How to calculate the Coronavirus Job Retention Scheme (CJRS) Extension

Publish on:
26/05/2021
Article written by: 
Lucy

CJRS Update

Great news! The Coronavirus Job Retention Scheme (CJRS) has been extended from 30 April to 30 September 2021. This means that employees can continue to be paid 80% of their usual pay for hours not working up to £2,500 per month.

What does this mean for employers? Employers are required to contribute 10% of pay in July and 20% in August and September i.e., the government will be contributing 70% and 60% respectively, the remainder is to be paid by the employer. Pay is based on ‘Usual Pay’.

Who is eligible to receive the Coronavirus Job Retention Scheme (CJRS) Extension?

Eligible employees are those that have been included in a PAYE Real Time Information (RTI) submission between 20 March 2020 and 2 March 2021.

How to calculate the correct amounts of pay for the CJRS Extension

Usual Pay - Fixed Pay

Deciding on the ‘Usual Pay’ for an employee depends on the ‘Reference Date’. There are three periods to consider:

  1. If there was a PAYE Full Payment Submission (FPS) for the employee before 19 March 2020 then the pay period to use is the last one on/before 19 March 2020. If not:
  2. For pay periods from 1 November 2020, the last pay period ending on/before 30 October 2020.
  3. For an employee first reported on a PAYE FPS between 31 October 2020 and 2 March 2021 use the last pay period ending on/before 2 March 2021.

Usual Pay - Variable Pay

Working this out is more involved than for Fixed Pay.

  1. If the employee is on a PAYE FPS before 19 March 2020 you need to consider the higher of:

• wages earned in the corresponding calendar period in a previous year

• average wages payable in 2019/20 tax year

  1. If the employee is on your payroll on 30 October 2020, use the average wages payable between 6 April 2020 (or, if later, employment start date) and the day before they were first furloughed on or after 1 November 2020.
  2. If the employee is first reported on the payroll between 31 October 2020 and 2 March 2021

they can be furloughed from 1 May 2021. You need to use 2 March 2021 as the reference date and calculate 80% of average wages payable between 6 April 2020 (or the date the employment started, if later) and the date before they were first furloughed on or after 1 May 2021.

CJRS – What if you have claimed too much?

If you’ve claimed too much grant through the CJRS then you must pay this back. You can also make a voluntary repayment if you do not want or need the grant to pay your employees’ wages, PAYE and National Insurance and Pension Contributions.

If you are still making Furlough claims, you can correct it in your next claim. This means the new claim will be reduced by the amount you are repaying. Or if you are not able to adjust your next claim you can get a payment reference number and pay back HMRC within 30 days.

Keeping Records

Records of all your furlough claims and adjustments must be kept for 6 years after you made the claim.

Useful Links

Of course, if you get stuck then feel free to get in touch with us and we will do what we can to help you. Otherwise, the HMRC website is a mine of useful information. In order to create this blog post, we consulted the HMRC website and our own manuals.

Eligible employees:

https://www.gov.uk/guidance/check-which-employees-you-can-put-on-furlough-to-use-the-coronavirus-job-retention-scheme

Calculate wage costs:

https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme

Examples of how much you can claim:

https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme

Claims procedure:

https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme

Repay CJRS:

https://www.gov.uk/guidance/pay-coronavirus-job-retention-scheme-grants-back

Post originally published in May 2021, updated July 2021.

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