your claim for pension contributions – claim periods from 1 August 2020

From 1 August 2020 you will no longer be able to claim towards contributions you make into your employees’ pensions.

How to claim

To make a claim, you will need:

You also need to provide either:

If you’re claiming for employees who are flexibly furloughed, you’ll need to have agreed the furlough arrangement with the employee (or reached a collective agreement with a trade union) and keep a written agreement that confirms the furlough arrangement.

For the claim period you’ll also need:

Using an agent to do PAYE online

If you use an agent who is authorised to do PAYE online for you, they will be able to claim on your behalf.

If you’re using an agent you must:

If you would like to use an agent, but do not have one authorised to do PAYE online for you, you can do that by accessing your HMRC online services and selecting ‘Manage Account’.

You can also use this service to remove authorisation from your agent if you do not want it to continue after they have submitted your claim(s).

If you’re putting 100 or more employees on furlough

For claim periods starting on or after 1 July, you can download a template if you’re claiming for 100 or more employees and upload this when you claim.

Using this template will help ensure your claim is processed quickly and successfully. Your template may be rejected if you do not give the information in the right format.

How to claim

You’ll need the Government Gateway user ID and password you got when you registered for PAYE online.

If you do not finish your claim in one session, you can save a draft. You must complete your claim within 7 days of starting it.

Online services may be slow during busy times. Check if there are any problems with this service.

Make a claim using HMRC online claim portal

Claim for furlough days inClaim must be submitted by
November 202014 December 2020
December 202014 January 2021
January 202115 February 2021
February 202115 March 2021
March 202114 April 2021

After you’ve claimed

Once you’ve claimed, you’ll get a claim reference number. HMRC will then check that your claim is correct and pay the claim amount by BACs into your bank account within 6 working days.You must:

You must pay the full amount you are claiming to your employee and pay the associated employee tax and National Insurance Contributions, even if your company is in administration. If you’re not able to do that, you’ll need to repay the money back to HMRC. The same applies in relation to employer NICs and pension contributions you claim regarding your employee.

The full amount you claim in respect of these must be paid or you will need to repay the money back to HMRC.

Employers cannot enter into any transaction with the worker which reduces the wages below the amount claimed. This includes any administration charge, fees or other costs in connection with the employment.

Where an employee had authorised their employer to make deductions from their salary, these deductions can continue while the employee is furloughed provided that these deductions are not administration charges, fees or other costs in connection with the employment.

If you make an error when claiming

If you have made an error in a claim that has resulted in an overclaimed amount, you must pay this back to HMRC.

You can now tell us about an overclaimed amount as part of your next claim.

You will be asked when making your claim whether you need to adjust the amount down to take account of a previous error. Your new claim amount will be reduced to reflect this. You do not need to take further action but should keep a record of this adjustment for six years.

If you have made an error that has resulted in an underclaimed amount, you should contact HMRC to amend your claim. As you are increasing the amount of your claim, HMRC need to conduct additional checks.

 

Pay Coronavirus Job Retention Scheme grants back

If you’ve overclaimed through the Coronavirus Job Retention Scheme, you can either:

What you’ll need

You’ll need your 14 or 15 digit payment reference number that begins with X.

You must contact HMRC to get your payment reference number.

How to pay

Bank details for online or telephone banking, CHAPS and Bacs

You can pay by Faster Payments, CHAPS or Bacs to HMRC’s account.

Sort codeAccount numberAccount name
08 32 1012001039HMRC Cumbernauld

Payments by:

Your payment may be delayed if you use the wrong reference number.

When the government ends the scheme

When the scheme closes, you must decide to either:

30 November 2020 is the last day that you can submit claims for periods ending on or before 31 October 2020.

Tax Treatment of the Coronavirus Job Retention Grant

Payments you’ve received under the scheme are to offset the deductible revenue costs of your employees. You must include them as income when you calculate your taxable profits for Income Tax and Corporation Tax purposes.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

Individuals with employees that are not employed as part of a business (such as nannies or other domestic staff) are not taxable on grants received under the scheme. Domestic staff are subject to Income Tax and National Insurance contributions on their wages as normal.

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Success in Numbers

Helping our clients to claim Furlough payments

£7.2 million
Total £'s claimed in furlough payments
1192
Total number of businesses we've helped
5323
Total number of employees claimed for
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