Coronavirus Job Retention Scheme (“CJRS”) FAQ

What is the CJRS?

The CJRS is a Government scheme introduced to provide financial help to employees that are out of work because of “circumstances arising as a result of coronavirus or coronavirus disease”.

If you were employed by your Limited Company (“Company) at the 19th March 2020, the Company had a live PAYE scheme registered for RTI at that date and a UK bank account, and you are out of work for at least 21 days because of circumstances arising as a result of coronavirus then you have the option to furlough yourself. Subject to certain criteria being met furloughing yourself will allow you to reclaim 80% of your average salary for the period you are out of work (up to a maximum of £2,500 per month).

The scheme is set to run from the 1st March to the 31st July 2020 on the terms described, and from 1st August to 31st October 2020 with revised terms requiring employers to contribute to the salaries of their furloughed staff (the specific details of this have not yet been announced). The 21-day furlough period(s) can fall anywhere in between those dates.

Do PSC’s qualify for the CJRS?

The Treasury has confirmed that individuals working through a Company/Personal Service Company (PSC) and receive a salary through that Company, are eligible to participate.

What are the criteria for qualifying?

You must have received a salary through your Company and you must have been on the payroll on March 19th 2020.

You must not work for your Company if wish to claim 80% of your salary back during any period of furlough.

You can have no trading activity or revenue in your Company during the furlough period. If you do this, you will prejudice your right to claim the furlough payment, and our understanding is that it is likely that HMRC will undertake retrospective audits to ensure that the requirements have been complied with.

Is there a difference if my client is Public or Private Sector?

This extract from the legislation suggests that the CJRS scheme is aimed at the private sector only – if you are working with a public sector client then we would recommend you liaise with them and your recruitment agency to understand if payments are going to continue to be made even if you are unable to fulfil your contract:

Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs.

What does furlough mean?

Furlough is a term used to describe a period of layoff subsidised by government. Another way to describe it would be that a furloughed employee is “taking a temporary leave of absence from work”.

How can I be furloughed as the only employee of my Company?

A director’s role as an officeholder is separate to the role as an employee, even if you fulfil both roles.

You would be furloughed as an employee, not a director.

What about my duties as a director?

You should still undertake your statutory duties while you are being furloughed, such as filing the Company’s accounts and making statutory declarations.

These statutory duties would not count as doing work so you would still meet the criteria of being furloughed.

Will I be able to claim relief on all my income?

The guidance talks about being able to recover “regular payments”. Our view on this is that in your circumstances that would be limited to your average monthly salary and not any dividend income or expenses. You cannot make a claim for the latter as part of the CJRS.

How much will I be able to claim in CJRS relief?

You will pay yourself and claim back 80% of your salary e.g. if you usually pay yourself £719 per month then 80% is £575. £575 is what you would pay yourself and claim back.

If you have been employed by your Company for a full twelve months prior to the claim, you can claim for the higher of either the same month’s earnings from the previous year or your average monthly earnings from the 2019-20 tax year.

If you have been employed for less than a year, you can claim for an average of your monthly salary.

In addition, you can claim any employers NI and the basic employer pension cost of 3% (if applicable).

Can I pay myself a higher salary during this period to claim back a higher amount of relief?

Yes, but the amount you will be able to reclaim can only be 80% of the average gross amount you paid yourself over the 2019/2020 tax year, or the same month’s earnings from the previous year, whichever is the higher amount.   

What if my salary changed over the course of the last year?

If you have been employed by your Company for a full twelve months prior to the claim, you can claim for the higher of either the same month’s earnings from the previous year or your average monthly earnings from the 2019-20 tax year.

If you have been employed for less than a year, you can claim for an average of your monthly salary.

Do I need an agreement with my limited company, or PSC to agree the Furlough Period?

Based on the most recent direction from HMRC, the definition of a “furloughed employee” is also contingent on there being a written instruction to cease all work in relation to their employment.

Therefore, there will need to be a written agreement between you and the limited company that you (as the employee) will cease work in relation to your employment. Without this document in place, this could prejudice the recovery of the payment from the CJRS.

How do I make a claim?

You must read these FAQs to understand if you qualify. If you believe you do, next click on the link at the bottom of the document, give us details of the period you wish to claim for and make your declaration that you are eligible to claim via CJRS.

On receipt of that confirmation we will calculate your claim based on your trading history and process it for you through the Government portal.

Noting that you must have been furloughed for 21 days before a claim can be made the first claim will be from the first date of furlough to the 30th April 2020. If your first date of furlough was the 10th April or later then the first claim will be from that date to the 31st May and will be processed in May’s payroll. That process will be repeated in subsequent months.

Separately you will instruct us to process your salary for the months you are furloughed at the full rate or to adjust it to 80% of last years average in line with what you can claim for.

