What is the Coronavirus Job Retention scheme?
Posted on 23rd March 2020
On Friday, Chancellor Rishi Sunak delivered a speech in which he announced that the government would be stepping in to deliver a further series of measures to support people, jobs and businesses.
The biggest measure the government is introducing is the Coronavirus Job Retention scheme or the CJRS. Any employer in the UK, whether small or large, charitable or non-profit, is eligible for the scheme. Employers will given a grant to cover most of the wages of people who are not working but are furloughed and kept on payroll, rather than losing their jobs. The grants will cover 80% of the salary of retained workers up to a maximum of £2,500 a month, per employee. Essentially, workers in any part of the UK can retain their job, even if their employer cannot afford to pay them, and be paid at least 80% of their salary. The scheme will be backdated to 1st March, and will initially be open for three months, but would be extended if required.
Over the weekend, we've received lots of enquiries about the scheme, so we've put together some FAQs...
What does 'furloughed' mean?
If your employer designates you as furloughed, this essentially means that you are permitted to be absent from work for a designated period of time. You are not permitted to carry out any work for your employer during this time, nor are you permitted to work for anybody else.
What if I work from home? Would that count as me being furloughed?
If you continue to work - whether that’s from the office or from home - you will not be deemed furloughed and your employer will be unable to claim anything from the government.
I'm the sole director of my limited company and pay myself a salary each month. Can I benefit from this scheme?
Unfortunately, if you’re the sole director and only paid employee we believe that you are unlikely to qualify for the scheme (we are still awaiting further details and confirmation of this) however you may be able to claim a grant (if you have business premises), a loan or universal credit.
Which of my employees can benefit from the scheme?
Anyone on payroll at 29 February 2020, and your employees must remain employed while furloughed to benefit from the scheme.
How much will the government pay my employees who are furloughed?
The government will pay 80% of furloughed workers wage costs, up to a cap of £2,500 per person per month. You can fund the difference between the 80% funded by the CJRS and their normal salary at your discretion. For example, if your employee normally receives £1,000 a month in wages, the CJRS will pay £800 of this. You can then pay the extra £200 if you can afford to. Another example - if your employee normally receives £4,000 a month in wages, the CJRS will only be able to pay the maximum amount of £2,500 (despite 80% of £4,000 being £3,200). If you wish to make up the remaining £1,500 yourself, you can do so.
Please note that we are expecting better guidance from the government on the dos and don’ts regarding the furloughing of employees. As soon as we are given any further information we will provide updates accordingly. In the meantime, check out our dedicated coronavirus support hub here - it's full of free resources which are constantly being updated.
Need urgent advice from us? Book a call or try the new government helplines
We understand how scary and uncertain this time is for you, so we are here if you need to speak to us. If you need urgent financial advice, please do not hesitate to book a call here.
Alternatively, a new HMRC helpline has been launched to help businesses concerned about paying their taxes due to coronavirus. Some options are agreeing an instalment arrangement, suspending debt collection proceedings and cancelling penalties and interest where you run into administrative difficulties contacting HMRC or paying them directly. If you run a business or are self-employed and are concerned about paying your tax due to coronavirus, you can call HMRC’s helpline for help and advice on 0800 0159 559 and the helpline is open Monday to Friday 08:00-20:00 and Saturday 08:00-16:00. There are likely to be call queues and delays – so patience is a virtue!
There is also a new Business Support Helpline for free advice from the government, which you can see the full details of here.
Written by
Nicola J Sorrell -
Effective Accounting
Founder | Xero Champion | IR35 Expert
Tagged as: Coronavirus
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