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Coronavirus Job Retention Scheme

Coronavirus Job Retention Scheme

What is it?

All UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis, starting from 1 March 2020.

Who is it for?

All UK Businesses that had or started a PAYE payroll scheme on 19 March 2020 are eligible (extended from the 28 February 2020) This includes:

  • Businesses
  • Charities
  • Recruitment agencies (agency workers paid through PAYE)
  • Public authorities

How does it work?

Instead of making staff redundant, they can be given a "furlough" designation. You will then submit information to HMRC on your furloughed workers through a new online portal. HMRC will then reimburse 80% of "furloughed" workers' wage costs, up to a cap of £2,500 per month.

To be eligible for this grant, employers should write to their employee confirming that they have been furloughed and keep a record of this communication.

The scheme will close to new entrants from 30 June 2020. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June 2020. This means that the final date by which an employer can furlough an employee for the first time will be 10 June 2020, in order for the current 3 week furlough period to be completed by 30 June 2020. Employers will have until 31 July 2020 to make any claims in respect of the period to 30 June 2020.

From 1 July 2020, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim for their normal hours not worked. When claiming the grant for furloughed hours; employers will need to report and claim for a minimum period of a week. Individual firms will decide the hours and shift patterns their employees will work on their return so that they can decide on the best approach for them - and will be responsible for paying their wages while in work.

From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. 

The following will apply for the period people are furloughed:

  • June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
  • August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

1. What employees can I claim for?

Furloughed employees must have been on your PAYE payroll on 19 March 2020. They can be on any type of contract. Employees hired after 19 March 2020 cannot be furloughed or claimed for in accordance with this scheme.

Any employees you place on furlough must be furloughed for a minimum period of 3 consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.

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. This includes providing services, generating revenue, working reduced hours or on reduced pay. If an employee is working, the employer will need to pay the employee through their payroll, subject to the terms of the employment contract you agreed.

While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

The scheme also covers employees who were made redundant since 19 March 2020, if they are rehired by their employer.

1.1. Employee on unpaid leave
Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 19 March 2020.

1.2. Employees shielding or with caring responsibilities
Employees who are shielding or unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be placed on furlough.

1.3. Employee on Statutory Sick Pay
Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this.

1.4. Employee that has more than one job
Your employee can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.

1.5. Employee that does volunteer work
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.

1.6. Employee that does training
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.

1.7. Employee on Maternity Leave, contractual adoption pay, paternity pay or shared parental pay
Individuals who are on or plan to take Maternity Leave must take at least 2 weeks off work (4 weeks if they work in a factory or workshop) immediately following the birth of their baby. This is a health and safety requirement. 

The normal rules for maternity and other forms of parental leave and pay apply.

Although, your employer may need to calculate your average weekly earnings, if you were put on furlough and then started leave on or after 25 April 2020 for:

  • maternity pay
  • adoption pay
  • paternity pay
  • shared parental pay
  • parental bereavement pay

Your employer can claim through the scheme for enhanced (earnings-related) contractual pay for employees who qualify for the above.

If you’re getting Maternity Allowance while you’re on maternity leave, you cannot get furlough pay at the same time. If you have agreed to be put on furlough, you must contact Jobcentre Plus to stop your Maternity Allowance payments.

If you agree to go on furlough and end your maternity leave early, you will need to give your employer at least 8 weeks’ notice and you will not be eligible for furlough pay until the end of the 8 weeks.

If you are pregnant and about to start maternity leave you should start maternity leave as normal. If your earnings have reduced because you were off sick before your maternity leave started, this may affect your Statutory Maternity Pay. If your earnings have reduced because you were put on furlough and then you started family-related statutory leave on or after 25 April 2020, the amount you receive in pay should not be affected. If you started family-related statutory pay before 25 April 2020, your entitlement may be affected.

1.8. Office Holders
Office holders can be furloughed. The furlough, and any ongoing payment during furlough, will need to be agreed between the office holder and the party who operates PAYE on the income they receive for holding their office. Where the office holder is a company director or member of a Limited Liability Partnership (LLP), the furlough arrangements should be adopted formally as a decision of the company or LLP.

