Tax Guides

Updated: Coronavirus Job Retention Scheme

Updated Coronavirus Job Retention Scheme

Updated: Coronavirus Job Retention Scheme

April 6, 2020

Since the Spring Budget 2020, the Chancellor announced that billions of pounds would be made available to support businesses who have all been severely impacted by the pandemic of Covid-19. In a more recent announcement on 20 March 2020, the Chancellor announced further temporary measures including the Coronavirus Job Retention Scheme (CJRS).

The CJRS is intended to protect employees who are at risk of being made redundant as a result of reduced business or government-ordered closed business. As a solution, the government are committing to cover 80% of employees’ salaries, up to £2,500 per month, per ‘furloughed employee’. The term ‘furloughed’ means for an employee to still be employed by a business but no longer provided with work.

Who is eligible under the Coronavirus Job Retention Scheme?


Any UK based business is able to use CJRS for employees who are paid through a PAYE scheme. Employees who can receive 80% of their salary as furloughed workers include full-time employees, part-time employees, employees on agency contracts and employees on flexible or zero-hour contracts.

Following new clarity issued by the government on 4 April 2020, it has been confirmed that company directors and members of limited liability partnerships are also eligible to use this scheme so long as remuneration is paid via PAYE. More information on becoming furloughed as a company director can be found below.

Who is not eligible under the Coronavirus Job Retention Scheme?


Following more announcements from the Chancellor on 26 March 2020, the following people have been determined as ineligible for the CJRS:

  • Freelancers, contractors, and the self-employed. Those who fall under this category are advised to use the Covid-19 Self-employment Income Support Scheme and/or claim universal credits.
  • Employees who have agreed to work reduced hours.

When will the Coronavirus Job Retention Scheme be available?


Although the scheme was announced on 20 March 2020, the Chancellor has said it will apply from 1 March 2020 and so the cost of wages can be backdated. It was initially available for 3 months, but as of 12 May 2020 has been extended until end of October. UK employers can start using the CJRS now and the portal to claim is now live. Please visit our article on How to claim from the Coronavirus Job Retention Scheme for instructions and direct link to the HMRC portal.

How do I access the Coronavirus Job Retention Scheme?


Employers should take the following actions to place employees on ‘furloughed worker’ status:

  • Employers should assess and determine which workers are to be made furlough. Note that employers cannot discriminate or select particular employees to go on furlough.
  • The employees should be notified (preferably in writing) of the change of their employment status and this procedure should comply with Employment Law requirements. In short, the employee will need to agree to this change.
  • Once agreed, the employee should cease all work. They should not be doing bits of work that they may able to do when available but should be completely off work.
  • A portal is currently being created by HMRC for employers to submit employee details, but because this is not yet available, we are unable to provide details on what exact information needs to be supplied. The portal is expected to be ready by the end of April 2020.
  • Employers are to continue paying the employee as usual, including both primary and secondary National Insurance Contributions, work place pension (where the employee has remained opted-in) and other benefits previously agreed under their employment contract.
  • The grant will be paid direct to the employers, however there are no details yet on the mechanism that will be in place for this to be implemented. It is currently expected that employers will have to borrow or self-fund in the short term to provide wage packages to employees.

Template letter to be used for putting employees on furloughed status


Employee Name
Employee address

Re: Notice of Furlough

Dear [employee name],

We regret to inform you that because of the current level of work available as a result of COVID-19, we have opted to place you on furlough (temporary layoff) during the next [number] weeks. You are not authorised to work during the furlough without advance written authorisation from your [manager, supervisor, or director].

The furlough will begin on [date]. We are hopeful that we will be able to restore you to your prior position with our company on or around [date]. However, it is important to note that we reserve the right to change this date based on our business needs.

During this period:

1. You will retain your seniority with the company.
2. You may be eligible for unemployment benefits during this time.
3. [Remove if not applicable] If you have available holidays time that you would like to use during this time, you are welcome to use such time, but are not required to do so. If you would like to use some or all of your available holidays during this time, contact [insert name].
4. It is important to us that your transition into furlough and back to work goes as smoothly as possible. Therefore, if you have any questions or concerns regarding these transitions, contact [insert name].

We very much appreciate your contributions to the organisation this year. We wish you all the best during this unprecedented time and are looking forward to your return to work following this furlough period.

Best regards,

HR Department/Director
Company name

How do I use the Coronavirus Job Retention Scheme if I am the director of my own limited company?


Previously there has been a lack of clarity as to whether single director owners of limited companies would be able to use this scheme, and most sources from Employment Law suggested that this would not be the case. However, the government have now directed single director owners of limited companies to use this scheme so our advice would be to prepare for when this portal is ready to access.

To be able to use the CJRS as a director of your own limited company you must be receiving your director’s salary through a PAYE scheme. The same rules as outlined above apply, and you will only be able to receive 80% of your monthly salary, or a maximum of £2,500 per month – whichever is less. During this time, you must not continue to provide services through your business or continue to trade in any way as this will undermine your furloughed worker status. However, you may continue to complete necessary duties which fall under a statutory obligation such as filing accounts

More Frequently Asked Questions:

  • Who is responsible for the other 20% of my employees’ wages?
    The government will only provide 80% of an employee’s wages. There is not requirement from you as an employer to pay the remaining 20% but you can do so if you wish to without invalidating your claim.
  • What gets deducted from the furloughed amount paid?
    Yes, any wages received through the CJRS will be subject to tax, National Insurance and auto-enrolment workplace pension contributions if applicable (where an employee has not opted-out. Employees are able to opt-out during this time and then request to be placed back into the workplace pension scheme at a later date).
  • How long are employees furloughed for?
    At a minimum, employees must be put on three weeks’ furloughed worker status. They may come back to work after this time and be put back on as furloughed worker status if necessary, but again they must not be working for a minimum of three weeks.

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