So far, the CJRS has helped 1 million employers across the UK furlough 8.4 million jobs.
The Chancellor of the Exchequer has announced changes to the #coronavirus Job Retention Scheme. Flexible furloughing is starting one month early and employers will only be asked to start contributing to furloughed salaries from September 2020.
Over the coming weeks, we can now take careful but deliberate steps to reopen our economy. Across the country, office lights will be turned on and windows thrown open. Work clothes and school uniforms will be pulled out of the wardrobe. Shops and factories will start to hum with activity.
As we enter this new phase, things will change. Businesses will need to become Covid secure to protect staff and customers. We will all need to stay alert as we go about our daily lives.And, as Britain returns to work, we need to adapt the emergency programmes we put in place to bridge through the crisis. Because of those programmes, our economic prospects are better than they otherwise would have been.
We have provided:
- tens of billions of pounds of tax cuts, tax deferrals, cash grants and discounted loans for businesses.
- income protection for millions of the self-employed
- a strengthened safety net to protect millions of our most vulnerable people
And our job retention scheme has now supported more than 8 million jobs and over a million businesses.
No British Government, Labour or Conservative, has ever done anything like this. I believe it has made a real difference. But as we reopen the economy, there is broad consensus across the political and economic spectrum: The furlough scheme cannot continue indefinitely.
Two weeks ago, I outlined the principles of my approach:
- the furlough scheme will remain open all the way until October
- we will ask employers to start contributing, as we also introduce flexible furloughing
- and employees will see no change to their level of support
As promised, I can provide more details today.
I believe it is right, in the final phase of this eight-month scheme… to ask employers to contribute, alongside the taxpayer, towards the wages of their staff. But I understand, too, that businesses and employers have been through an incredibly difficult time. So I have decided to ask employers to pay only a modest contribution, introduced slowly over the coming months.
June and July 2020 Status quo 80% grant plus Employer NI and banded pension
In June and July, the scheme will continue as before, with no employer contribution at all.
August 2020 – 80% grant but employers pay their NI and pension
In August, the taxpayer contribution to people’s wages will stay at 80%.
Employers will only be asked to pay National Insurance and employer pension contributions… which, for the average claim, account for just 5% of total employment costs.
September 2020 – 70% grant
By September, employers will have had the opportunity to make any necessary changes to their workplaces and business practices. Only then, in the final two months of this eight-month scheme, will we ask employers to start paying towards people’s wages.
In September, taxpayers will pay 70% of the furlough grant, with employers contributing 10%.
October 2020 – 60% grant
In October, taxpayers will pay 60%, and employers will contribute 20%.
November 2020 – the Scheme is closed
Then, after eight months of this extraordinary intervention…
…of the government stepping in to help pay people’s wages, the scheme will close.
Flexible furlough from 1st July
The biggest request I’ve heard from businesses large and small, right across our country, is to have the flexibility to decide what is right for them. So, to protect jobs, and help businesses decide how quickly to bring their workforce back, we are introducing a new, more flexible furlough. This is a critical part of our plan to kickstart the economy.
The financial security of the furlough scheme has been a relief for many, but at the same time people want to work. No one wants to be at home on furlough. No one wants to feel unable to contribute. So HMRC and the Treasury have worked hard to put the flexible furlough in place not from August 1st, as originally planned, but from July 1st – one month early.
From July 1st, employers will have the maximum possible flexibility to decide on the right arrangements for them and their furloughed staff. For instance, if you are watching at home and on furlough, your employer could bring you back two days a week.They would pay you for those two days as normal, while the furlough scheme will continue to cover you for the other three working days.
To allow us to introduce this new, flexible furlough from July 1st, we will need to close the old scheme to new entrants on June 30th.
Closure to new entrants – 30th June 2020
Employers wanting to place new employees on the scheme will need to do so by June 10th… to allow them time to complete the minimum furlough period before then.
Reopening the country and kickstarting the economy
…Today, a new national collective effort begins: to reopen our country and kickstart our economy.
The facts
- Around 40% of employers have not made a claim for employer NICs costs or employer pension contributions and so will be unaffected by the change in August if their employee’s employment patterns do not change.
- Many smaller employers have some or all of their employer NIC bills covered by the Employment Allowance so will not be significantly impacted.
- Around 25% of CJRS monthly claims are below the thresholds where employer NICs and automatic enrolment pension contributions are due, and so no employer contribution would be expected for these payments to furloughed employees in August.
