Coronavirus Job Retention Scheme - FAQ - 22 March 2020
Coronavirus Job Retention Scheme FAQ – Published 22nd March 2020. Note that this information may be out of date very soon so please watch out for updates!
Under the new Coronavirus Job Retention scheme announced on Friday 20th March, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It will continue for at least three months, and can include workers who were in employment on 29 February.
To claim under the scheme employers will need to:
- designate affected employees as ‘furloughed workers’, and notify employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation so please take HR advice
- submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC will set out further details on the information required.
- HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
While HMRC is working urgently to set up a system for reimbursement, we understand existing systems are not set up to facilitate payments to employers. Business that need short-term cash flow support, may benefit from the VAT deferral announced and may also be eligible to apply for a Coronavirus Business Interruption Loan.
Q: What does “furloughed” mean?
A: It’s if you allow an employee to be absent from work for a period of time. In this case that means anyone asked to stop working during the coronavirus pandemic but not made redundant.
Q: Are the government going to pay my team for me?
A: There seems to be a common misconception that the government will subsidise 80% of your team costs while they work for you. Not so – it’s only for people who you would normally make redundant in any other situation. They are in effect on “garden leave”, and should not be doing any work during the “furloughed” period.
Q: Surely they can do some odd jobs for me whilst off…
A: Absolutely not.
Q: Can they go part time and benefit from this?
A: No. They can’t lift a finger. You’d be best making some of your staff full time, and put others on garden leave so that they qualify for the Job Retention Scheme payment.
Q: Who qualifies?
A: Anyone on payroll at 29th February and is subsequently laid off or furloughed
Q: How do you work out what they get 80% of?
A: This has not been announced yet. (Our opinion is that it may be an average of the last 12 weeks pay, or the salary they were paid in February)
Q: How do I submit a claim for the Coronavirus Job Retention Scheme?
A: This has not been announced yet. HMRC do not have the claims systems set up but expect to do so by the end of April 2020.
Q: How will HMRC know that the people I am claiming for have actually worked for me?
A: Under the RTI (Real Time Information) scheme, HMRC get a report each month of the names, NI numbers and addresses of the staff you have paid. This is submitted electronically by your accountant or payroll bureau from their payroll software. (Our opinion is that HMRC will cross reference any Job Retention Scheme claim against the payroll records in February to make sure that the employee you are claiming for is a genuine employee)
Q: Can we retrospectively alter February’s payroll to increase the figure up?
A: Absolutely not. This is a scheme designed to help individuals in need, and HMRC will come down hard on any employer who tries to abuse the scheme.
Q: Can directors benefit from this?
A: There is no guidance yet. (Our opinion is Directors will be excluded. Certainly sole directors would find it difficult to claim they were furloughed and not have any involvement with their business )
Q: Can you help me bend the rules to enable me to make a claim under this scheme when we both know I don’t really qualify?
A: No. Absolutely not.
Q: But my mates “accountant” said they would…
A: We promise to make the transfer of your records to your new accountant as hassle free as possible.