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At the time of writing, the Coronavirus Job Retention Scheme (CJRS) has supported over 1 million employers and 9 million jobs at an estimated cost to the treasury of £25 billion.
The extension of the scheme until 31st October and the introduction of flexible furloughing was a welcome move which will see a tapered removal of government support, rather than the cliff edge some had feared. However, the combination of flexible furloughing and the reduction in the amount that can be claimed has added additional complexity to an already confusing scheme that has seen many revisions to official government guidance.
The below table summarises how the grant available will be reduced in the coming months:
Assuming you had a director’s salary in place for the 19/20 tax year of £719 per month, you will have no employer's NI or workplace pension to consider. Provided you meet the requirements of the scheme and had furloughed yourself prior to 10th June and remained furloughed full time until 31st October 2020 you could claim as follows:
July - £575.20
August - £575.20
September - £503.30 (Your business must top this up by a minimum of £71.90)
October - £431.40 (Your business must top this up by a minimum of £143.80)
Flexible furlough was introduced from 1st July and means businesses can bring back furloughed workers part time, whilst still making a claim under the scheme for usual hours not worked. This much needed flexibility means that if you do not have enough work to justify a full time return to work you are able to work the hours you can, and remain furloughed for the hours you cannot. This could be useful if you are offered a contract with a reduced number of hours/days.
This can make calculating the amount of your claim more complicated and accurate record keeping here is essential. You will need to keep a record of the days or hours worked and your usual hours not worked. You should also retain evidence for the basis of your calculation e.g. if you usually invoice for 4 days each week you should use that as the basis of calculating usual days worked.
Taking the example above; if you ordinarily bill for 5 days per week however only have enough work to justify returning 2 days per week as a result of the coronavirus crisis, you will be able to claim for the days you remained on furlough. Assuming throughout August you work for 8 days out of a usual 20, you could claim for the 12 days you did not work. This would reduce the amount of your claim from £575.20 to £345.12.
When making a claim under the CJRS it is vital that you keep a copy of all records for 6 years. This should include:
It is essential that you have the information to support your claim as in the event of an investigation HMRC will expect to see it.
At SJD, we have been keeping up to date with government guidance and are able to help you to calculate your claim. If you need assistance with calculating your flexible furlough claim, please speak to your accountant directly, who will be happy to help.
Appointing an accountant can save you time and stress when starting up on your own. If you would like to speak to someone about any of the above information or any other queries you may have, arrange a callback and a member of the team will be in touch.