Q&A: Coronavirus Job Retention Scheme (CJRS) extension

In our regular Q&A series, Pras Patel, tax advice consultant at Croner Taxwise, provides an at a glance guide to current and upcoming changes to the furlough rules

Got kids? If your employee is unable to work because they are ‘caring for children who are at home as a result of school and childcare facilities closing’ then they can be furloughed. This was confirmed by HMRC on 5 January 2021.

The Coronavirus Job Retention Scheme (CJRS) has been extended until 30 April 2021. This was announced late last year and confirmed by the 5th Treasury Direction which was issued on 26 January 2021.

Employees will receive 80% of their current salary for hours not worked, up to a maximum of £2,500 per month. This cap is proportional to the hours not worked. Employers will not be required to contribute or top-up for the hours not worked.

The government will meet the pay of the employee up to this cap, but the employer remains responsible for meeting the pension and national insurance contributions (NIC) costs. The employer will, of course, pay the employee for the hours actually worked in the normal way.

This means that the extended CJRS scheme is more generous than it was in October and therefore it will mirror the terms of the CJRS for August 2020.

To be eligible under this extension, employees must be on an employer’s PAYE payroll by 23:59 30 October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020.

The employee does not need to have been furloughed previously. This is a significant change to the rules.

The grant must be paid to the employee in full.

The reference to pay and the ‘usual hours’ will differ depending on whether the employee has been furloughed previously under the original CJRS or not.  Please refer to the section below marked ‘Reference pay and usual hours’ for more detail.

CJRS extension claims must be submitted by 11.59pm 14 calendar days after the month you are claiming for or the next working day where the 14th day falls on a weekend.

Claims for January must be made by 15 February 2021.

HMRC has announced plans to publish details of the companies and LLPs that have actually made claims for the month of December onwards. Employees will be able to access their Personal Tax Account on gov.uk to check which furlough claims have been made on their behalf.

The Job Retention Bonus will not be paid in February 2021.

The Job Support Scheme (JSS) has now been postponed, presumably until the CJRS extension scheme ends.

At a glance

We have updated this guidance to reflect the changing nature of the scheme. This means that we have removed information that related solely to the first version of the scheme and information that relates solely to previous months.

‘Reference pay’ and ‘Usual hours’ – Much depends on whether the employee has fixed or variable pay

If the employee has fixed pay and the following applies then we use the last pay period ending on or before 19 March 2020 as the reference pay period:


An RTI submission was made on or before 19 March 2020 showing payment to that employee;


A valid CJRS claim has been made in respect of that employee on or before 31 October 2020.

For all other employees, the reference period is the last pay period ending on or before 30 October 2020; this will only apply for periods starting after 1 November 2020.

If on the other hand an employee’s pay varies and they were on the payroll on 19 March 2020 then the ‘reference pay’ is 80% of the higher of:

  • the wages earned in the corresponding calendar period in the tax year 2019 to 2020; and
  • the average wages payable in the tax year 2019 to 2020.

As we look forward, for someone who is to be furloughed in April 2021 having previously received a payment of earnings which were reported on the FPS on or before 19 March 2020 we would lookback at April 2019 rather than April 2020.

The advice above also applies where a valid CJRS claim was made on or before 31 October 2020.

For all other employees the reference pay is based on 80% of the average wages payable between 6 April 2020 (or later if the employee started after that date) and the day that they were furloughed on or after 1 November 2020.

The dates are inclusive. This includes any hours that the employee received holiday pay for.

See examples 2.9 and 3.3 in HMRCs guidance which was last updated 26 January 2021.

Employees whose first pay period ends after 30 October 2020

Remember, for periods from 1 November onwards you can only claim for employees who were employed on 30 October 2020 as long as the employer has also made an RTI submission showing a payment for that employee between 20 March 2020 and 30 October 2020.

It is possible to furlough an employee whose 1st pay period ends after 30 October.  This will apply to employees that have been hired in September or October 2020.

The employer will need to ensure that HMRC have received details of the employee’s pay via RTI on or before 30 October.

