{"id":3751,"date":"2020-05-26T14:29:15","date_gmt":"2020-05-26T14:29:15","guid":{"rendered":"https:\/\/sloane.co.uk\/finance\/blog-post\/government-launches-business-coronavirus-job-retention-scheme\/"},"modified":"2020-06-10T14:59:16","modified_gmt":"2020-06-10T14:59:16","slug":"government-launches-business-coronavirus-job-retention-scheme","status":"publish","type":"post","link":"https:\/\/sloane.co.uk\/finance\/blog-post\/news-blog-post\/government-launches-business-coronavirus-job-retention-scheme\/","title":{"rendered":"Government makes further changes to Coronavirus Job Retention Scheme"},"content":{"rendered":"<section class=\"article-content post-content\" id=\"article-content\">\n<p><strong>UPDATED:\u00a0<\/strong>The government has announced further changes to the Coronavirus Job Retention Scheme (CJRS).<\/p>\n<p>\t    \t<!-- \/14181245\/TEST-INPAGE-TEXTAD_4 --><\/p>\n<div class=\"inpage-ad\">\n<div id=\"div-gpt-ad-1498568931895-4\">\n\t\t\t<!-- CALLED --><\/p>\n<p>\t\t\t\t\tgoogletag.cmd.push(function() { googletag.display(&#8216;div-gpt-ad-1498568931895-4&#8217;); });<br \/>\n\t\t\t\t<!-- post CALLED -->\n<\/div><\/div>\n<p>From 1 July, employers will be able to bring back furloughed employees on a part-time basis. Individual firms will be the ones who decide the hours and shift patterns that employees will work on their return. Employers will be responsible for paying these wages while they\u2019re in work.<\/p>\n<p>From August 2020, the scheme will be tapered as employees return to work. Throughout June and July, the government will continue to pay 80 per cent of salaries. In the following months, businesses will be asked to contribute \u2018a modest share\u2019, but people will be receiving that 80 per cent if they are still unable to work.<\/p>\n<p>The following will apply to people who are furloughed:<\/p>\n<ul>\n<li>\n<strong>June and July:<\/strong> The government will pay 80 per cent of wages up to a cap of \u00a32,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.<\/li>\n<li>\n<strong>August:<\/strong> The government will pay 80 per cent of wages up to a cap of \u00a32,500. Employers will pay ER NICs and pension contributions \u2013 for the average claim, this represents 5 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed.<\/li>\n<li>\n<strong>September:<\/strong> The government will pay 70 per cent of wages up to a cap of \u00a32,187.50. Employers will pay ER NICs and pension contributions and 10 per cent of wages to make up 80 per cent total up to a cap of \u00a32,500. For the average claim, this represents 14 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed.<\/li>\n<li>\n<strong>October:<\/strong> The government will pay 60 per cent of wages up to a cap of \u00a31,875. Employers will pay ER NICs and pension contributions and 20 per cent of wages to make up 80 per cent total up to a cap of \u00a32,500. For the average claim, this represents 23 per cent of the gross employment costs the employer would have incurred had the employee not been furloughed.<\/li>\n<\/ul>\n<p><strong>&gt;See also: <a href=\"https:\/\/smallbusiness.co.uk\/what-the-revamped-furlough-scheme-means-for-your-small-business-2550437\/\"><span class=\"title--only\">What the revamped furlough scheme means for your small business<\/span><\/a><\/strong><\/p>\n<p>Shops are starting to reopen this week, while hospitality venues and cinemas may reopen in July \u2013 providing the government sees evidence of the coronavirus dying out.<\/p>\n<p>How to wean businesses off the Coronavirus Job Retention Scheme, which currently costs the Treasury \u00a36bn a month, is an ongoing headache for the Treasury. The scheme could end up costing as much over a year as the NHS. The government has been taken aback by how enthusiastically employers and staff have embraced the scheme, which currently has about <a href=\"https:\/\/www.ft.com\/content\/8e2c0615-f2af-4885-a9bf-78deeb94bc80\">50 per cent of the population<\/a> on furlough.