Updated: 20 April 2020
The “on the payroll” date for employees to be included in a claim for the Coronavirus Job Retention Scheme (CJRS) has been extended from 28 February to 19 March 2020, but there are further conditions to meet.
After much confusion about exactly what “on the payroll” meant for claiming the CJRS grant, the Treasury has changed the cut-off date for the furloughed employees to be on the employer’s payroll as at 19 March 2020.
However, the second condition for the CJRS announced on 15 April is that the details of those furloughed employees must have been reported to HMRC on an RTI submission by 19 March 2020. Thus, the last effective date an employee could join the payroll and be included in a CJRS grant application could be much earlier than 19 March. It depends when the employer submitted the FPS for the pay period.
RTI returns
The FPS must have been received by HMRC by midnight on 19 March for anyone paid in 2019/20 to be able to be included in the CJRS claim. For example, an employee with a start date of 24 February whose details were not reported under RTI until 26 March is excluded from the claim, whereas an employee who started on 19 March and was reported on that day with earnings for March 2020 will be eligible to be included in the CJRS claim.
The employer must have an active PAYE scheme to apply for the CJRS grant and this must have been set up by 19 March 2020. This is another change from the initial guidance which said the PAYE scheme had to be set up by 28 February.
Pay period
The employer can claim 80% of the furloughed employee’s wages, subject to a cap of £2,500 per month. The original guidance said this salary should be that in place as 28 February 2020, but the new guidance refers to the last pay period that ended prior to 19 March 2020. For monthly paid employees that reference date is likely to be around 28 February, but for weekly payrolls it will be different.
HMRC has helpfully said that if the employer has already calculated its CJRS claim based on an employee’s salary at 28 February, this calculation can still be used even if the employee’s salary had changed by 19 March.
Re-employed redundant employees
The policy for employees who were made redundant and then re-employed by the same employer has also changed.
If an employee had been notified to HMRC as being on the payroll as of 28 February, was then made redundant or stopped working for the employer before 19 March, they can be included in a CJRS claim if they have been re-employed by the same employer and furloughed. The re-employment date can be after 19 March if the person was identified as an employee of the employer in an RTI submission made by 28 February 2020.
Portal open
HMRC has opened CJRS portal to submit claims today, Monday 20 April 2020.
The latest HMRC email to employers also says that the grants will be paid out to employers within six working days of the receipt of a claim. This is an improvement on the initial guidance which said the money would start to be paid out from 30 April.
How the cut-off was set
When the CJRS was first announced on 20 March it was stated that it would only apply to the pay of employees “on the payroll” on 28 February.
HMRC needs to draw a line to prevent fraudulent claims from being made. If the eligibility date was set as a date after the scheme was announced unscrupulous employers could set up a PAYE scheme with fictional employees to take advantage of the grant. HMRC will compare the employees’ details in the CJRS claim to RTI reports already submitted by the employer, thus ensuring that no money is paid out for fictional employees.
In Practical terms
- Although the scheme has been extended to include employees on the PAYE scheme on or before 19 March, the condition to have reported them to HMRC by 19 March means that employees paid weekly or fortnightly may be included but monthly paid employees joining the employer after 28 February may be excluded.
- Employees that were made redundant due to the impact of Coronavirus can be re-hired and furloughed.
Employers should receive the grant within six working days of making the claim.