Key points from “Work out 80% of your employees’ wages to claim through the Coronavirus Job Retention Scheme” guidance


On 17 April, the Government published new guidance (see here) on how to calculate employees’ wages to claim under the Coronavirus Job Retention Scheme (“CJRS”).  This new Guidance is in addition to the Employer Guidance (further updated on 15 April) and Employee Guidance (further updated on 17 April) alongside a Direction (see here) from the Treasury on 15 April made under the Coronavirus Act 2020.

We have set out below the key points from this new Guidance. Our note on the updated Employer and Employee Guidance and Direction can be found here.

What is the CJRS claim limit per employee?
  • Wages of up to £2500 per month or £576.92 per week plus any employer National Insurance contributions and mandatory employer pension contributions on the gross amount claimed (see further below).
  • Other than the employer pension contribution and employer National Insurance amounts claimed, the employer must pay the entirety of the sums claimed through the CJRS to the furloughed employee.
When does Day 1 of furlough begin?
  • The Guidance is clear that claims should be started from the date that the employee finished work and starts furlough, not when the decision is made or when the employee is written to confirming their furloughed status. However, the Direction requires a written agreement from the employee before they meet the definition of furloughed employee.  Notwithstanding the Direction, it would therefore seem unlikely that HMRC would count Day 1 of furlough as the day that the furlough agreement is in place.
What to include when calculating wages?
  • Employers should include regular payments they are obliged to make under the contract, but exclude discretionary payments such as tips, discretionary bonuses and discretionary commission payments, non-cash payments and non-monetary benefits such as a company car and salary sacrifice schemes (including pension contributions) which reduce an employee’s taxable pay.
Claims for salaried members of an LLP
  • If a member of an LLP is treated as an employee in accordance with tax law, “wages” claimed can be fixed or variable payments provided they are not varied or otherwise affected by the overall amount of the LLP’s profits or losses.
Working out the sums
  • A basic calculator is now available, published on 20 April (see here).
  • As the minimum period of furlough is three weeks, employers are likely to need to calculate daily, weekly and monthly wage rates to make claims. The Guidance provides worked examples of how to do this for full-time, part-time, fixed pay and variable pay rate employees.
  • The Guidance clarifies that claims may cover multiple pay periods. A calculation should be made for each pay period and then added together.
  • Employers are free to choose the calculation which best fits their employee (depending on whether the employee’s pay is fixed or variable). HMRC confirm that they will not decline or seek repayment of CJRS grants based solely on the choice of calculation providing a reasonable choice is made.
Working out employer National Insurance
  • Employer National Insurance is payable on all pay over the secondary threshold at a rate of 13.8%. Employers may be eligible for the Employment Allowance which is £3000 for all employers in the 2019/2020 tax year.  This rises to £4000 in the 2020/2021 tax year, but is only available to employers whose Secondary National Insurance contributions liability in tax year 2019/2020 was under £100,000.
  • Employers can claim for the employer National Insurance paid on the maximum CJRS grant claimed, but not for any National Insurance due on any additional amounts that the employer may choose to pay to top up the grant.
  • The amount claimed for employer National Insurance cannot exceed the amount the employer is due to pay. For example, when calculating the employer National Insurance element of a CJRS grant in any pay period, the employer should subtract any actual (or expected) Employment Allowance used (or to be used) in that pay period. If as a result of the Employment Allowance, no employer National Insurance is due to be paid in any pay period, no National Insurance amount should be claimed under the CJRS.
  • The total employer National Insurance contributions due in a pay period should be apportioned on a daily basis, with the amount apportioned to any qualifying furlough days forming the basis of the amount that can be claimed through the scheme.
Working out employer’s pension contributions
  • Employers can only claim what they are obliged to pay and only up to the level of the mandatory employer contribution (whether the pension is an auto-enrolment pension or not).
  • They should: (a) start with the amount they are claiming for the employee’s wages; (b) deduct the minimum amount the employee would have to earn in the claim period to qualify for employer’s pension contributions (known as Lower Level Of Qualifying Earnings), being £512 a month for periods before 5 April 2020 and £520 for periods after 6 April 2020; and (c) multiply this amount by 3%.
  • The amount claimed must be paid directly into the employee’s pension scheme.
  • Worked examples are shown in the Guidance.
  • The Guidance states that where a pay period includes periods of less than a week, the Lower Level of Qualifying Earnings should be apportioned accordingly.
When can an employer claim?
  • Although the service opened on 20 April, the Guidance provides that claims should be made shortly before or during running payroll.
  • Employers cannot make more than one claim during a claim period. They must claim for all employees in each period at one time. Furthermore, they cannot make changes to their claim.  This means employers face huge pressure to get this right in “one shot” and this pressure will naturally be greater the more employees that the employee attempts to furlough.
  • The Guidance states that employers making claims agree to use the grants received to pay the employees and not for anything else and the employer will immediately return grants if an employer is unable or unwilling to pay employees, their pension contributions and employer National Insurance accordingly. As mentioned in our CJRS update here, the Direction and Employer Guidance on employees receiving SSP and what agreement is necessary from employees are inconsistent.  Given the “one shot” approach mentioned above, some employers may try to claim for as many employees as possible (including those employees on SSP and those who have not provided their written agreement to be furloughed) and then repay the grant if the position is clarified and it is clear that such employees do not qualify under the CJRS.
Tax treatment of the CJRS
  • The grants received should be included as income in the businesses calculation of its taxable profits for Income Tax and Corporation tax purposes and payments in respect of all employment costs should be deductible for such purposes, in accordance with normal tax principles, resulting in no taxable profit arising as a consequence of the scheme.
  • The grants paid to individuals who employ others (such as nannies and domestic workers), but not as part of a business, are not counted as income for the purposes of their self-assessment.
  • CJRS grants received and paid should be reported through RTI in the same way an employer would report normal pay, save that, where employers have continued to pay employees during a period of furlough in advance of receiving a grant payment, they do not need to make any further RTI submissions when they receive the grant.
  • The RTI submission should be made on or before the date the employer pays the employee.

Please contact any member of our team for further information.

Lidia Poczok

Justin Costley


Miranda Cass


Julia Cockroft


Rachel Arnison

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