From 1 July the Coronavirus Job Retention Scheme is changing to allow flexible furlough and part-time work. We have written a series of example calculations to support organisations making claims. This is based on a simple, but common scenario.

CJRS from 1 July

We have outlined the changes that will be happening to the Coronavirus Job Retention Scheme from 1 July, including the introduction of flexible furlough.

ABC Ltd has been furloughing Bob who previously earned a salary of £37,500 until being furloughed full time from April 2020.

Bob’s employment contract requires him to work a standard five day week, seven hours each day.

In July 2020, Bob agrees to return to work on Tuesdays and Wednesdays.

Calculations for July

ABC Ltd’s CJRS grant claim for July is based on 14 furlough days.

 Days Hours   Total hours
Actual working hours (to be reported)   9    7        63
Expected furloughed hours  14    7        98
Total usual hours (to be reported)       161

ABC Ltd will incur a cost for employing Bob in July as follows:

Cost Calculation      Total
Bob’s salary £37,500/12   £3,125.00
Employer’s NIC (£3,125 – £732) x 13.8%      £330.23
Employer’s minimum pension contribution (£3,125 – £520) x 3%        £78.15
Total cost   £3,533.38

ABC Ltd’s CJRS grant claim for July will be as follows:

1. Salary     Total:
Lower of:
£37,500/12 x 80%, and
£2,500
 x Furlough hours (98)/total hours (161)   £1,521.74

 

2. Employers’ NIC on this pay    Total:
(£1,521 – Secondary threshold for furloughed hours/total hours) x 13.8%
(£1,521 – £732 x 98/161) x 13.8%   £148.41

 

3. Employers’ pension contribution on this pay Total:
(£1,521 – lower limit qualifying earnings for period for furloughed hours/total hours) x 3%
£1,521 – 520 x 98/161) x 3% £36.13

Total grant claim for July £1,706.28

The CJRS grant claim for this amount can be submitted at any time from 14 days before pay day, so from 18 July onwards.

Net cost to business of employing Bob in July is

Employment cost  £3,533.38
Less CJRS grant  £1,706.28
Net cost  £1,827.10

HMRC’s calculator on gov.uk has already been updated to calculate claims for July, so can be used to calculate claims for future periods to assist budgeting until 31 July 2020. It also gives a detailed breakdown of calculations for each pay period. It explains how the calculated figures for the claim we’ve arrived at.

The calculator works for most employees paid weekly, 2 weekly, 4 weekly or monthly.

Costs for August to October

Our calculations for the period August to 31 October indicate the following costs.

Cost Calculation      Total
Bob’s salary  £37,500/12  £3,125.00
Employer’s NIC  (£3,125 – £712) x 13.8%    £330.23
Employer’s minimum pension contribution  (£3,125 – £520) x 3%      £78.15
Total cost £3,533.38

Calculations for August 2020

ABC Ltd’s CJRS grant claim for August based on 12 furlough days

Days  Hours   Total hours
Actual working hours (to be reported)
[Assume bank holiday is paid as a working day]
    9      7          63
Expected furloughed hours    12      7          84
Total usual hours (to be reported)    21      7        147

The grant is now only in respect of salary.

    Total:
Lower of:
£37,500/12 x 80%, and
£2,500
x Furlough hours (84)/total hours (147)   £1,428.57

Net cost to business of employing Bob in August is

Employment cost   £3,533.38
Less CJRS grant   £1,428.57
Net cost   £2,104.81

Calculations for September 2020

ABC Ltd’s CJRS grant claim for September, based on 12 furlough days:

  Days  Hours  Total hours
Actual working hours (to be reported)    10    7       70
Expected furloughed hours    12    7       84
Total usual hours (to be reported)    22    7     154

The grant is only in respect of salary but recovery percentage is reduced to 70%.

  Total:
Lower of:
£37,500/12 x 70% (£2,187.50), and
£2,500 x 7/8
x Furlough hours (84)/total hours (154)  £1,193.18

Net cost to business of employing Bob in September is

Employment cost £3,533.38
Less CJRS grant £1,193.18
Net cost £2,340.20

Calculations for October 2020

ABC Ltd’s CJRS grant claim for October, based on 14 furlough days

  Days   Hours   Total hours
Actual working hours (to be reported)     8      7     56
Expected furloughed hours    14      7     98
Total usual hours (to be reported)    22      7   154

The grant is only in respect of salary but recovery percentage is reduced to 60%.

 Total:
Lower of:
£37,500/12 x 60% (£1,875), and
£2,500 x 6/8
x Furlough hours (98)/total hours (154) £1,193.18

Net cost to business of employing Bob in October is;

Employment cost £3,533.38
Less CJRS grant £1,193.18
Net cost £2,340.20