• Date

    05 Feb 2021
  • Category

    Tax, Employer Solutions

Guidance update for the Job Retention Scheme – 1 February 2021 to 30 April 2021

The Government published a further Treasury Directive on 25 January 2021 to update the Job Retention Scheme (JRS) guidance to cover the period 1 February 2021 to 30 April 2021.

There were a few key points which we detail below:

Variably paid employees – Lookback periods

It is important to note that this applies to those employees who were eligible for the initial phase of the scheme and were on the payroll on or before 19 March 2020.

The JRS guidance advised us to use reference pay and usual hours based on the higher of the following:

  • the corresponding period from last year, or
  • the average from the 2019/2020 tax year.

The 'corresponding period form last year' made sense when we were still in 2020, but as the scheme has been extended through to 2021, this has now been clarified and updated.

For claims made for January 2021 and February 2021, the corresponding periods to use remained as “last year”, ie. January 2020 and February 2020. In contrast, for claims to be made for March 2021 and April 2021, the corresponding periods to use will be March 2019 and April 2019. In summary:

Claim month

Lookback period

November 2020

November 2019

December 2020

December 2019

January 2021

January 2020

February 2021

February 2020

March 2021

March 2019

April 2021

April 2019

Note that for claims for February 2021, as 2020 was a leap year and the corresponding February 2020 had 29 days, the full pay for February 2020 can be used or an adjustment can be made of 28/29ths of that amount.

Reference pay – variably paid employees

To clarify, for claims made for March 2021 or April 2021, the reference pay for variably paid employees who were on the payroll on 19 March 2020, is to be based on the higher of:

  • the pay from the corresponding period in March 2019 or April 2019, or
  • the average pay from the 2019/2020 tax year.

For employees who were on the payroll on 30 October 2020, but were not eligible previously, their reference pay will remain as their average pay between 6 April 2020 and the day before the first day of their furlough period. 

Usual hours – variably paid employees

For claims made for March 2021 and April 2021, the usual hours for variably paid employees who were on the payroll on 19 March 2020, is to be based on the higher of:

  • the hours from the corresponding period in March 2019 or April 2019, or
  • the average hours from the 2019/2020 tax year.

For employees who were on the payroll on 30 October 2020, but were not eligible previously, their usual hours will remain as their average hours between 6 April 2020 and the day before the first day of their furlough period. 

Deadline dates

The claim submission deadlines dates have been confirmed as:

  • 15 March 2021 for February 2021 claims
  • 14 April 2021 for March 2021 claims
  • 14 May 2021 for April 2021 claims

The deadline dates for claim amendments are:

  • 29 March 2021 for February 2021 claims
  • 28 April 2021 for March 2021 claims
  • 28 May 2021 for April 2021 claims

Annually paid directors

In addition, HMRC have now clarified the treatment of furloughing annually paid directors.

They have now stated that furlough claims can be submitted for annually paid directors only where there is an “imminent” payroll run. This was not previously stipulated and it was implied that monthly furlough claims could be submitted in advance of the next annual payment.

We therefore believe there to be two options as follows:

  • If furloughing a director for a stand-alone month, the annual payment should then be brought forward to be processed through payroll earlier than normal to coincide with the furlough month.
  • However, if furloughing a director for several months, it is advisable to transfer them onto monthly payroll so that there is a corresponding payroll run each month.

We are here to help

We are of course here to help and we will provide further updates as and when more information is published. If you would like to discuss the support available, or have any other queries, please get in touch with your usual Azets contact or a member of our Employment Tax team

About the author

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Dave Hedges

Partner Southampton
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