HMRC has released the below case studies to help business owners and payroll departments work out how much they will be claiming and paying their employees through the Coronavirus Job Retention Scheme (CJRS).

Case Study One

Nan has been working for 4 years.

She is unable to work due to coronavirus.

She and her employer have agreed she is a furloughed worker.

Nan’s pay fluctuates each month.

Her employer uses her average monthly earnings from the 2019 to 2020 tax year to calculate her actual pay.

Nan earned £10,800 in 2019 to 2020.

Her average monthly earning are £900 (£10,800 divided by 12).

Nan’s employer uses this figure to work out how much to claim under the scheme.

80% of Nan’s average monthly earnings is £720 (£900 times 80%)

Case Study Two

Joe is a company director.

He’s owned a café for 6 years with 8 employees.

Joe operates a payroll to pay himself and his employees.

He is not able to open the business due to coronavirus and has no work.

Joe is a furloughed worker.

Joe’s monthly earnings are worked out by his payroll administrator.

They use his average earnings from 2019-20.  Joe also received a dividend from his company in the year.

Joe’s pay in year 2019-20 was £21,600 (£1,800 per month) plus a dividend of £10,000.

The dividend can’t be claimed under the scheme so, 80% of his monthly earnings are £1,800 x 80% or £1,440.