Your practical guide: Coronavirus Job Retention Scheme

The following summary reflects information that was added to the website in recent weeks.


  • The scheme applies to employees who have been asked by employer to stop working, as a result of the impact of COVID-19, but who are being kept on the payroll until the longer-term impact on their role is known. It is to safeguard employees from being made redundant and these affected employees are known as ‘furloughed workers’.
  • The scheme will cover the cost of wages (backdated to 1 March 2020) will run until the end of June 2020 (this may be extended further). It is open to all UK employers that had a PAYE scheme registered on HMRC's real-time information system for PAYE on 19 March 2020, and have a UK bank account.
  • Furloughed employees must have been on your PAYE payroll on 19 March 2020, and can be on any type of contract, including:

a. Full-time employees;
b. Part-time employees;
c. Employees on agency contracts;
d. Employees on flexible or zero-hour contracts;
e. The scheme also covers employees who were made redundant since 19 March 2020, if they are rehired by their employer.

  • Employees hired after 19 March 2020 cannot be furloughed or claimed for, in accordance with this scheme.

The grant claim

The online portal service is now live - - and the details are currently here: and here:

To claim, you will need:

  • Your ePAYE reference number;
  • The number of employees being furloughed;
  • The claim period (start and end date);
  • Amount claimed (per the minimum length of furloughing of 3 weeks);
  • Your bank account number and sort code;
  • Your contact name;
  • Your phone number.

You will need to calculate the amount you are claiming. HMRC will retain the right to audit all aspects of your claim retrospectively.

You can only submit one claim at least every three weeks, which is the minimum length an employee can be furloughed for. This would seem to suggest that re-furloughing of certain employees might be possible in some situations (e.g. if a furloughed employee has to go back to cover the work of an employee who has had to self-isolate, but could then be re-furloughed once that other employee is able to return, if in a key role for example). Claims can be backdated until the 1 March, if applicable.

Employers will be able to use the portal to claim a grant for 80% of furloughed employees’ usual/regular monthly wage costs (fees, commission and bonuses should not be included) up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage.

For full time and part time salaried employees:

The employee’s actual basic salary before tax, as of 19 March 2020 should be used to calculate the 80%.

For employees whose pay varies:

If the employee has been employed for a full twelve months prior to the claim, you can claim for the higher of either:

a. The same month’s earning from the previous year;
b. Average monthly earnings from the 2019-20 tax year.

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll, or in advance of an imminent payroll.

Amount of wages/salary

  • At a minimum, employers must pay their employee (through the normal payroll process) the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this, but is not obliged to under this scheme.
  • The amount of grant that the employer receives for an employee’s gross pay must be paid to them as a minimum and no “fee” can be deducted by the employer from the wage/salary.

Employer National Insurance and Employer Pension Contributions

  • Employer National Insurance Contributions and automatic enrolment contribution on any additional top-up salary will not be funded through this scheme. Nor will any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income above the lower limit of qualifying earnings (which is £512 per month until 5th April and will be £520 per month from 6th April 2020 onwards). Employers can use this scheme anytime during this period.
  • Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.
  • The government will issue more guidance on how employers should calculate their claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme goes live.

Numerical Example

(Source: ICAEW latest guidance

Example Ltd employs Mr A at an annual salary of £24,000, so £2,000 per month. Mr A has opted out of auto enrolment.

Each month, Mr A currently receives net pay of £1,655 which is after deducting PAYE of £191 and employees NIC of £154. On this salary, the employer pays employers' NIC of £177.

The available grant for the employer is the lower of:

(a) 80% of £2,000, and
(b) £2,500

Plus, employers' NIC on this amount.

So, Example Ltd claims a grant of £1,600 plus £122 = £1,722.

The net amount of cash required by Example Ltd to furlough Mr A based on maintaining the existing salary is £2,000 + £177 - £1,722 = £455 per month.

It is a matter for employment law as to whether the employer is required to pay this top up. Employees and employers can agree to a different arrangement during the furlough.


A very common question has been whether directors in owner managed companies can be furloughed, if the 80% grant can be claimed, and on what income this is calculated. For further information, please see our detailed factsheet here: .

We will continue to closely monitor this situation very closely and let you know if any further guidance or clarification comes to light.

Some Other Key Rules

  • To be eligible for the subsidy, a furloughed employee cannot undertake work for on behalf of the organisation. This includes providing services or generating revenue. While on furlough, the employee’s wage will be subject to the usual income tax and other deductions.
  • If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme.
  • Employers should discuss with their staff and make any changes to the employment contract by agreement and to be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication. We have sample wording, which we can send you for this.
  • You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.
  • Employees on sick leave or self-isolating should get Statutory Sick Pay (or be paid in accordance with the employer’s occupational sick pay policy as applicable),but can be furloughed after this.
  • If your employee has more than one employer, they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.
  • If workers are required to, for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

Tax Treatment

Income tax and Employee National Insurance

  • Wages of furloughed employees will be subject to Income Tax and National Insurance as usual. Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt-out or to cease saving into a workplace pension scheme.
  • Employers will be liable to pay Employer National Insurance contributions on wages paid, as well as automatic enrolment contributions on qualifying earnings, unless an employee has opted out or has ceased saving into a workplace pension scheme.

Business Tax Treatment of the Coronavirus Job Retention Grant

  • Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with the normal principles.
  • Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

For further information or advice on any of the issues raised, or for help with services like bookkeeping, cash flow management or payroll during the Coronavirus pandemic, please call us on 01225 325580, email, or contact your usual client director.

Please note that this is only a summary of the main issues and should not be construed as advice. Every effort has been made to ensure factual accuracy at the time of publication (21 April 2020), however, the government response to the Coronavirus situation is changing 24-7, so it should not be relied upon completely.