Over the weekend, the UK Government updated and expanded the rules of the Coronavirus Job Retention Scheme. Here are the key points, which in some cases updates or amends some of the previous advice that we have provided.
Over the weekend, the UK Government updated and expanded the rules of the Coronavirus Job Retention Scheme. Here are the key points, which in some cases updates or amends some of the previous advice that we have provided.
Please read carefully and consider how the below apply to you and contact us if you have any questions. The latest guidance can be found on the web link below.
There is also useful information for employers on the ACAS website.
https://www.acas.org.uk/coronavirus
The Scottish Government publishes regular updates and guidance for employers at
https://findbusinesssupport.gov.scot/coronavirus-advice
How much you can claim
80% of your employees’ wages (even for employee’s on National Minimum Wage) – up to a maximum of £2,500.
Minimum automatic enrolment employer pension contributions on banding earnings of the subsidised wage/salary
Employers National Insurance contributions on the subsidised wage/salary
You can choose to top up your employee’s salary, but you do not have to. Employees must not work or provide any services for the business while furloughed, even if they receive a top-up salary.
- The updated guidance covers in more detail what can be included in pay and now states that contractual compulsory commission and overtime may be included up to the £2,500 cap. Discretionary bonuses, tips and money benefits won’t be allowed.
- The salary to be calculated is the salary as at 28th February, or for those on casual or zero hour contracts the average over the 2019/20 tax year, or their earnings on the same month a year ago. Where contractual pay rises or increases in the NMW or NLW have arisen these are not covered by the grant. Only where training is being undertaken does the employer have to top up to NMW.
How to make a claim for the Job Retention Scheme
The online service you’ll use to claim is not available yet. We expect it to be available by the end of April 2020
To claim, you will need:
- your ePAYE reference number
- the number of employees being furloughed
- the claim period (start and end date)
- amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
- your bank account number and sort code
- your contact name
- your phone number
You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.
HMRC will check your claim, and if you’re eligible, pay it to you by BACS to a UK bank account.
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.
Can One Accounting make the claim on behalf of clients?
- We anticipate that accountants and tax agents will be able to make Job Retention Grant claims on behalf of their clients, but this has not been confirmed by HMRC
- We will be able to make the calculation of the grant claim, including amounts for Employers NIC and Employers Pension contributions. This will subject to an additional fee to cover the extra time involved.
- We will also be able to submit the grant claim to HMRC via the online portal, again for an additional fee to cover the extra time involved.
Eligibility for the job retention scheme
- The scheme is open to all employees who were on your PAYE scheme at 28/02/2020 (HMRC seem to have ignored that it is a leap year)
- Nannies, cleaners, agency workers, apprentices and salaried partners of LLPs are also eligible if they were paid through PAYE at 28/02/2020
- Those on fixed term contracts may have their contract extended to benefit from the scheme.
Furlough of Directors
Directors can be furloughed. There must be a written board resolution and the director may only carry out their statutory duties. they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.
Note that we believe that sole Directors cannot be furloughed where there are still employees working for the company (and are unfurloughed).
Where there are two or more Directors, one or more Directors can be furloughed subject to approval by the board.
Necessary paperwork required to comply with the scheme
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 grant employers must confirm in writing to their employee confirming that they have been furloughed. A record of this communication must be kept for five years.
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.
Backdating of Furlough Start Point
Claims can be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they written to confirming their furloughed status.
- Furloughed employees may be rotated and furloughed multiple times, if each period of furlough is for a minimum of three weeks.
- Those that were made redundant or who had resigned may be rehired and then furloughed, but it is not compulsory, and we would advise you take expert HR advice first. This is only applicable if the employee was made redundant or resigned after 28/02/2020.
Employees with caring responsibilities e.g. Childcare due to school closures
- Clarification has been made that those with caring responsibilities can be furloughed, meaning that employees who cannot work because of childcare responsibilities during coronavirus are covered.
What amounts can be claimed?
Salary sacrifices
- If an employee has entered into a salary sacrifice scheme, HMRC has confirmed they can reverse this and go back to their full basic salary losing the salary sacrifice benefit. This must be agreed with the employee.
Working for another employer whilst on furlough
One unexpected announcement was that furloughed employees may take up employment with a new employer. This is subject to their contract with the employer allowing this.
