Busbys Chartered Accountants

Coronavirus update 11 – 26 June 2020
Details on extension of CJRS

The Government has published details on the extensions to the Coronavirus Job Retention Scheme (CJRS) over the last couple of weeks, and these are detailed below. But firstly a few other points:


As a degree of normality has now set in, I can confirm that our opening hours are now 9.00am to 4.00pm, as we always have the office staffed during this time. Often we are open earlier, and can remain open later, but if you need to make a delivery outside of our normal hours, please arrange this in advance.


The VAT deferral facility has now ended. If you took advantage of this, and used to pay your VAT by Direct Debit, then you will need to set your Direct Debit up again if you want to take advantage of the automation and the additional three days’ credit that this scheme allows.

We cannot do this for you, even if we file your VAT returns for you – so you will need to set up the DD facility yourself via your own Government Gateway account. If your VAT quarter ended on 31 May, you need to set this up very soon, as the VAT will need to be taken on 10 July. Generally you need to allow 7 days for the DD to take effect, so please deal with this straight away.

If you are unable to set up the Direct Debit in time, you will need to pay your VAT directly - see https://www.gov.uk/pay-vat?_ga=2.191346346.1418823609.1592989800-609174434.1549625277  for full details of how to pay. For those with quarters ending on 31 May, you will need to pay by 7 July.


As mentioned in Newsletter 10, the deadline to claim the first Self-Employed Income Support Scheme grant is Monday 13 July. If you think that you are eligible (and we can tell you if we think you are), then you must make the claim by this deadline, otherwise it will be lost. And please remember that you must make the claim - we cannot do this for you! See newsletter 8 for full details of how to claim - https://www.busbys.co.uk/Coronavirus_Update_8/ - the process is very straightforward.

Claims for the second grant can be made from August (exact date to be announced), and the process will be the same as for the first claim. As well as meeting the income criteria and qualifying dates (see https://www.busbys.co.uk/Coronavirus_Update_4/ ), you will only be able to claim if your business has been adversely affected by Covid-19 after 14 July. The only other change is the amount of grant – it will be equal to 70% of your average quarterly profits, rather than 80%. So those who qualify will receive 87.5% of what they received for the first grant.


I detailed the main changes to the CJRS in Newsletter 10, so please refer back to that for the main rules: https://www.busbys.co.uk/Coronavirus_Update_10/

The scheme is changing on 1 July to allow far more flexibility, but with that comes far greater complexity! Indeed, the Government have published no fewer than 13 different sets of guidance relating to CJRS. In a newsletter such as this, it is impossible to cover every angle, so if you need advice on your particular circumstances, do please contact us. But the key points to note from a practical point of view are as follows:

    1. The scheme is now effectively closed to “new entrants”. Subject to a couple of exceptions, anyone who has not yet been furloughed cannot be added onto the scheme now. Likewise, any employer who has not made a claim for any period prior to 30 June is now excluded from the scheme. The exceptions relate to staff returning from a period of parental leave, and reservists in the armed forces returning from a period of active service. If you have queries on these limited categories, let us know.
    2.  Future claims are going to be limited by reference to the maximum number of employees that you have claimed for in any period prior to 30 June. I doubt that this will be an issue for most businesses, but if you have operated a rota system, care may be needed.
    3. Claim periods can no longer straddle a month end, as the changes to flexible furloughing are starting on 1 July, and from 1 August onwards, the amount that you can claim is being steadily reduced.
    4. Claims can currently be made for any period that suits you, as long as each claim is at least a week long. Most employers will have claimed monthly, and as long as the claim period is a calendar month, then you will not be affected. But from now, claim periods cannot straddle a month end. So, if your payroll period is not an exact calendar month, you will need to make at least two claims in a month and an example illustrates this best:
      1. Your normal payroll month runs from 26th to 25th. So you will run a payroll covering the month ended 25 June, and you can still claim for that period in full.
      2. But your next payroll period will run from 26 June to 25 July, so you will have to make claims as follows – 
        • 26 June to 30 June (5 days)
        • 1 July to 25 July (25 days)
      3. So a claim period can now be less than 7 days, if necessary, to ensure that the claim period does not straddle a month end.
    5. Deadlines for claims have now been introduced:
      • - All claims up to 30 June must be made by 31 July.
      • - Claims for July must be made by 31 August.
      • - Claims for August must be made by 30 September, etc.
    6. This might lead to a practical problem in that some claims may have to be made very quickly after the end of a payroll period. Taking the example above, the claim for the period 26 June to 30 June will have to be made by 31 July, but that is only five days after the end of the normal payroll period.
    7. Flexible furloughing also means that you may not receive your CJRS claim until after your normal pay date. If the flexible furlough periods vary or are unpredictable, you will not be able to calculate the claim until after the end of the payroll period. But HMRC will still take 6 days to pay, and you will probably be paying your staff just before or just after the end of the payroll period. For example:
      • You pay your staff monthly on the penultimate day of the month.
      • So for July, you will pay on 30th, but that will cover work done up to and including 31st.
      • So you will not know what to claim until 1 August and that means you will not receive your claim until a full week after you have paid your staff.
    8. Once employees have completed the minimum three week furlough period (normally by 30 June) then furlough periods after 1 July are fully flexible. Furlough periods do not even have to be full days – you can bring someone back to do two half days per week if you wish to. Indeed you can furlough someone for just an hour a month if you wish to!
    9. But whatever you decide to do (and it is the employer’s decision), make sure that it is discussed with your employees, and confirmed in writing, as employment law still applies at all times. If in doubt, take advice from an employment lawyer.