- To enable the introduction of part time furloughing, and support those already furloughed back to work, claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees. The scheme will close to new entrants on 30 June, with the last three-week furloughs before that point commencing on 10 June.
- From 1 July, employers will be able to agree any working arrangements with previously furloughed employees.
- When claiming the CJRS grant for furloughed hours; employers will need to report and claim for a minimum period of a week, for grants to be calculated accurately across working patterns.
- The CJRS scheme will continue to operate UK-wide.
- If an average claim lasted 8 months, the total cost of employer contributions would represent around 5% of the gross employment costs an employer would have incurred had the employee not been furloughed.
PAYadvice.UK 29/5/2029
I have paid PAYE for 30+ years.
My PAYE is paid annually every year, so I am excluded from support.
I have not been allowed to work for 4 months and have no income.
My friends here in Leicester are dying from poverty.
The government has blood on it’s hands.
Why do you pay yourself only once a year? If you took a regular wage then you would have been covered by the Scheme, or at least have made a payment before 20th March. Have you made a Universal Credit claim?
My companies Accountant does annual PAYE to save on administration cost compared to monthly PAYE. The tax bill is exactly the same for monthly or yearly PAYE, and the tax must be paid every year, before the end of the tax year. You can still get regular pay.
You are right, I would qualify if my companies Accountant got the RTI number by the 19th of March, but this rule wasn’t created until after the 19th of March, so there is no way we could have known that.
I have not tried Universal Credit. Thanks for advice.
Annual PAYE would only apply to annual pay (paid as income once a year). If you are receiving regular pay, then it would be subject to PAYE at the point of payment and also required to be reported on or before each of those payment points, so would not be annual pay. Choices may not have worked in your favour. So an element of self exclusion maybe!
As I understand it the monthly pay is a loan until the PAYE is filed, but I am not an Accountant.
All I know is that it has been filed every year for the same amount, without fail.
It is recommend by my companies Accountant, and is done by an estimated 700,000 workers in the UK.
My companies choice to use the annual PAYE system for all my wages has not worked out, you are right, but why?
I pay the same amount of tax as all workers who take all of their earnings through PAYE.
I am trying to apply for Universal Credit. One problem.. A disabled person lives in the same house as me and I have no idea what benefits they are claiming, but I need to know to apply..
In the quest to save elements of tax, the construction has disguises income as not being from employment. Equally it is not self employment. So operating an annual Scheme has some tax advantages, the other side of the coin is that it then defines the income as something else, and the CJRS is there to protect employment income and jobs. Timing indicates that there was none. So on the one hand you would qualify, however, on the other 80% of nothing is zero. Hindsight is a great thing, but also daemon when it doesn’t work in one favour. Lots are indicating that it doesn’t cover them for dividends, correct, but dividends are again not a payment for employment but a share of a business profits to its investors. I see that HMRC have called for evidence on disguised remuneration schemes. Wish you all the best and that business recovers rapidly.
That is completely incorrect, there is no saving in tax whatsoever!
What is saved is accounting fees from the accountant (12 times cheaper), and administration fees for HMRC.
I am not self-employed and never have been.
I am an employee of a company and pay everything I receive through PAYE, and always have.
I have contributed more that £500,000 in Income Tax and National Insurance over 30+ Years.
I have never ever received any dividends.
I have never ever received any benefits.
I have never avoided any tax or used any tax efficiency schemes.
I’m sorry you feel that way. This is where it starts to be confused and we are going through strange times.
Since April 2013 it has been a legal requirement to report earnings in real time on or before payment. If that he been occurring, then there would not be an issue and you could potentially furlough.
You indicate receiving no benefits, however, also mention loans which would be considered as a benefit in kind where they exceed £10,000 and subject to reporting on P11D subject to PAYE and Class 1A NICs.
HMRC don’t charge administration fees for RTI submissions. An employer could not charge employees for their payroll costs.
In these cases it is evident that the Scheme operation is causing challenges, and it is understandable as to why.
The government require a means of identifying income, yet in the qualifying tax year, there is none declared. That is a problem under the Coronavirus protection scheme. Unfortunate for those who do not fall into the qualification.
I personal receive no Coronavirus support as no qualifying condition is met.
It would seem strange that annual is only used to avoid administration costs alone. Officially, annual schemes only apply if you only make 1 payment of earnings a year and generally relate to directors and office holders who do not fall within National Minimum Wage timing requirements. Else some care would be needed with regards to National Minimum Wage law, as if an employee, you may be breaching the legal time limits required.
However, if acting as a director, then the construction is different to employees.
Wish you all the best and success for the future.