The UK government provides a range of employment support schemes to help businesses manage workforce costs during economic disruption, support hiring and meet statutory obligations. While the Coronavirus Job Retention Scheme (CJRS) — commonly known as furlough — ended on 30 September 2021, its impact on payroll processing and compliance remains relevant for employers dealing with HMRC enquiries, corrections and record-keeping. Alongside legacy furlough obligations, several ongoing support mechanisms continue to operate through the PAYE payroll system.
Coronavirus Job Retention Scheme (Furlough)
Overview
The CJRS ran from March 2020 to 30 September 2021 and allowed employers to claim government grants covering a proportion of furloughed employees’ wages. At its peak, the scheme supported over 11 million jobs.
Key Features
| Period | Government Contribution | Employer Contribution | Employee Received |
|---|---|---|---|
| March–July 2020 | 80% of wages (up to £2,500/month) | Employer NICs and pension only | 80% of normal pay |
| August–September 2020 | Tapering from 80% to 70% | Increasing from NICs/pension to 10%+ of wages | 80% of normal pay |
| November 2020–June 2021 | 80% of wages (up to £2,500/month) | Employer NICs and pension only | 80% of normal pay |
| July 2021 | 70% (up to £2,187.50/month) | 10% of wages + NICs/pension | 80% of normal pay |
| August–September 2021 | 60% (up to £1,875/month) | 20% of wages + NICs/pension | 80% of normal pay |
Ongoing Compliance
Although the scheme is closed, employers must retain furlough-related records because:
- HMRC can still assess overclaimed grants within its normal assessment time limits, which are longer where an error was careless or deliberate
- Employers who overclaimed must repay the excess — voluntary disclosure reduces the risk of penalties
- Records must be kept for 6 years, including calculations of claim amounts, employee agreements to furlough and evidence of reduced working hours for flexible furlough claims
Common HMRC Enquiry Areas
- Employees who continued to work while furloughed (not permitted under full furlough)
- Incorrect calculation of reference pay (the baseline for 80% claims)
- Claims for employees who had already been given notice of redundancy
- Failure to include furlough pay in holiday pay calculations
- Overclaims not voluntarily repaid
Statutory Payment Recovery
Employers can recover certain statutory payments from HMRC through the payroll system:
Statutory Sick Pay
Employers are generally responsible for the full cost of Statutory Sick Pay. Since 6 April 2026, SSP is the lower of the flat weekly rate and 80% of average weekly earnings, payable from the first full qualifying day. The temporary SSP Rebate Scheme operated during the pandemic and is closed.
| SSP Detail | Current Position |
|---|---|
| Who pays | Employer — no recovery from HMRC |
| Rate | Lower of the flat weekly rate and 80% of average weekly earnings |
| Waiting days | None for absences starting on or after 6 April 2026 |
| Maximum duration | 28 weeks |
| Small employer relief | None |
Statutory Maternity, Paternity and Shared Parental Pay
Employers can recover statutory maternity, paternity, adoption and shared parental pay from HMRC:
| Employer Size | Recovery Rate |
|---|---|
| Small employers (total NIC liability ≤ £45,000 in qualifying year) | 100% plus compensation set by HMRC |
| All other employers | 92% |
Recovery is made by offsetting the statutory payment against the employer’s PAYE and NIC liability each month. The offset is reported on the Employer Payment Summary (EPS) through RTI.
Employment Allowance
The Employment Allowance reduces an eligible employer’s Class 1 NIC liability by a fixed annual amount set by HM Treasury. This ongoing relief is claimed through the EPS and applied automatically against monthly PAYE liabilities. For full details, see the employer National Insurance guide.
| Feature | Detail |
|---|---|
| Maximum annual reduction | The allowance for the tax year |
| Eligibility | Since 6 April 2025, no cap based on the previous year’s employer NIC bill |
| Excluded employers | Companies whose only employee paid above the secondary threshold is a director, public bodies, those carrying out functions of a public nature |
| How to claim | Tick the Employment Allowance indicator on the EPS at the start of the tax year |
Kickstart Scheme (Closed)
The Kickstart Scheme ran from September 2020 to March 2022 and funded 6-month work placements for 16–24-year-olds on Universal Credit. The government paid:
- 100% of the National Minimum Wage for 25 hours per week
- Associated employer NICs
- Employer minimum pension contributions
- A £1,500 setup grant per placement for training and support
Although closed, employers who participated must retain records of placements and payments received.
Other Current Support
Apprenticeship Funding
Employers not paying the Apprenticeship Levy can receive government co-investment covering 95% of apprenticeship training costs. Small employers with fewer than 50 staff may receive 100% funding for apprentices aged 16–18. Additional incentive payments of £1,000 are available for employers hiring apprentices aged 16–18 or aged 19–24 with an Education, Health and Care Plan.
Disabled Workers Support
- Access to Work — government grants covering practical support for disabled employees (specialist equipment, travel costs, support workers), with no impact on the employer’s payroll tax position
- Disability Confident scheme — voluntary employer accreditation demonstrating commitment to disabled employees
Redundancy Support
When making 20 or more redundancies, employers must notify the Redundancy Payments Service using form HR1. If an employer becomes insolvent, the government’s National Insurance Fund covers statutory redundancy pay, unpaid wages (up to 8 weeks), holiday pay (up to 6 weeks) and notice pay (up to 12 weeks) for affected employees.
Accounting for Government Support
Government grants and statutory payment recoveries are recorded in the employer’s accounts:
| Item | Accounting Treatment |
|---|---|
| Statutory pay recovery | Offset against PAYE liability — reduces the cash payment to HMRC |
| Employment Allowance | Reduces employer NIC expense |
| Government grants (e.g. CJRS, Kickstart) | Recognised as income when entitlement conditions are met |
| Overclaimed grants | Liability — repay to HMRC with any penalties |
Payroll System Requirements
For ongoing government support schemes, the PAYE payroll system must be configured to:
- Track statutory payments (SMP, SPP, SAP, ShPP, SSP) and calculate recovery amounts
- Report recoveries on the EPS each month
- Apply the Employment Allowance against employer NIC liabilities
- Maintain an audit trail of all claims, recoveries and offsets for HMRC compliance checks
- Flag furlough-related data for the retention period if the employer used CJRS