• Coronavirus Job Retention Scheme

    Everything you need to know


Coronavirus Job Retention Scheme: Everything you need to know

16 September 2021

The Coronavirus Job Retention Scheme (CJRS) will expire at the end September 2021, and employers will have limited time following this deadline to correct any claims. Read our article explaining what happens as the scheme comes to a close.

HMRC has restated that it will check all claims before payments are made and since December 2020 has published details of all companies and LLPs making furlough claims. It is important to make sure that all claims you have made are checked as any errors must be reported to HMRC and corrected – read more on the HMRC’s CJRS enforcement rules and powers and the CJRS inquiry letters that its specialist team has begun to issue.

CJRS Claims Review Service 

Will your furlough claims come back to haunt you? Get your furlough claims checked to avoid penalties and possible naming and shaming by HMRC. 

Read more

CJRS Calculator

A time saving calculator that allows our specialist employment tax team to assist you with calculations for your entire furlough population. 

Read more


CJRS version 4 – 1 May to 30 September 2021

Basic employee eligibility rules

Any individual employed at 2 March 2021 (on a full time, fixed period or variable contract) who had their earnings notified to HMRC via an RTI submission between 20 March 2020 and 2 March 2021.

Employees must not carry out any duties whilst on furlough; however, they could undertake training provided this did not make money or services available to the employee (or any associated employer).

Claim dates and deadlines

For version 4, claims have to cover at least a seven day period and can only cover days within the same calendar month, eg only days in December 2020. The exception to this is where the claim covers the last or first day of the month and you have already claimed for the period ending immediately before it.

The claim must be made within 14 days of the end of the calendar month (unless this falls on a weekend, then it is the next working day) - eg 14 July 2021 for June 2021.

Correcting errors under version 4

It is possible to delete a claim from the online service provided it is done within 72 hours of starting it. If you notice an error after this, then a different approach needs to be taken, depending on when the error is noticed and whether the error results in an under or overclaim:

  • Within 28 days of claim period end – an adjustment made be made through the online portal to correct regardless of whether the error results in an under or overclaim.
  • After 28 days - it isn’t possible to correct the claim online, but there are different rules depending on whether the error is an under or overclaim,

Underclaims – it’s not possible to correct an underclaim after 28 days; however, the employer is still required to make good to the employee any underpayment of grant within a “reasonable time frame”. This applies even though they are unable to claim this back. Failure to do so puts at risk the whole employee’s claim for that claim period.

Overclaims – must be notified to HMRC directly and either deducted from the next claim being made or arrangements made to make direct repayment to HMRC.

There is a requirement to notify HMRC within 90 days of either:

  • The date they ceased to be entitled to the payment
  • The time the payment is received.

Failure to notify within this timeframe could lead to significant penalties.

With effect from April 2021 HMRC also provided the opportunity to make an overclaim disclosure via corporation tax and self-assessment tax returns.

CJRS grant available

The grant available drops over the period to September 2021, but there is still a requirement to pay the employee 80% of their reference pay.


May 2021

June 2021

July 2021

August 2021

September 2021


80% of reference salary (subject to cap of £2,500)


80% of reference salary (subject to cap of £2,500)


70% of reference salary (subject to cap of £2,187.50)


(10% top up by employer)

60% of reference salary (subject to cap of £1,875)


(20% top up by employer)

60% of reference salary (subject to cap of £1,875)


(20% top up by employer)

Unlike earlier versions of CJRS it isn’t possible to make a claim for employer national insurance or pension contributions.

Calculation rules for reference pay and usual hours

As in other versions, the reference pay rules for version 4 depend on whether an employee is engaged on a fixed salary or paid variably and when the last RTI submission before furlough was for that individual.

For employees on a fixed salary

Last RTI submission for employee

Reference pay

Usual hours

On or before 19 March 2020

Amount in last pay period ending on or before 19 March 2020

Contracted hours in last pay period ending on or before 19 March 2020

Between 20 March 2020 and 30 October 2020

Amount in last pay period ending on or before 30 October 2020

Contracted hours in last pay period ending on or before 30 October 2020

Between 31 October 2020 and 2 March 2021


Amount in last pay period ending on or before 2 March 2021


Contracted hours in last pay period ending on or before 2 March 2021



For variably paid employees

Last RTI submission for employee

Reference pay

Usual hours

On or before 19 March 2020



The higher of:

1. Average wages payable from later of date of employment started and 6 April 2019 and the day before being furloughed.


2. Wages earned in corresponding calendar period in 2019/20

The higher of:

1. Average number of hours from later of date of employment started and 6 April 2019 and the day before being furloughed.


