BrightPay provides two independent tools to assist users who have furloughed employees under HMRC's Coronavirus Job Retention Scheme (CJRS):
The following are notes of importance with regard to the operation of these.
When guidance for the Coronavirus Job Retention Scheme (CJRS) was first published in April 2020, HMRC did not provide comprehensive instructions on how to calculate the amounts for every scenario. Like other software providers, we were left to make certain assumptions with very little time for development.
One such scenario for which no official guidance was initially provided by HMRC was the handling of pay reference periods that are only partly encapsulated by a CJRS claim period (e.g. the week ending 3 May in a claim for 1–31 May).
BrightPay's initial handling of this scenario was to ignore the pay reference period start and end dates, and work solely from the pay date, i.e. if a pay date was encapsulated by a claim period, then BrightPay would include the full amount in the claim, regardless of whether the pay reference period start and end dates were fully or partially within the claim period. This reasoning is consistent with other payroll calculations (e.g. that for average weekly earnings for statutory pay), and was deemed adequate by HMRC in our communications with them.
Later, HMRC published new guidance on how to handle part pay reference periods that involved apportioning the pay by the number of encapsulated days in a claim period. For example, if an employee was paid £500 for the week ending 3 May, then the new guidance stated that only £500 ÷ 7 × 3 (£214.29) should be accounted for in a claim for 1–31 May (with the other 4 days in a previous claim).
At first, there was no urgency to update BrightPay, as claim period dates were flexible anyway, and as long as claim period dates were selected that aligned with the pay reference period dates (including the pay date), everything worked out.
But from July 2020, things are changing again.
From July 2020 onwards, to support flexible furlough, HMRC require that claim dates are strictly within a single calendar month. And so to meet this new obligation, we have had no choice but to change the CJRS calculation in BrightPay 20.5 to work the updated way, splitting pay reference periods where required and apportioning them by the number of days, regardless of pay date. (BrightPay 20.5 also supports flexible furlough, as well as the updated rules and rates for August, September and October.)
For many of our customers, this calculation change will not make a difference. But those who pay in lieu (e.g. a July pay date for June payroll), or those for whom an already submitted claim period ending 30 June did not actually cover all of June's earnings, will need to check and ensure that all reclaimable amounts are accounted for and submitted to HMRC prior to making July claims. Going forward, depending on the pay schedule and CJRS claim dates, it may also be necessary to finalise pay periods further in advance of when they would normally be finalised, to ensure that amounts from the beginning of such periods are picked up in a CJRS claim.
For a pay period covered by multiple claim periods, we apportion the pay period's gross pay into each claim period on a daily basis, where each day has a relative weighting in line with the maximum daily wage amounts as stipulated by HMRC. This is the only method that guarantees accuracy in all scenarios.
Please click here for a working example.
In some instances, users may see a few pence difference if comparing HMRC's calculations with those calculated in BrightPay.
This is because the published HMRC calculations are based on rounded amounts for making manual calculation easier. BrightPay uses a more direct and accurate algorithmic version of the calculation instead (similar to those used in NIC calculations) which can result in the few pence difference.
In line with HMRC's guidance that from 1st July 2020 employers will only be able to claim for employees who have previously been furloughed for at least 3 consecutive weeks taking place any time between 1st March 2020 and 30th June 2020, BrightPay's Claim Report will require an employee's furlough start date to be before 1 July 2020.
With this, BrightPay's Claim Report will not be able to cater for an employee returning from statutory parental leave after 10th June who is subsequently furloughed for the first time after 1st July 2020. In this instance, a separate calculation should be performed (e.g. using HMRC's calculator) and their amounts included with all other employees you are claiming for through HMRC's claim portal.
Need help? Support is available at 0345 9390019 or firstname.lastname@example.org.