Coronavirus Job Retention Scheme - Questions Answered

In our previous straight to the point, we highlighted some key questions employers have about the new scheme. More guidance has been released, please see below for the answers we now have:

How often do I need to submit a claim?

You can only submit a claim every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1 March if applicable.

What information do I need to make a claim?

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 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.

What happens after I claim?

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.

You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.

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. You can choose to top up the employee’s salary, but you do not have to.

What is included in the £2,500 per month cap?

Employers can claim up to £2,500 of furloughed employee’s usual monthly wage costs

On top of this the employer will also claim associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

If you choose to top up the extra 20% of staff salary then any excess Employer National Insurance Contributions and automatic enrolment contribution will not be funded through this scheme. Nor will any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income above the lower limit of qualifying earnings (which is £512 per month until 5th April and will be £520 per month from 6th April 2020 onwards).

Does this scheme apply to zero hour contract workers?

Yes – the scheme applies to full-time employees, part time employees, employees on agency contracts and employees on flexible zero hours contracts.

How do I calculate the pay for employees whose pay varies?

If the employee has been employed for a full 12 months prior to the claim, you can claim for the higher of either:

The same month’s earning from the previous year

Average monthly earnings from the 2019-20 tax year

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.

Can I claim for employees that have seen a drop in working hours due to Coronavirus?

No – any employee furloughed must not be working for the company during the time that HMRC is reimbursing.

What if my employee’s furloughed wage is below the National Living Wage/Minimum Wage?

Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.

Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.

However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

What if my employee has more than one job?

If your employee has more than one employer, they can be furloughed for each job. Each is separate and the cap applies to each employer individually.

What if they do volunteer work or training?

A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.

However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

Is this taxable income?

Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

Summary

We will continue to update you on the detail on all relevant schemes as it is released. Do get in touch if you have any questions.

Share this post