Coronavirus Job Retention Scheme (CJRS)

Coronavirus Job Retention Scheme (CJRS)


The Coronavirus Job Retention Scheme (CJRS) ended on 30 September 2021 but reporting on the funds received and correcting past claims will keep finance directors and HR teams busy for some time yet. HMRC is enquiring into past claims and checking reporting on business tax returns to ensure that any funds overpaid are reclaimed from businesses.

Before your business reports on CJRS payments through your tax returns, it  is important to make sure that all claims you have made are checked as any errors must be reported separately on tax returns if they have not already been 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. 


CJRS version 4 – 1 May to 30 September 2021

Basic employee eligibility rules

Any individual employed on 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 were not allowed 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 had to cover at least a seven-day period and could only cover days within the same calendar month, eg only days in December 2020. The exception to this was where the claim covered the last or first day of the month and you had already claimed for the period ending immediately before it.

The claim must have been 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 was possible to delete a claim from the online service provided it was done within 72 hours of starting it. If you noticed an error after this, then a different approach needed to be taken, depending on when the error was noticed and whether the error resulted in an under or overclaim:

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

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

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

There was 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.

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 dropped over the period to September 2021, but there was 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 wasn’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 depended on whether an employee was 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 had to 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 have included these days and corresponding amounts.

Core principles of CJRS

The concept of an employee furlough was 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 choose to volunteer, for example to assist the NHS, this did not impact their status as a furloughed employee. They were also able to work for an unconnected business, or even be self-employed.

While on furlough, the employee’s wage was subject to usual income tax and other deductions. Employees that were furloughed had 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 had to be notified in writing that they were 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.” It was recommended that employment law advice was 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.

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

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

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

If an employer used an agent who was authorised to act for them for PAYE purposes, the agent was able to make the claim on the employer’s behalf. However, if the employer used a ‘file-only’ agent, they were not able to provide that service: they could only  provide the employer with the information needed to make the claim.

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

This means that employers could 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.

Reference pay should only include regular payments which you made to employees; some examples of those which did and didn’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 needed to be taken when establishing reference pay, as there may have been a mixture of qualifying and non-qualifying pay elements in the reference pay period being used. In such scenarios, the non-qualifying pay elements needed to be disregarded in the calculations.

Employees continued to accrue annual leave and if they took holiday during a period of furlough, they were entitled to holiday pay at their normal rate of pay in accordance with the Working Time Regulations. HMRC’s guidance on holiday pay is here

All UK businesses could 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)
  • Had enrolled for PAYE online
  • Had a UK bank account, and
  • Had qualifying furloughed employees.

Eligible entities included 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 was formally furloughed.

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

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

Any furloughed worker could take part in remote/online training (the government is encouraging it to maintain skills). For example, a furloughed apprentice may have need to continue their study course online. However, this training was not allowed to generate revenue for the business or a connected business nor involve the provision of services to the business. All workers that undertook training still had to be paid at least the appropriate NMW for the hours that they spend training. Therefore, for some employees, employers had to top up furloughed pay for the period/s in which they undertook training. 

Inbound expats qualified for CJRS if the conditions of the scheme were met. The individual had to be on the UK payroll, must have been receiving payments of earnings included on the RTI submission at the relevant date (depending on what version of the scheme the claim was made under).

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

So long as the UK entity was the employer, it doesn’t matter who physically paid the employee.  We would note, though, that businesses should only have accessed the scheme if they could not maintain their current workforce without doing so. If the UK employer could continue to successfully recharge costs to an overseas entity, then it did not need to access the CJRS and would be regarded by HMRC as ineligible for it.

Yes, as a company director you could qualify as a furloughed employee. As with other employees, you could not carry out any revenue generating work for the company while on furlough, but could 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 were only able to claim a grant for the salary element for the furloughed director.

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 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 were salary sacrifice arrangements in place. 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.

Yes, both on the employee and the employer. When furloughed employees were paid through RTI, the employer had to 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 furloughed domestic staff (e.g. nannies) are not taxable on grants received under the scheme. However, the domestic staff were 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

Read more on the tax status of CJRS payments.

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

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