Coronavirus Job Retention Scheme for care homes

The position of care homes has not been specifically addressed by HMRC or any other government department. We have prepared an analysis for all those in the sector.


In the published HMRC guidance to the Coronavirus Job Retention Scheme (CJRS) which was last updated on 20 April, it is stated that:

“Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs.”

This has caused a great deal of uncertainty in the sector, as many care home businesses in the South East receive funding from local government, alongside their fees from residents and their families, yet want to furlough their staff.

We have prepared a detailed guide to the CJRS, which can be found here

When would we be justified in furloughing staff?

Examples , which HMRC would probably accept include:

  • A care provider implementing full lockdown of a care home with a number of staff volunteering to live-in to support residents. This created a reduced requirement for other staff who could be furloughed.
  • A care provider with reduced occupancy due to Covid-19 seeking to furlough care staff and office staff until occupancy and revenue increased.

Can we benefit from CJRS?

If your business is wholly funded by fees paid from residents and their families  then you can apply for CJRS funding on the same basis as any other business.

However, if your business has a mix of public income (largely this will be funding from local authorities) and private income (largely this will be the fees that residents and their families pay), you will have to pay attention to HMRC’s guidelines.

The ‘Four Tests’

A private business within the sector should only furlough employees, and therefore seek support through the CJRS, if it meets the following conditions:

  • the employee works in an area of business where services are temporarily not required and where their salary is not covered by public funding
  • the employee would otherwise be made redundant or laid off
  • the employee is not involved in delivering provision that has already been funded (free entitlement funding)
  • the grant from the CJRS would not duplicate other public grants received, and would not lead to financial reserves being created

How does this work in practice?

If it is difficult to distinguish whether staff are funded through free entitlement or private income for the purposes of meeting the first 3 conditions as listed above, then as a care home provider you can access the CJRS to cover up to the proportion of  your payroll which could be considered to have been paid for from your business’s ‘private’ income.

This would typically be income received from residents or their families, and excludes all income from local government.

Calculating the entitlement

You should use the month of February 2020 to represent your usual income in calculating the proportion of your payroll eligible to be covered by CJRS. 

Following the initial claim, you  should adjust these proportions in subsequent furloughing applications if your income from the local government changes, but you are not expected to make any adjustments in relation to changes resident paid income.


Govender’s care home’s February 2020 monthly income was 60% from the council and 40% from residents’ payments, so he can claim CJRS support for up to 40% of his payroll.

This would be done by furloughing staff whose usual salary / combined salaries come to no greater than 40% of his February 2020 payroll

These proportions could change in Govender’s subsequent furlough applications as a result of his council payments changing (but not where income from residents or their families increased or decreased). 

For example, if in May 2020 he subsequently receives additional local authority funding, a new calculation must be made, again using the February 2020 payroll figure.  

Assuming that with the new council income, 75% of the business’s total income comes from this,  his maximum use of the furlough scheme should, from that point, be reduced to 25% of his February payroll, and he will need to unfurlough employees.

SRC-Time are one of the South East’s leading accountancy firms in advising individuals and businesses in all aspects of their accounting and tax affairs and we are able to assist in any issue raised above.

Our expert team is available to provide you with advice and can be contacted on 01273 326 556 or you can drop us an email at  or speak with an account manager to get any process started.

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