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Updated on 6 April 2024

Job retention scheme

The coronavirus (COVID-19) pandemic had far-reaching financial impacts on individuals and businesses across the UK, and indeed across the world. This page sets out some information for employers about the Coronavirus Job Retention Scheme. The scheme closed on 30 September 2021. However, this page is retained as reference information for any employers needing or wanting to check their claims. 

a drawing of an employee with 2 further drawings above showing options of being at home with family or staying employed at work
Yuriy K /

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The Coronavirus Job Retention Scheme (CJRS), set up in March 2020, helped employers pay their workers’ wages if they were unable to work during the coronavirus crisis. As well as situations where the business had to close or temporarily reduce its capacity, this could also include workers who:

  • had caring responsibilities resulting from coronavirus, such as caring for children who were at home as a result of school or childcare closing, or
  • were clinically extremely vulnerable, or in the highest risk group for severe illness from coronavirus.

Under the CJRS, you could claim a government grant so that a ‘furloughed’ worker could receive up to 80% of their usual wages, via the payroll, up to a total of £2,500 each month.

These grants are taxable income for employers in business, however they should be offset by the employment costs that you deduct when calculating taxable profits for income tax or corporation tax purposes. For more on reporting the payment, see the guidance below Report your CJRS grants.

Treasury Direction and guidance

The underlying scheme rules (the Treasury Directions) can be found on GOV.UK.

GOV.UK guidance

The government's guidance on the CJRS, to help you check your claims, is split over a number of pages, all of which can be found in the collection on GOV.UK.

The guidance on how to deal with the accrual of holiday leave and pay during furlough, can be found on GOV.UK.

Employment law guidance

There were requirements around furloughing workers from an employment law perspective. Guidance and articles can still be found on the internet.

Although these are outside the scope of this guidance, the main thing to note was that the employment relationship continued through the furlough period and you continued to have certain obligations – for example, workers may have continued to accrue holiday (guidance for which was published on GOV.UK, as linked to above).

Incorrect calculation/claim?

We understand that a lot of employers will have got their calculations of furlough pay/grant amounts wrong, particularly in the early stages of the scheme when there was a lot of confusion about what the rules were.

There are obvious issues if an employer paid out too much by way of furlough pay (as they will have paid out more than they could legitimately claim for under the CJRS). However, there may also be serious ramifications where they did not pay out enough by way of furlough pay (that is, where they have paid out less than the ‘reference pay’ as calculated under the scheme rules). Indeed, it could mean that the employer was not actually eligible to make a claim for a grant from the Job Retention Scheme at all.

You are now probably out of time to claim a further amount of grant (see the section below Pay back any amounts owing to HMRC). If you discover an underpayment of furlough pay to an employee for this period, which under the scheme rules you have an obligation to make good, this may have to come from your own pocket. You must make good any shortfall to employees within a ‘reasonable period’ see our guidance below under the heading Payments to employees.

In summary:

If you have underclaimed a grant in the period to 31 October 2020, there is now nothing you can do about this.

If you have underclaimed a grant from 1 November 2020, you must have amended it by the amendment deadline for the relevant month:

To amend a claim for You must have amended the claim by 11.59pm on
November 2020 29 December 2020
December 2020 28 January 2021
January 2021 1 March 2021
February 2021 29 March 2021
March 2021 28 April 2021
April 2021 28 May 2021
May 2021 28 June 2021
June 2021 28 July 2021
July 2021 31 August 2021
August 2021 28 September 2021
September 2021 28 October 2021

HMRC may have accepted amendments after these dates if there was a reasonable excuse for the failure to make the amendment in time. HMRC gave examples of what they considered might be a reasonable excuse in their guidance on GOV.UK (now withdrawn).

We understand the online claim system was taken down on 28 October 2021. People who have a reasonable excuse that want to make an amendment to a claim, had to ask HMRC to process this manually after this date.

If you overclaimed a grant, you may need to pay some money back to HMRC – more on this below. You used to be able to reduce your next claim by the overclaimed amount, although as the Job Retention Scheme is closed, this is no longer possible. You can find HMRC's guidance on what to do on GOV.UK.