How do you work out claims for flexibly furloughed staff from 1 July onwards?

Firstly, please note that the examples that I gave in Newsletter 10 were too straightforward – as I say above, it is not that simple! The main point to note is that the CJRS claim will only cover a maximum of 80% of the salary that is due in respect of the furloughed hours. Hence, if someone is working part time, the employer must give the employee full pay for the hours worked, and then they will get a minimum of 80% for the hours that are not worked. As before, the employer can choose to top this up, but they do not have to.

It is imperative that you keep detailed records of hours worked. If your staff always work a set number of hours per day, then you may be able to calculate claims based on days, but generally you will probably have to look at the number of hours worked.

The calculations are potentially complex, and HMRC has published numerous examples which I will not reproduce, but please look at https://www.gov.uk/government/publications/find-examples-to-help-you-work-out-80-of-your-employees-wages/examples-of-how-to-work-out-80-of-your-employees-wages-national-insurance-contributions-and-pension-contributions#example1 if you need more specific guidance.

However, if I give you a relatively straightforward example, then you can see how the new flexible scheme will work:

Consider an employee (a chef) who has been fully furloughed to 30 June, without any top up – i.e. they have been paid 80% of their normal pay. The employer (a café) now asks them to come back to work on Friday and Saturday each week for 8 hours each day. Normally they would work a 5 day week (Tuesday to Saturday), 8 hours per day, and they are paid a monthly salary of £2,000, and their payroll period is a calendar month. The café is opening on Saturday 4 July, but the chef is asked to start on Friday 3rd to get everything ready for opening. So the calculation is as follows:

  1. How many hours would they normally work in a recurring pay period? In this example, the recurring pay period is a week, and they would normally work 40 hours.
  2. Divide the normal working hours (40) by the number of days in the shift pattern (a week, so 7) to give the average daily hours – i.e. 5.71.
  3. Multiply by the number of days in the pay period (the month of July, so 31) to give the normal hours for the pay period – 5.71 x 31 = 177.14. (HMRC use 2 decimal places)
  4. How many hours did they actually work in July? 9 days, i.e. 72 hours.
  5. Calculate the number of furloughed hours – i.e. C-D = 105.14 hours.
  6. Calculate the normal total pay for the furloughed hours - i.e. Salary x E/C which is £2,000 x 105.14/177.14 = £1,187.08 (HMRC seem to round down to the nearest penny)
  7. Multiply by 80% to give the furlough grant, and this is the minimum amount payable for the furloughed hours – i.e. 80% x £1,187.08 = £949.66.
  8. Calculate the pay for the hours worked – i.e. Salary x D/C which is £2,000 x 72/177.14 = £812.92.
  9. That means that the employee will receive gross salary of £1,762.58, being G+H.

Contrast this with what the employee received when fully furloughed, which was 80% of normal pay, i.e. £1,600 per month. So the employee will get additional gross pay of £162.58 in this example, but that, of course, will be subject to deductions for PAYE, employee’s NI, employee’s pension contributions, and any student loan repayments.

On top of the claim for the furloughed salary of £949.66, the employer will also be able to reclaim the proportion of employer national insurance and minimum statutory pension contributions that relate to the furloughed salary for July, but these costs will not be claimable from August onwards. In this example, the total claim works out at £1,039.88, compared to £1,752.18 for June. That is roughly a 40% reduction, which reflects the fact that the chef is now working 40% of his normal hours.

The HMRC have published a calculator to help with these calculations, and whilst we have not extensively tested it, it does seem to work for straightforward examples. See https://www.tax.service.gov.uk/job-retention-scheme-calculator/?_ga=2.234592153.609740547.1591998295-983822980.1582809501

The full flexibility of CJRS version 2 is to be welcomed, but everyone’s situation is going to be different now. So I will not go into further detail here, but if you need guidance on your specific circumstances, please let us know by calling or emailing your regular contact, or by sending a message to mail@busbys.co.uk.