The ‘usual hours’ will be the hours that they were contracted for at the end of the latest pay period on or before 30 October 2020.

For example, an employee starts work on 12 October 2020 and is to be paid £2,340 per month. If an RTI submission is made by 30 October, then it is possible for that employee to be furloughed from 1 November 2020.  The reference pay to be used in the claim will be £1,620 (rather than £2,340) as this was what will be reported in October to account for the fact that the employee started work on the 12th.

Remember that the daily maximum wage amount for November is capped at £83.34 per day and this will drop to £80.65 in December to ensure that the £2,500 cap is observed.

Company directors and annually paid employees

It is possible to make a claim for an annually paid employee including a director, but we will need to check to ensure that the employee has been paid via RTI between 20 March 2020 and 30 October 2020. Here is a link to the government’s guidance on directors.

Re-hiring an employee

If the employee was employed and on the payroll on 23 September 2020 and they were subsequently made redundant or stopped working for their employer can be re-employed and claimed for. An RTI submission must have been made to notify payment to that employee between 20 March 2020 and 30 October 2020.

This applies to fixed term contract employees too provided that they were on the payroll at 23 September and the contract expired after 23 September.

How long can an employee be furloughed? – This applies to the CJRS and CJRS extension

There is no minimum period that an employer can furlough an employee and a separate agreement can be made when re-furloughing an employee on subsequent occasions.

Claims must start and end within the same calendar month and must last at least seven days unless the employer is claiming for the first few days or the last few days in a month.

An employer can only claim for a period of fewer than seven days if the period they are claiming for includes either the first or last day of the calendar month, and they have already claimed for the period ending immediately before it. The 3rd Treasury Direction dated 26 June calls such a period an ‘orphan period.’

Can an employee work for an employer while they are furloughed?

Yes, an employer can bring furloughed workers back to work part time while still claiming the CJRS grant for their normal hours not worked.

Where training is undertaken at the request of the employer, the employee will be entitled to be paid at least the national minimum wage (NMW) for this training. In most cases, the 80% (70% from September) furlough payment will ensure that the NMW has been observed and so an additional payment will not be required.

How to make a claim

A claim under the old or original CJRS cannot be made after 30 November 2020 and employers will not be able to add to that claim after that date.

How often can a claim be made?

The claim period is not linked to the employee’s pay period. This simply affects the frequency by which an employer can submit a claim and has nothing to do with pay period intervals.

However, only one claim can be made per claim period.

This means that an employer should include all details for all the employees that were furloughed during that claim period in one claim even if some of those employees are fully furloughed and some are flexibly furloughed.

Claimed too much? –  This applies to the original CJRS

If an employer has overclaimed in the past then they have two choices:

•            correct the matter in the next claim;

•            pay HMRC back (if there are to be no further claims by that employer).

If an employer has overclaimed a CJRS grant and has not repaid it, they should notify HMRC by the latter of the following dates:

•            90 days after receipt of the grant - 90 days after the day circumstances changed so that you were no longer entitled to keep the CJRS grant; or

•            20 October 2020.

A claimant can overclaim because they were not entitled to it or if they have not paid it out in the form of wages.

Penalties for not repaying an overpaid grant

If a taxpayer was not entitled to the grant and has not repaid it by the latter of the above dates then HMRC can charge a ‘failure to notify’ penalty.  This penalty very much depends on the taxpayer’s behaviour. Please refer to HMRC factsheet CC/FS11.

HMRC will charge late payment interest and they raise the possibility of publishing details of deliberate defaulters as per factsheet CC/FS13.

What if the company becomes insolvent having claimed too much?

in this scenario, HMRC can hold the company officers personally liable.

Specific provisions for partnerships which have overclaimed CJRS

In factsheet CC/FS48 HMRC states that if the grant is paid over to the partnership rather than being kept by the individual partner then HMRC may assess any of the partners to collect the amount of the tax due as income tax. The partners will be jointly and severally liable for the tax.

An employer who has made an error which has resulted in an underclaim should contact HMRC to amend their claim and this will result in HMRC conducting additional checks.

What if HMRC makes an error?