<\/p>\n<p>Organisations representing pubs and hotels, restaurants and others in hospitality, braced to be the last small business sector to reopen, have argued that the job retention scheme should be kept open for hospitality workers indefinitely. However, Mr Sunak is reportedly not keen on sector by sector exemptions.<\/p>\n<p>Edwin Morgan, director of policy, told the <a href=\"https:\/\/www.telegraph.co.uk\/business\/2020\/05\/10\/job-retention-scheme-set-extended-september\/\">Telegraph<\/a>: \u201cEnabling people to return to work gradually can help businesses get back on their feet. With demand still flagging across the economy, and social distancing proving a challenge for many firms, the Government needs to be agile with its support.\u201d<\/p>\n<div id=\"suggestvplayer\"><\/div>\n<h3>Coronavirus Job Retention Scheme launches<\/h3>\n<p>The government\u2019s Coronavirus Job Retention Scheme went live on Monday, April 20 with small businesses able to claim up to \u00a32,500 a month towards staff wages.<\/p>\n<p>Employers can apply for direct cash grants through HMRC\u2019s new <a href=\"https:\/\/www.access.service.gov.uk\/login\/signin\/creds\">online portal<\/a> \u2013 with the money expected to land in their bank accounts within six working days.<\/p>\n<p>The job retention scheme, announced by Chancellor Rishi Sunak as part of a package of support to protect jobs and businesses, allows employers to claim for a cash grant of up to 80 per cent of a furloughed employees wages, capped at \u00a32,500 a month.<\/p>\n<p>Up to 5,000 HMRC staff will be manning phone lines and\u00a0webchat services to answer any questions about the scheme, which runs until the end of June. HMRC has said it can cope with 450,000 users an hour.<\/p>\n<p>Last week, the government\u00a0<a href=\"https:\/\/www.gov.uk\/government\/news\/chancellor-extends-furlough-scheme-to-end-of-june\">extended<\/a> the Coronavirus Job Retention Scheme (CRJS) until the end of June.<\/p>\n<p>The scheme was originally going to run for three months until the end of May, but was extended in light of the April 16 lockdown extension announcement. The CJRS will cover the cost of wages backdated to 1 March 2020.<\/p>\n<p>The government also announced that the scheme was now open to 200,00 more workers at risk of losing their jobs.<\/p>\n<p>The Treasury said employees are now eligible to receive money under the scheme if they were on a small business\u2019s payroll on March 19, having previously set the cut-off date for February 28.<\/p>\n<p><strong>&gt;See also: <a href=\"https:\/\/smallbusiness.co.uk\/how-to-get-the-governments-10000-coronavirus-cash-grant-2549956\/\"><span class=\"title--only\">How to get the government\u2019s \u00a310,000 cash grant for small businesses<\/span><\/a><\/strong><\/p>\n<p>Announcing the scheme, chancellor Rishi Sunak said there was no limit on how much this job-retention scheme might cost, which will be financed through the national debt.<\/p>\n<p>On March 27 the government improved the CJRS offer by covering employer national insurance contributions \u2013 which amount to about 13.8 per cent of the majority of a worker\u2019s salary \u2013 as well as minimum auto-enrollment pension contributions. The move could save businesses an extra \u00a3300 per month per employee under the scheme.<\/p>\n<p>However, Sir John Timpson, chairman of shoe repair chain Timpson has already called for the CJRS <a href=\"https:\/\/www.telegraph.co.uk\/business\/2020\/04\/20\/avoid-mass-job-cuts-business-state-must-share-burden\/\">to be extended<\/a> until September at a lower rate of 50 per cent, as businesses only slow reopen over the summer.