You must inform us immediately if you return to work. On receipt of that information we will adjust your next claim accordingly.

When will I get the reclaimed money?

The first payments are expected to be made to employers on the 30th April with the stated aim being that future payments will be made within 4 to 6 working days of data submission.

I am concerned I will not have the cash to make the payments while I am furloughed. How will I make the payments if this is the case?

If you have deferred any PAYE, VAT and/or CT liabilities then you could consider using the cash earmarked for those in the interim to make the furlough payments. Alternatively, you can wait for the payment to arrive from the reclaim and pay it then.

What if I started to close my Company before March 19th?

As noted above – the CJRS is a Government scheme introduced to provide financial help to employees that are out of work because of “circumstances arising as a result of coronavirus or coronavirus disease”.

If the reason for deciding to close your Company was Coronavirus related then you do have the option to furlough yourself (going back to 1st March if appropriate) otherwise in our opinion, you will not qualify under the CJRS, because the reason you stopped working through the Company was not as a result of the coronavirus outbreak.

I am not from the UK and am here on a Visa and as a result I have heard that I am not eligible for state aid. Will I be eligible for CJRS support?

The CJRS grant is offered to your Company, not to you as an individual. If you have a Visa that allows you to work in this country and you were registered on the payroll on March 19th, your Company will be eligible to make a claim for CJRS relief.

What if I furlough myself but get offered a permanent or umbrella role during the furlough period elsewhere?

Despite the fact that the scheme was designed to support those who cannot work due to the Corona outbreak, the legislation does seem to suggest that you can receive secondary income, be furloughed from your Company and still qualify for the relief on salary through that Company.

However, this is not entirely clear and there is the chance that HMRC will not allow you to reclaim any payments made (or seek to reclaim them back from you at a later date) during the furlough period if you are working elsewhere, particularly if you decide to work with the same organisation that you were working for before you were furloughed.

What if I furlough myself and end up getting a contract role during the Furlough Period?

You cannot have any trading activity carried out in your Company – revenue in or payments out – during the furlough period if you wish to make a claim. The minimum period of furlough is only 3 weeks though (and can be back dated to 1st March) so if a contract starts after you have been furloughed for 3 weeks then you may still be eligible to claim for the furloughed period but not any period where income is being generated.

I was due to stop working through my Company for a reason not related to Corona e.g. had accepted a permanent role, do is still qualify under the CJRS?

In our opinion, you do not qualify under the CJRS, because the reason you stopped working through the Company was not as a result of the coronavirus outbreak.

If my Company contract with a client was typically renewed e.g. on a month to month basis, but was ended early, or not renewed in March, or April 2020 because of coronavirus, would I qualify for CJRS?

Our view on this, is that provided you were registered on the payroll of your Company on 19 March 2020, and that reason that you cannot renew your assignment was because of the coronavirus that you would be entitled to make a claim under the CJRS.

When you make a claim under the CJRS, you are likely to have to declare that the reason you are making the claim is because you cannot work because of the circumstances, or impact of coronavirus. If you are subsequently audited, you may need to have evidence to back this up, it is therefore important that you are careful to ensure that any declaration made is accurate, or this could prejudice your recovery under the scheme and may be subject to recoupment by HMRC, which could include interest, fines and penalties if the claim is made fraudulently.

My Company is dormant, do is still qualify under the CJRS?

As noted above – the CJRS is a Government scheme introduced to provide financial help to employees that are out of work because of “circumstances arising as a result of coronavirus or coronavirus disease”.

If the reason your Company is dormant was Coronavirus related then you do have the option to furlough yourself (going back to 1st March if appropriate) otherwise in our opinion, you will not qualify under the CJRS, because the reason you stopped working through the Company was not as a result of the coronavirus outbreak.

Will I qualify for any other state aid?

The legislation stipulates individuals will be able to qualify for as many of the support packages as you fit the criteria for.

SSP is one potential option if you are unable to work due to illness:  

https://www.gov.uk/employers-sick-pay/eligibility-and-form-ssp1

Universal Credit is commonly available to most people and you can see if you qualify on the HMRC website:

https://www.gov.uk/universal-credit/eligibility

What next?

If you do find yourself unable to work on the contract you had intended because of Coronavirus then the CJRS is a welcome intervention from the Government but, as we have noted above – the amounts available are much lower than you will be used to earning so finding a new contract that can generate income for you during these challenging times will always be preferable.

If you wish to claim via the CJRS having read these FAQ’s, please complete this form and we will be in touch: https://workrgroup.com/flw/cjrs-claim-form/

Please note that these FAQs are based on our reading of the Legislation and supporting guidance and do not amount to legal advice. If you remain unsure then you should seek your own legal advice