Checking your claims

Now the CJRS has come to an end, HMRC may check some claims. HMRC said that they were concentrating their compliance activity on those who they think were abusing the system and that they would not be actively looking for cases where the employer simply made an innocent error.

HMRC might look for issues such as the following, before approaching employers about CJRS claims being wrong:

  • whether the overall claim looks larger than they would expect based on previous filings
  • whether the number of employees and the type of employees claimed for appears credible
  • whether the pattern of RTI filings and claims is broadly in line with what they would expect

Due to the complexity of the scheme, there will be many more employers with innocent errors in their claims’ histories (particularly in the early days when there was a lot of confusion), than HMRC are likely to check. However, it is a good idea to review your claims so that you are satisfied they are all correct, or alternatively so you can take action to put any mistakes right sooner rather than later. There is always the small chance that you will be randomly picked for an HMRC check and it is better for you to have corrected any errors than for HMRC to spot mistakes and require you to make amendments.

Typical errors could include:

  • for variably paid workers, the use of 2019/20 average pay details only (without doing the comparison);
  • misunderstanding what employees could and, importantly, could not do when on furlough;
  • once flexi- furlough came in, incorrectly recording hours as worked rather than on furlough;
  • continuing to claim 80% of reference pay for months when the limit was 60% or 70%;
  • incorrect use of pre-salary sacrifice pay figures;
  • counting discretionary pay items as usual reference pay.

You can find the full collection of guidance on the CJRS to help you check previous claims, work out claim amounts and pay grants back on GOV.UK. All employers, at the very least, will need to keep records for six years, supporting the grants they have claimed, in case HMRC want to check them.

We worked with HMRC to identify common scenarios in the calculation of CJRS grants, and whether they gave rise to errors which require correction. As a result, HMRC provided us with the this guidance.


If you find you have made a mistake with a claim, you will either have claimed too much grant (known as an overclaim) or you will have not claimed enough grant (known as an underclaim).

HMRC explained to us that employers could offset overclaims and underclaims for different employees in the same claim period. Therefore, you only had to repay any overclaim to HMRC to the extent that it was more than any underclaims in the same claim period. HMRC gave an example in their guidance.

The errors must have arisen in the same claim period to be offset. 


An employer, Shiny Window Cleaners, made a number of CJRS calculation errors:

  • underclaimed by £100 for employee A in July 2021
  • overclaimed by £200 for employee B in July 2021
  • underclaimed by £50 for employee C in August 2021
  • overclaimed by £200 for employee C in September 2021

Our understanding, based on our discussions with HMRC is that the employer could net off the errors in respect of employee A and employee B as, although they are for different employees, they were in the same claim period of July 2021. Therefore, the overclaim for July 2021 is reduced to £100.

The employer could not net off the employee C underclaims against any of the overclaims as they were for different claim periods.

This employer must repay the total overclaims of £300 (£100 for July 2021 and £200 for September 2021. The employer could not amend the August 2021 claim for the £50 underclaim as the amendment window had closed, although it might have been possible to make a late claim if there was a reasonable excuse at the time the original claim was made.

Pay back any amounts owing to HMRC

Where you have overclaimed an amount of CJRS grant, HMRC ask that you ‘voluntarily’ repay the overclaimed amount directly to them, for example, by bank transfer or debit card. To do this, you should request a payment reference number, which will begin with X – and then make payment within 30 days.

If you do not do this, these excess payments are treated as tax that needs to be collected back from the employer at a rate of 100%, so employers can repay HMRC by including the excess amounts on the relevant tax return, which will then trigger the tax liability.

For overclaims arising in 2020/21 for sole trader business employers, these needed to be included on the 2020/21 Self Assessment tax return with payment made by 31 January 2022. For 2021/22 they needed to be included on the 2021/22 Self Assessment tax return. See below for more information under the heading Report your CJRS grants. For limited company employers, the rules can be found in the Company Tax Return Guide available on GOV.UK.

Reporting requirements and penalties

Paying back any overclaimed money through the appropriate tax return is not the end of the story. Strictly, employers must also notify HMRC of the overclaimed amount within 90 days from the receipt of the payment (or change of circumstances that meant the grant was received incorrectly) or potentially face ‘failure to notify’ fines – more on these below. There is no prescribed way of notifying HMRC.