<\/p>\n<p><strong>&gt;See also: <a href=\"https:\/\/international-adviser.com\/coronavirus-how-to-manage-your-money-if-you-lose-your-job\/\">Coronavirus \u2013 How to manage your money if you lose your job<\/a><\/strong><\/p>\n<h3 id=\"how-to-access-the-scheme\">How to access Coronavirus Job Retention Scheme<\/h3>\n<p>You will need to:<\/p>\n<ul>\n<li>Designate affected employees as \u2018furloughed workers\u2019, and notify your employees of this change \u2013 changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation<\/li>\n<li>Small businesses need to classify employees as a furloughed worker, which means they should not undertake any work for the company while furloughed, including answering calls or emails<\/li>\n<li>Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)<\/li>\n<\/ul>\n<h3>Do companies have to top up 20% of staff wages?<\/h3>\n<p>No. One unintended consequence of last Friday\u2019s announcement by the chancellor was that many businesses are still planning to lay off staff because they still think they have to top up wages by 20 per cent.<\/p>\n<p>Companies should pay 80 per cent of workers\u2019 wages up to \u00a32,500 a month once they have been furloughed, says Treasury. Small business owners will retroactively be able to claim for that amount. You should also deduct tax under PAYE, as you would normally.<\/p>\n<p>Of course, it is up to you if you want to add to the \u00a32,500 gross salary on a discretionary basis.<\/p>\n<p>The big outstanding issue is what happens to employers\u2019 national insurance contributions, . This has not been decided yet.<\/p>\n<h3>How can I pay staff wages until May without cash flow?<\/h3>\n<p>Officials expect reimbursements through the Coronavirus Job Retention Scheme to start flowing from end-April onward into May.<\/p>\n<p>Until then, small businesses will have to cover staff wages themselves, often without any money coming in to the business.<\/p>\n<p>Officials suggest two ways small businesses can do this:-<\/p>\n<ul>\n<li>Using the deferral of VAT payments for the quarter until June 2020, which do not have to be paid until March 2021<\/li>\n<li>Using the <a href=\"https:\/\/smallbusiness.co.uk\/how-do-i-apply-for-a-coronavirus-business-interruption-loan-2549863\/\">Coronavirus Business Interruption Loan Scheme<\/a>, which offers up to \u00a35m for small businesses with no interest to pay for 12 months<\/li>\n<\/ul>\n<h3>How businesses should prepare \u2013 the financials<\/h3>\n<ul>\n<li>Set up the payroll with a furloughed pay element to identify the amounts for reclaim<\/li>\n<li>Calculate furloughed pay based on the 12 weeks up to the end of February. Use regular basic pay but not overtime or bonuses<\/li>\n<li>For employees off sick during that 12 weeks, base furloughed pay on the amounts excluding sick pay<\/li>\n<li>Assume this is still pay and that PAYE tax and NIC deductions will be due<\/li>\n<\/ul>\n<h3>Applying for JRS \u2013 a practical guide<\/h3>\n<p>Accountancy firm <a href=\"https:\/\/www.macintyrehudson.co.uk\/\">MHA Macintyre Hudson<\/a> has drawn up a 15-point action plan for small businesses that want to put staff on furlough and subsequently claim through the JRS:<\/p>\n<ul>\n<li>Identify those employees \u2018at risk\u2019 and earmarked for lay-off<\/li>\n<li>Analyse pay from the last 12 weeks up to the end of February (estimated time frame, government still to confirm)<\/li>\n<li>Establish base pay that qualifies for 80% furloughed grant<\/li>\n<li>Identify employees where \u00a32,500 cap will apply<\/li>\n<li>Calculate additional pay required to get to \u2018normal\u2019 pay<\/li>\n<li>Model options to manage any top up outside of the grant<\/li>\n<li>Identify employees required to remain in employment<\/li>\n<li>Model options to flex remuneration for those employees not furloughed, including establishing new \u2018base\u2019 pay in line with national minimum wage and employment related loans<\/li>\n<li>Commence communication with all affected employees including illustrations of proposed payments<\/li>\n<li>Obtain employee\/union buy-in<\/li>\n<li>Implement changes to payroll and pay elements<\/li>\n<li>Prepare application to HMRC<\/li>\n<li>Register and log-on to new HMRC portal (timing TBC)<\/li>\n<li>Submit required information to HMRC<\/li>\n<li>Receive reimbursement via new system<\/li>\n<\/ul>\n<p><strong>&gt;See also: <a href=\"https:\/\/smallbusiness.co.uk\/how-do-i-apply-for-a-coronavirus-business-interruption-loan-2549863\/\"><span class=\"title--only\">How do I apply for a Coronavirus Business Interruption Loan?