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CJRS reformed

The CJRS enters a new phase from 1 July 2020 with new conditions which will vary month by month until October.

No new employers or employees can be involved in a CJRS claim for furlough periods undertaken from 1 July onwards. If an employer has been holding back from making a CJRS claim, they need to submit that claim for periods up to 30 June by 31 July 2020.

Where an employer wishes to claim the CJRS grant for a furloughed employee from 1 July 2020, that employee must have already completed an initial furlough period of at least three weeks prior to 30 June 2020, and included in a CJRS claim for that period. Thus, the last day an employee can be furloughed for the first time is 10 June.

The number of employees in a CJRS claim for periods from 1 July 2020 onwards cannot exceed the number included in any CJRS claim by that employer for periods to 30 June 2020.

The support given under CJRS will remain the same in July at 80% of the employee’s normal pay plus employer’s NI and pension contributions, but in subsequent furlough periods it will only cover per employee:

  • in August - 80% of normal wages capped at £2,500 per month, no employers’ NIC or pension contributions
  • in September - 70% of normal wages capped at £2,187.50 per month, no employer’s NIC or pension contributions
  • in October - 60% of normal wages capped at £1,875 per month, no employer’s NIC or pension contributions

For all furlough periods the employee must continue to receive at least 80% of their normal pay. What’s more the employer will not be permitted to change the terms and conditions of the employment contract to reduce pay to the amount of CJRS grant. This will come as a shock to many employers.

The sweetener is that furlough periods can be far more flexible from 1 July. An employee may be furloughed for a few hours or days a week and work normally the rest of the time. Exactly how the worked and furloughed hours are to be recorded and reported by the employer is not yet clear, but further details are promised in an announcement on 12 June.

CJRS guidance
Factsheet on reforms to SEISS and CJRS

SEISS second grant 

The SEISS grant is paid at a level equivalent to 80% of the taxpayer’s annual average profits, capped at £2,500 per month for three months. Thus, the maximum amount payable for the first SEISS grant is £7,500.

The Government has decided to extend the SEISS for a further three months. Another lump sum will be paid to eligible taxpayers in August, at a level equivalent to 70% of their annual average profits, capped at £2,190 per month. The maximum payable for this second grant will be £6,570. The SEISS will not be extended again after this payment.

The qualifying conditions for the second SEISS grant will be the same as the first. However, eligible taxpayers will have to make a second claim for SEISS, and confirm that their business has been adversely affected by coronavirus.

The term “adversely affected” is not defined in the law which sets out the SEISS conditions, but HMRC guidance indicates it would include a reduction or temporary halt in business activity due any of these reasons:

  • supplies not arriving
  • fewer customers
  • staff unable to work

If taxpayers are eligible for the first SEISS grant they need to submit their claim by 13 July 2020. HMRC has confirmed that taxpayers do not have to claim the first SEISS grant in order to be eligible to claim the second grant.
Check whether SEISS grant is due