2. Hours in corresponding calendar period in 2019/20

Between 20 March 2020 and 30 October 2020

Average wages payable from later of date of employment started and 6 April 2020

Average hours from later of date of employment started and 6 April 2020

Between 31 October 2020 and 2 March 2021


Average wages payable from earlier of date employment started and 6 April 2020 to first day spent on furlough after 1 May 2021

Average hours from earlier of date employment started and 6 April 2020 to first day spent on furlough after 1 May 2021

Changes to Average Pay Calculation – version 4 only

When calculating the averages noted above it should exclude any days and corresponding amounts relating to the following types of leave:

  • Statutory sick pay related leave and any subsequent reduced rate paid leave.
  • Family related statutory leave and any subsequent reduced rate paid leave

This is unless the individual was on one of these kinds of leave for the whole of the period used to calculate their average wages, in which case you should include these days and corresponding amounts.

Core principles of CJRS




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What is a furloughed employee?

The concept of an employee furlough is new to the UK, but in general terms it refers to when employers require their staff to take unpaid leave of absence. When on furlough, an employee cannot undertake work for or on behalf of the organisation (eg providing services or generating revenue). However, the rules for flexible furlough did not apply to CJRS version one  of the scheme. 

If an employee chooses to volunteer, for example to assist the NHS, this will not impact their status as a furloughed employee. They are also able to work for an unconnected business, or even be self-employed.

While on furlough, the employee’s wage will be subject to usual income tax and other deductions. Employees that have been furloughed have the same rights as they did previously. That includes Statutory Sick Pay entitlement, maternity rights, other parental rights, and rights against unfair dismissal and to redundancy payments.

Each employee must be notified in writing that they are being furloughed; however, HMRC’s guidance states that “Collective agreement [for furlough] reached between an employer and a trade union is also acceptable for the purpose of such a claim.” We would recommend that employment law advice is sought before issuing the relevant written communications/notifications to selected employees. Note that a record of this written communication must be retained for six years.

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How will CJRS payments be paid to us? 

Employers will need to make a claim via HMRC’s online portal.

HMRC will reject the claim file automatically if it does not include all the information required. The period of time that a CJRS claim must cover and the last filing date has changed with different versions of the scheme.

Once HMRC has processed the employer’s claim, it will make payment by BACs into their nominated UK bank account. If employers have not already paid the employee, then they must pay the employees all of the grant they received for their gross pay. No fees may be charged from the grant money. The normal RTI return process must apply to all payments to employees..

If an employer uses an agent who is authorised to act for their PAYE purposes, the agent will be able to make the claim on the employer’s behalf. However, if the employer uses a file-only agent, they will not be able to provide this service, but they will be able to provide the employer with the information needed to make the claim.

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Flexible furlough – how does it work?

The option to furlough employees flexibly started from 1 July 2020 (when CJRS version 2 started) and has continued unchanged since then. Under the flexible furlough rules, employers can put employees on furlough for any amount of time regardless of their usual working pattern (ie there is no minimum number of weeks or days for which the furlough period must last).

This means that employers can rotate workers on and off furlough as required for the business and/or share reduced working around a team. However, it is important to note that HMRC will review claims made and will investigate claims where it appears the scheme has been abused – for example, if furlough periods coincide with periods of leave for most staff.

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What can I include as reference pay?

Reference pay should only include regular payments which you make to employees; some examples of those which would and wouldn’t qualify are noted below.



Regular wages, allowances

Payments made at discretion of employer (i.e. non contractual).

Non-discretionary fees or commissions

Tips, including those from troncs

Piece rate payments

Non-monetary benefits e.g. company cars

Care needs to be taken when establishing reference pay, as there may be a mixture of qualifying and non-qualifying pay elements in the reference pay period being used. In such scenarios, the non-qualifying pay elements need disregarding in the calculations.

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What about holiday pay?

Employees continue to accrue annual leave and if they take holiday during a period of furlough, they are entitled to holiday pay at their normal rate of pay in accordance with the Working Time Regulations. It is worth noting that HMRC has stated that it will continue to keep policy on holiday pay under review. HMRC’s current guidance on holiday pay is here.

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Which employers are eligible?

All UK businesses can claim under the scheme if they:

  • Created and registered a PAYE payroll scheme on or before 19 March 2020 (30 October for the second lockdown period)
  • Have enrolled for PAYE online
  • Have a UK bank account, and
  • Have qualifying furloughed employees.

