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 |
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