I wanted to start with making it clear that this is what we know – there are so many things we do not know – it is a confusing time for everyone and we want to share the information as it comes and try to clear up everyone’s questions as we can!
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for AT LEAST three months starting from 1 March 2020. We expect the scheme to be up and running by the end of April. This can be back dated to 1st March – it is simply the actual portal that we expect to have by the end of April.
Employers can use a portal to claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, PLUS the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period.
You can claim for any employee who has been on your PAYE payroll since 28th February 2020.
The employee can not undertake work for or on behalf of their employer when on furlough. This includes providing services or generating income. They cannot work for you in any capacity.
While on furlough, the employee’s wage will be subject to the usual income tax and other deductions.
If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.
Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.
You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.
Work out what you can claim
You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
At a minimum, employers MUST pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.
The minimum time you can furlough an employee is 3 weeks.
Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account. We will process all claims on your behalf (if we can) at the very least we will provide all the information you need to make the grant claim. We are not charging any extra for this service.
You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted.
Tax Treatment of the Coronavirus Job Retention Grant
Payments must be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes.
As always if you do have any queries or questions please let us know.