If HMRC has made a mistake or there has been an unreasonable delay on HMRC’s part, then it is possible to complain. Contact HMRC: https://www.gov.uk/complain-about-hmrc

Maximum monthly, weekly or daily wage claim per employee

This is £2,500 or £576.92 (weekly).

For month ends where the employer is not claiming for a whole week or a whole month then they should use the following daily maximums.

The daily maximum for:

January 2021 is £80.65

February 2021 is £89.29

March 2021 is £80.65

April 2021 is £83.34

Who can make the claim?

In addition to the employer, it is possible for an employer to authorise an agent to file a claim on their behalf. An employer can do that by accessing your HMRC online services and selecting ‘Manage Account’.

How many employees can a claim be made for?

There is no maximum number of employees you can claim for from 1 November 2020.

Can an employer claim for an employee who is serving notice?

HMRC states: ‘Your employer can continue to claim for you while you are serving a statutory notice period or contractual notice period, however grants cannot be used to substitute redundancy payments.’


An employer cannot claim for any days from 1 December 2020 during which a furloughed employee was serving a contractual or statutory notice period. This includes employees who are serving notice of resignation or retirement.

Statutory Redundancy Pay

Employees with more than two years’ continuous service who are made redundant are usually entitled to a statutory redundancy payment.

Legislation came into force on Friday 31 July to ensure that employees who are furloughed receive statutory redundancy pay based on their normal wages, rather than a reduced furlough rate (currently 80%).

If you make an employee redundant, you should base statutory redundancy and statutory notice pay on their normal wage rather than the reduced furlough wage.

Record keeping

An employer must keep all details of a claim including the claim reference number for six years.

Successions and TUPE

HMRC understands that there will be occasion when there is a business succession and they advise ‘Where on 19 March 2020 an employee was employed in a qualifying (RTI registered) PAYE scheme by someone who is not the current employer and after 19 March 2020 the employee is transferred to a new employer and the transfer meets one of the three conditions in paragraph 10, the new employer can make a CJRS claim even though they register an RTI PAYE scheme after 19 March. The new employer is treated as having made the 2019/20 earnings payments made by the former employer on or before 19th March 2020.’

For claim periods from 1 November 2020, a new employer is able to claim if the TUPE or PAYE business succession rules apply to the change of ownership. The employees should have been employed by their prior employer on or before 30 October 2020, have a valid RTI submission showing payment to them to by their old or new employer between 20 March 2020 and 30 October 2020, and the employee must have transferred to their new employer on or after 1 September 2020.

Payroll consolidation

Where a group of companies have multiple PAYE schemes and these are consolidated into a new PAYE scheme after 19 March 2020 then the new scheme will be eligible to furlough those employees.

Employment Allowance (EA)

The employment allowance increased to £4,000 from 6 April 2020. HMRC guidance states that it is possible to delay claiming the employment allowance while claiming for NICs under the original CJRS scheme. This does not apply to the CJRS extension as employers are responsible for paying NIC in full without rebate under the CJRS extension.

Up to 31 July 2020, employers who received a grant for employer NICs costs should have deducted the amount of grant they have received from the amount of Employment Allowance they have left before they use it, if not doing so would result in receiving relief for the same cost twice.

The extension of the scheme to 30 April 2021 becomes problematic.

Now we must take into account the fact that an employer can use the Employment Allowance to pay less employer NICs until the allowance runs out or we reach 5 April 2021.

If you still have any NIC liability for the year after taking into account NICs claimed under the CJRS, you can use your Employment Allowance to reduce that liability by offsetting the EA against future payments made to HMRC under your PAYE scheme for the year.

Research and development (R&D)

If furlough payments are met by the government through the CJRS then that expenditure will be treated as having been subsidised and will therefore not qualify under the SME scheme. In such cases those employers generally claiming under the SME scheme will have to make a separate claim under the large company scheme.

The only area where this advice might change is with regards to annual leave or where sick leave is taken during furlough. These two costs can be considered as qualifying R&D expenditure. HMRC allows claimants to apply the same apportionment between qualifying and non-qualifying activities to holidays and sickness as they do to working time.