Eligible entities include businesses, charities, not-for-profit organisations, recruitment agencies, single director companies and public authorities. Administrators could also apply, but only if there was a reasonable expectation that individuals will ultimately be rehired.

It was not expected that many public sector organisations would furlough employees. Individuals who employ domestic workers (eg a nanny) can apply where the worker is formally furloughed.

If a business has taken on employees of a previous business transferred they are eligible if either the TUPE or PAYE business succession rules apply to the change in ownership, regarding the employees concerned.

Finally, if a group of companies with multiple PAYE schemes transfers all employees into a new consolidated PAYE scheme after 19 March 2020, the new scheme will be eligible to furlough those employees and claim the grants available under the CJRS.

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What about training for furloughed employees?

Any furloughed worker can take part in remote/online training (the government is encouraging it to maintain skills). For example, a furloughed apprentice may need to continue their study course online. However, this training must not generate revenue for the business or a connected business and should not involve the provision of services to the business. All workers that undertake training will still need to be paid at least the appropriate NMW for the hours that they spend training. Therefore, for some employees, employers may need to top up furloughed pay for the period/s in which they undertake training.

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Are Expats eligible for the Coronavirus Job Retention Scheme? And does the employee have to be physically paid by the UK employer?

Inbound expats will qualify for CJRS if the conditions of the scheme are met. The individual must be on the UK payroll, must have received a payment of earnings included on the RTI submission at the relevant date, depending on what version of the scheme is being claimed under.

Whether the individual is an employee of the UK entity is a question of fact. HMRC will accept that assigned or seconded employees who are included by an employer within a normal, Appendix 6, or dedicated expatriate PAYE scheme, constitute employees of the UK entity for the purposes of the CJRS.

So long as the UK entity is the employer, it doesn’t matter who physically pays the employee.  We would note, though, that businesses should only access the scheme if they could not maintain their current workforce without doing so. If the UK employer can continue to successfully recharge costs to an overseas entity, then it does not need to access the CJRS and is, therefore, ineligible for it.

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I operate through my own personal service company but my work has dried up, can I furlough myself? 

Yes, as a company director you can qualify as a furloughed employee. As with other employees, you must not carry out any revenue generating work for the company while on furlough, but can undertake company administrative tasks (such as filing tax returns and company accounts) as needed.

Please note that personal service companies paying their director in both salary and dividends will only be able to claim a grant for the salary element for the furloughed director.

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What happens if we have made a mistake in our furlough claim?

Errors in CJRS claims have to be corrected, and any overclaimed funds returned to HMRC. The practical arrangements and rules for doing this have evolved with each version of the scheme – see above.

Our experience to date is that the calculations are not as simple as many employers had hoped, and from the many reviews already undertaken, have yet to find that all calculations have been correct - particularly where there are salary sacrifice arrangements. BDO offers a CJRS Claims Review Service to help you correct any past mistakes and rectify them to reduce your risk of a formal enquiry from HMRC which could result in potential tax penalties and naming and shaming.

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Is the CJRS payment taxable? 

Yes, both on the employee and the employer. When furloughed employees are paid through RTI, the employer must make the usual PAYE, NIC and automatic enrolment deductions.

Employers must treat the grant as taxable income for corporation/income tax purposes, but can deduct employment costs as normal when calculating their taxable profits.

Note that individual households who have furloughed domestic staff (e.g. nannies) are not taxable on grants received under the scheme. However, the domestic staff are subject to PAYE/NIC on their wages as normal.

HMRC has not provided specific guidance on the VAT status of the payment. However, the scheme is described as providing a ‘grant’ and this is likely to be treated as outside the scope of UK VAT on the basis that there is no underlying supply from the claimant to the government. Of course, as with all new schemes, we would recommend keeping a watchful eye on announcements.

Read more on the tax status of CJRS payments.

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Do CJRS payments have to be counted for EU State Aid limits?

HMRC has now confirmed that the CJRS grant is not considered state aid because it is available to all businesses. See BEIS Guidance.

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What if instead of furloughing employees we pay them reduced wages and/or cut their hours during the crisis instead?

You should take legal advice on any arrangement to reduce employees’ contractual hours or wages. Please also bear in mind that employers must continue to pay at least the minimum wage per hour to employees who continue to work, and HMRC will continue to take enforcement action against those that do not. Read more on the National Minimum wage.

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