1.9. Company Directors
As office holders, salaried company directors are eligible to be furloughed.

Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed.

Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.

Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, 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.

This also applies to salaried individuals who are directors of their own personal service company (PSC).

1.10. Salaried Members of Limited Liability Partnerships (LLPs)
Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.

The rights and duties of a member of an LLP are set out in an LLP agreement and in the absence of an agreement, default provisions in the LLP Act 2000, based upon company and partnership law. Such an agreement may include a separate agreement between the LLP and an individual member setting out the terms applicable to that member’s relationship with the LLP.

To furlough a member, the terms of the LLP agreement (or any such agreement between the LLP and the member) may need to be varied by a formal decision of the LLP.

1.11. Apprentices
Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed.

However, you must pay your Apprentices at least the Apprenticeship Minimum Wage/National Living Wage/National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training. This means you must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.

2. Work out what you can claim

Employers need to make a claim for wage costs through this scheme.

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.

2.1. Claim for full time and part time employees
For full time and part time salaried employees, the employee’s actual salary before tax, as of 19 March 2020 should be used to calculate the 80%. Fees, commission and bonuses should not be included.

2.2. Claim 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.

Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.

2.3. Claim for employer National Insurance and Pension Contributions
All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.

You can choose to provide top-up salary in addition to the grant. Employer National Insurance Contributions and automatic enrolment contribution on any additional top-up salary 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).

2.4. Claim for National Living Wage/National 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.

What should I do next?

You can now claim for this scheme. Click here to go to the portal.

To claim, you will need the Government Gateway user ID and password you got when you registered for PAYE online.

To claim, you will need:

  • To be registered for PAYE online
  • Your UK bank account number and sort code (you must only provide bank details where a BACS payment can be accepted)
  • Your employer PAYE scheme reference number
  • The number of employees being furloughed
  • Each employee’s National Insurance number
  • Each employee’s payroll or employee number
  • The start date and end date of the claim
  • The full amount you’re claiming for including employer National Insurance contributions and employer minimum pension contributions
  • Your phone number

You also need to provide either:

  • Your Corporation Tax unique taxpayer reference
  • Your Self Assessment unique taxpayer reference
  • Your company registration number

If you’re claiming for more than 100 furloughed employees, you’ll need to upload a file containing each employee’s:

  • Full name
  • National Insurance number
  • Payroll number (optional)
  • Furlough start date
  • Furlough end date (if known)
  • Full amount claimed

The format of the file you upload must be either:

  • .xls
  • .xlsx
  • .csv
  • .ods

To reduce the risk of delaying your payment and/or being asked to provide the information again, make sure you:

  • provide only the employee information requested above 
  • submit one line per employee for the whole period
  • do not break up the calculation into multiple periods within the claim
  • do not split data by contract type
  • upload your file as an .xls, .xssx, .csv or .ods

Once you’ve claimed, you will get a claim reference number. HMRC will then check that your claim is correct and pay the claim amount by BACs into your bank account within 6 working days. If you have not heard from HMRC after 10 working days since you made the claim, you can contact them here. After you have claimed you must:

  • Keep a copy of the claim reference number for your records
  • Keep a copy of your calculations in case HMRC need more information about your claim
  • Tell your employees that you have made a claim and that they do not need to take any more action
  • Pay your employee their wages, if you have not already

Employers need to discuss with their staff and make any changes to the employment contract by agreement. You may require legal advice on this process. 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.

If you use an agent who is authorised to act for you for PAYE purposes, they will be able to make a claim on your behalf, so please speak to them now. However, if you use a file-only agent (files your RTI return but doesn’t act for you in other matters), they won’t be able to make a claim for you and you will need to claim for yourself.

If you do not have an agent who is authorised to act for you for PAYE purposes, then you will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.

You should make your claim using the amounts in your payroll. Claims can be backdated until the 1 March 2020 where employees have already been furloughed. Wages should be reduced to 80% of their salary within your payroll before they are paid. This adjustment will not be made by HMRC.

You should retain all records and calculations in respect of your claims.

HMRC’s step by step guide with a very good example included.