So in summary, HMRC would like any overclaimed CJRS money paid back to them ‘voluntarily’ as early as possible and for employers who do not do this, HMRC require them to follow the 90-day rule and notify HMRC that it will be included on a tax return. HMRC has the right to raise an assessment to claw back any excess payments at any time.

If employers (who did not know that their CJRS grant was incorrect at the time they received it) do not meet the 90-day notification requirement above, they should still ensure they pay back any overclaimed amounts as if they were tax via their tax return by the appropriate deadline. By doing so, there will be no potential lost revenue and so no failure to notify penalty. This is in line with general failure to notify principles - for a discussion of these, and also the reasonable excuse provisions that may apply, see HMRC’s dedicated factsheet.

Note that different, more severe, penalty rules apply for employers who knew that their CJRS grant was incorrect at the time they received it (and who haven’t reported it/paid it back). They will be treated as having made a deliberate and concealed failure to notify. They can be charged a penalty of up to 100% of the amount over-claimed as at the end of the notification period.

For more information on paying back CJRS grants, see the comprehensive article by our colleagues in the ATT.

Payments to employees

If you have underclaimed an amount of CJRS grant and it resulted in you underpaying an employee (meaning that they didn’t receive 80% of their reference salary), you must still make good any amount that you owe the employee. Not doing so may mean that those workers did not receive the minimum amount that they are entitled to under the CJRS, which may invalidate your claim for that employee and mean it must be repaid to HMRC.

Where the 80% of reference salary requirements are met as a whole for an employee over all claim periods (despite there being shortfalls within some claims), HMRC will accept that the employer has paid 80% of reference pay to the employee for the total period covered by all the claims.

Making good any amount that you owe an employee must be done within a ‘reasonable timeframe’ for CJRS purposes. We understand from the GOV.UK guidancethat for most sole trader business employers, this means by 31 January 2022 for any underpayments arising in 2020/21 tax year and 31 January 2023 for 2021/22. The deadlines for limited company employers are available on GOV.UK.

To the extent that you paid your employee an amount which you now need to pay back to HMRC, you need to think very carefully before attempting to claw an amount back from your employee.

An employer’s position under the CJRS is a separate issue to its obligation to pay its employees under employment law. There is no automatic right for an employer to require an employee to repay an amount of CJRS grant paid to them, even where it subsequently proves to be incorrect under the law governing the CJRS scheme.

Whether you can recover payments that are repayable to HMRC from your employee is dealt with by existing employment law rules. The Employment Rights Act 1996 allows employers to make deductions from an employee’s future wages to recover overpayments of wages made by mistake. This could potentially be used if an employer discovers they made an error and over-claimed their CJRS grant and overpaid an employee, in good faith, an amount which they now need to pay back. However, it is sometimes possible for an employee to object to such a deduction.

You should seek appropriate employment law advice, for example from ACAS, before making any deductions.

Report your CJRS grants

Remember to include the CJRS grants in the appropriate tax return. If you are a sole trader business employer, these grants are taxable income for your business and must be entered in box 16 of the full Self-employment pages or box 10 of the short Self-employment pages of your self assessment tax return for the relevant tax year. The wages you paid out to your employees under the CJRS should be included as a business expense as usual and so should be offset when calculating your taxable profits.

There is a box to tick on page TR8 (box 20.1) of the Tax Return to confirm that these payments have been included as taxable income for the purposes of calculating your profits.

If you have overclaimed an amount of CJRS grant and have not already told HMRC/paid it back, do not include that amount as business income in box 16/box 10 of the Self-employment pages – include it in box 1 on page TR5 of the main tax return in the section called ‘Incorrectly claimed coronavirus support scheme payments’. For limited company employers, the rules can be found in the Company Tax Return Guide

Any CJRS grant received by an employer who is an individual and not employing staff in the course of a business (for example, someone who employs a carer or a nanny) will not be taxable and does not need to be included in a tax return.

The GOV.UK guidance on reporting Covid-19 grants and support payments can be found here.

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