<\/span><\/a><\/strong><\/p>\n<p>Sunak also announced that small businesses would be able to defer next quarter\u2019s VAT, a direct injection of \u00a330bn of cash-flow support for SMEs.<\/p>\n<p>Other measures announced include a \u00a37bn of extra support through the benefits system:<\/p>\n<ul>\n<li>Increasing universal credit by \u00a312,000 for one year<\/li>\n<li>Self-employed people who lose jobs qualifying for the minimum income floor<\/li>\n<li>Next self-assessment payments deferred until 2021<\/li>\n<\/ul>\n<p>Sunak said: \u201cWe will remember the small acts of kindness \u2026 the small business to do everything they can to protect their staff.\u201d<\/p>\n<p>Prime minister Boris Johnson added: \u201cI know how much businesses need the financial reassurance we are giving.<\/p>\n<p>\u201cWe will stand by you and we will do everything in our power to do that, supporting you in a way that government has never done before.\u201d<\/p>\n<p>Johnson also announced that all cafes, bars, pubs and restaurants to close from midnight March 20, along with nightclubs, theatres, gyms and leisure centres.<\/p>\n<p>The hospitality and entertainment sector closures will be reviewed each month.<\/p>\n<p>Grants can sometimes be combined with other forms of funding, such as banks, grant makers, <a href=\"https:\/\/smallbusiness.co.uk\/crowdfunding-uk-small-business-everything-you-need-to-know-2548127\/\"><strong>crowdfunding platforms<\/strong><\/a> and other lenders. In fact, we have teamed up with FundingOptions.com to help you find the right finance for your business. <strong><a id=\"fo-txt-message\" href=\"https:\/\/smallbusiness.fundingoptions.com\/?utm_source=smallbusiness&amp;utm_medium=link\" target=\"_blank\" rel=\"noopener noreferrer\">You can find their page here.<\/a><\/strong><\/p>\n<p>Compare business loans from across the market <strong><a href=\"https:\/\/nmem1.co.uk\/?a=188&amp;c=314&amp;s1=\" target=\"_blank\" rel=\"noopener noreferrer\">with our partners, Know Your Money<\/a>.<\/strong><\/p>\n<p>We support small businesses with useful guides and advice \u2013 especially with the recent outbreak of coronavirus. Submit your details <a href=\"https:\/\/smallbusiness.co.uk\/sign-up-for-updates\/\"><strong>here<\/strong><\/a> to receive daily updates direct to your inbox.<\/p>\n<h3>Further reading on coronavirus<\/h3>\n<p><!--\n                --><\/p>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p class=\"article-intro secondary-text-colour\">Government will cover up to 80% of small business staff wages while the coronavirus pandemic continues, up to \u00a32,500 per employee<\/p>\n","protected":false},"author":2,"featured_media":5728,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[21],"tags":[],"_links":{"self":[{"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/posts\/3751"}],"collection":[{"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/comments?post=3751"}],"version-history":[{"count":0,"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/posts\/3751\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/media\/5728"}],"wp:attachment":[{"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/media?parent=3751"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/categories?post=3751"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sloane.co.uk\/wp-json\/wp\/v2\/tags?post=3751"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}