How to Calculate Your Claim for the Coronavirus Job Retention Scheme
If you have furloughed employees, you will now be able to claim your grant from HMRC. We have a guide on ‘How to Apply for the Coronavirus Job Retention Scheme‘ here.
First, you will need to calculate how much you need to claim.
For the majority of employers with full-time or part-time employees on a set salary, you will need to work out the following for the claim period:
- The total amount being paid to furloughed employees
- The total employer NICs
- The total employer pension contributions
Example calculation for an employee on a fixed salary
An employee started work for Smith Ltd in 1997 and is paid a regular, fixed monthly salary on the last day of each month. They are also auto-enrolled into the workplace pension. The employee agreed to be placed on furlough from 21 March 2020, at 80% of their salary.
Calculating the grant for gross pay
The employee was paid £2,400 in gross salary for February, the last full monthly pay period before 19 March 2020.
21 March to 31 March is 11 days. So the reference salary for the part of March in which the worker is furloughed is:
- £2,400 divided by 31 days in March = £77.42
- £77.42 multiplied by 11 days of furlough = £851.62
Smith Ltd can claim 80% of this amount, up to the ‘maximum amount’ for the time on furlough in March:
- 80% of £851.62 is £681.30
The maximum amount test is:
- Monthly maximum of £2,500 divided by 31 days in March = £80.65
- £80.65 x 11 days of furlough = £887.15
Smith Ltd claims the lower amount, £681.30, for the employee’s gross pay in March.
Calculating the grant for employer National Insurance contributions (NIC)
The employee’s gross pay at the end of the month is made up of £1,548.40 of salary funded by Smith Ltd, for 1 to 20 March (20 days), and £681.30 of pay funded by CJRS for the remaining 11 days of March.
The employer NICs due on the total gross pay of £2,229.70 is £208.48
- Step 1: £208.48 divided by 31 days in March = £6.73
- Step 2: Daily employer NIC amount of £6.73, multiplied by 11 furlough days = £74.03
Smith Ltd claims £74.03 for employer NIC’s due on the employee’s March pay.
Calculating the grant for employer pension contributions
The monthly lower level of qualifying earnings of £512 (for March 2020) is apportioned based on the number of days in the month to the qualifying furlough days:
- £512 divided by 31 = £16.52
- £16.52 multiplied by 11 days = £181.72
The minimum level of auto-enrolment pension contributions on the £867.10 furlough pay is therefore:
- (£681.30 – £181.72) x 3% = £14.99
This is the lower of £14.99 or the employer pension contributions due on the furlough pay under the terms of the pensions scheme.
Smith Ltd claims £14.99 for the employer pension contributions for March.
Total claim for employee
Smith Ltd claims a total of £770.32 from the Coronavirus Job Retention Scheme for the employee in March. This is made up of £681.30 for gross pay, £74.03 for employers NIC and £14.99 for employer pension contributions. Smith Ltd has checked that they are not claiming for more than they are going to pay out.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.