On the 31 October, Boris Johnson announced a second national lockdown for England. With non-essential retail and hospitality and leisure businesses forced to close, he announced an extension to CJRS that was due to finish on that day. Initially, this was announced as a month’s extension but was later revised and extended for five months until the end of March 2020.
The scheme is now available again from the 01 November with the online system to claim available from 11 November.
Like the first version, version two for at least November and December will pay 80% of an employee’s usual wages for their hours not worked. This is due to be reviewed in January, and will presumably be increased or decreased with the severity of the lockdown measures at the time.
The extension from one month is welcomed by many but also a concern for some business owners. Interestingly the scheme is not currently sector-specific, although HMRC intends to publish those companies using the scheme which may add some peer pressure to business owners not to utilise the scheme if others in the same position aren’t.
Business owner’s opinions of the scheme seemingly differ. We have found that in the vast majority of cases, those forced to close welcome version two of the CJRS, it otherwise would have left them with a wage bill and no revenue. Others, however, are concerned that CJRS will “subdue the entrepreneurial spark of some” who would be forced to pivot or diversify due to the climate. Others are concerned that it will “provide some with an excuse to furlough staff over their normal reduced demand winter period, therefore bolstering cash reserves that would naturally deplete over this period.” Others are concerned that “although they are hugely busy, still attempting to clear the backlog from lockdown version one, their supply chains will utilise the scheme thus reducing their capacity and therefore the supply to them.”
Overall the scheme will be welcomed, with 49% of businesses (ONS 12/11) reporting a decrease in their annual comparison turnover due to COVID-19. But we expect the availability and terms of the scheme to be reduced when reviewed in January. The scheme could be made sector-specific, i.e. Only to those forced to close due to the national lockdown; understandably the impact on supply chains can never be estimated, but Rishi Sunak has been frank from the beginning ‘we cannot save every business and every job’. It is also likely that the Gvt’s support level will reduce like version one, with employers requiring to stump up the rest. We could also see financial assessment requirements, possibly for larger businesses or claims, that would need the company to prove it is suffering the effects of the pandemic or that it does not have the cash reserves to support itself.
CJRS version two is available to those employees and employers that did not participate in version one. 80% of the employees’ wage is capped at £2,500 like the previous scheme. Employers can claim for employees who were employed on 30 October 2020, as long as they have made a PAYE RTI submission to HMRC between the 20 March 2020 and 30 October 2020.
As per version one, all employers with UK PAYE scheme and UK bank account can claim, and the grant covers 80% of the employees usual hours worked, that they are not working. Employees can be furloughed for any work pattern and any amount of time. This will hopefully support employers to keep as many of their staff working rather than selecting who they wish to be furloughed and those they want to remain working.
This article was written by Matthew Hector, Business Development Manager, who can be contacted for any further information.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.