Employers will need to remember that when an employee is on furlough they should not be engaged in R&D and therefore none of the corresponding staffing costs can qualify for R&D. With flexible furlough an apportioned claim will need to be made.

Reference Pay under the original CJRS

The gross salary in their last pay period prior to 19 March 2020 (this was previously stated as the gross salary at 28 February 2020) is the relevant reference pay figure to use for full and part-time employees.

Non-monetary benefits and salary sacrifice

When arriving at the gross salary the employer should not include non-monetary benefits in kind like a company car and salary sacrifice schemes.

Are overtime, bonuses and commissions included in this gross figure?

The gross salary does not include fees, discretionary bonuses and commission. Previously, HMRC told us that this can include past overtime and something that they referred to as ‘compulsory commission’. HMRC has since updated their guidance to focus on whether the payment is discretionary or not.

HMRC has added ‘only include payments which you have a contractual obligation to pay and to which your employee had an enforceable right.’ HMRC also further clarifies that if other variable payments are ‘always’ made then those may also be added to the calculation.

Overtime payments can be included in the calculation where the employer is contractually obliged to pay the employee at a set rate for overtime hours.

HMRC agrees that Covid-19 counts as a life event/’lifestyle’ that could warrant changes to salary sacrifice arrangements. It possible for the employer and employee to update the relevant employment contract to switch out of a salary sacrifice, however, at present the guidance does not allow for employers to recalculate the reference salary in order to reflect these increases in the amount of furlough pay the employers can claim under the scheme. HMRC updated their salary sacrifice guide for employers on 9 April.

Maternity, paternity leave

For periods from 1 November 2020, if an employee returns from maternity, shared parental, adoption, paternity or parental bereavement leave then the normal scheme rules apply in terms of how to work out the Average Weekly Earnings (AWE).

If an employee is getting maternity allowance while they are on maternity leave, they should not get furlough pay at the same time.


Apprentices can be furloughed in the same way that any other employee can be furloughed, however, they are entitled to at least Apprenticeship Minimum Wage/National Living Wage/National Minimum Wage (NMW) as appropriate for the time that they are training, even if this is more than 80% of their normal wages.


It is acceptable for an employer to furlough an employee for business reasons while that employee is already on sick leave or isolating.

An employee who becomes ill during a period of furlough is entitled to SSP as a minimum, however, an employer may decide to keep paying the furlough rate.

If a fixed pay employee is furloughed on return from sickness, then the reference salary is their gross salary rather than the pay that they received while off sick.

What if the employee is on SSP already?

HMRC states that employees on sick leave or self-isolating should get Statutory Sick Pay (SSP), but can be furloughed after this.

Employees who are shielding in line with public health guidance can be placed on furlough, however, HMRC states: ‘It is up to employers to decide whether to furlough these employees.’

Holiday pay

Workers who have been placed on furlough continue to accrue statutory holiday entitlements, and any additional holiday provided for under their employment contract

Employees will continue to accrue leave while on furlough and they can also take holiday. In respect of holiday pay, HMRC says: ‘Employers will be obliged to pay the additional amounts over the grant.’

If an employee is flexibly furloughed (this applies to any new furlough period from 1 July to October) then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours.

Working Time Regulations (WTR) require holiday pay to be paid at your normal rate of pay or, where your rate of pay varies, calculated on the basis of the average pay you received in the previous 52 working weeks.

If an employee takes holiday while on furlough, then the employer should pay the employee their usual holiday pay in accordance with the WTR.

Must an employer supplement employees’ salaries over the 80%?

No. Employers can if they wish to or if there is an employment contract in place which requires this.

How does the grant impact on a business’s tax position?

The grant will be treated as normal business income and taxable accordingly.

Individuals with employees that are not employed as part of a business (such as nannies or other domestic staff) are not taxable on grants received under the scheme. Domestic staff are subject to income tax and NICs on their wages as normal.


About the author

Pras Patel is a tax advice consultant at Croner Taxwise www.cronertaxwise.com


This article first appeared in Croner Taxwise, Coronavirus Job Retention Scheme (CJRS) Extension


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