To see HMRC’s step by step guide with an example, click here.

Find more information on the gov.uk website here

Critchleys Clients: If you have specific questions or concerns, please contact your Critchleys Accountant directly.

 


Published 24 March 2020
Last Updated 1 June 2020

1 June 2020

How does it work?
The scheme will close to new entrants from 30 June 2020. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June 2020. This means that the final date by which an employer can furlough an employee for the first time will be 10 June 2020, in order for the current 3 week furlough period to be completed by 30 June 2020. Employers will have until 31 July 2020 to make any claims in respect of the period to 30 June 2020.

From 1 July 2020, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim for their normal hours not worked. When claiming the grant for furloughed hours, employers will need to report and claim for a minimum period of a week. Individual firms will decide the hours and shift patterns their employees will work on their return so that they can decide on the best approach for them - and will be responsible for paying their wages while in work.

From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. 

The following will apply for the period people are furloughed:

  • June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
  • August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

2 May 2020
This scheme has been extended by four months, until at least October 2020.

From August 2020, the government will ask companies to "start sharing" the cost of the scheme. The scheme would continue for all sectors and regions of the country, but with greater flexibility to support the transition back to work. For example, employers currently using the scheme would be able to bring furloughed employees back part-time.

5 May 2020
1.7. Employee on Maternity Leave, contractual adoption pay, paternity pay or shared parental pay
Individuals who are on or plan to take Maternity Leave must take at least 2 weeks off work (4 weeks if they work in a factory or workshop) immediately following the birth of their baby. This is a health and safety requirement. 

The normal rules for maternity and other forms of parental leave and pay apply.

Although, your employer may need to calculate your average weekly earnings, if you were put on furlough and then started leave on or after 25 April 2020 for:

  • maternity pay
  • adoption pay
  • paternity pay
  • shared parental pay
  • parental bereavement pay

Your employer can claim through the scheme for enhanced (earnings-related) contractual pay for employees who qualify for the above.

If you’re getting Maternity Allowance while you’re on maternity leave, you cannot get furlough pay at the same time. If you have agreed to be put on furlough, you must contact Jobcentre Plus to stop your Maternity Allowance payments.

If you agree to go on furlough and end your maternity leave early, you will need to give your employer at least 8 weeks’ notice and you will not be eligible for furlough pay until the end of the 8 weeks.

If you are pregnant and about to start maternity leave you should start maternity leave as normal. If your earnings have reduced because you were off sick before your maternity leave started, this may affect your Statutory Maternity Pay. If your earnings have reduced because you were put on furlough and then you started family-related statutory leave on or after 25 April 2020, the amount you receive in pay should not be affected. If you started family-related statutory pay before 25 April 2020, your entitlement may be affected.

1.11. Apprentices
Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed.

However, you must pay your Apprentices at least the Apprenticeship Minimum Wage/National Living Wage/National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training. Meaning you must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.

29 April 2020

You must only provide bank details where a BACS payment can be accepted.

To reduce the risk of delaying your payment and/or being asked to provide the information again, make sure you:

  • provide only the employee information requested above 
  • submit one line per employee for the whole period
  • do not break up the calculation into multiple periods within the claim
  • do not split data by contract type
  • upload your file as an .xls, .xssx, .csv or .ods

24 April 2020
To see HMRC’s step by step guide with an example, click here.

20 April 2020
You can now claim for this scheme. Click here to go to the portal.

To claim, you will need the Government Gateway user ID and password you got when you registered for PAYE online.

Once you’ve claimed, you will get a claim reference number. HMRC will then check that your claim is correct and pay the claim amount by BACs into your bank account within 6 working days. If you have not heard from HMRC after 10 working days since you made the claim, you can contact them here

To claim, you will need:

  • To be registered for PAYE online
  • Your UK bank account number and sort code
  • Your employer PAYE scheme reference number
  • The number of employees being furloughed
  • Each employee’s National Insurance number
  • Each employee’s payroll or employee number
  • The start date and end date of the claim
  • The full amount you’re claiming for including employer National Insurance contributions and employer minimum pension contributions
  • Your phone number

You also need to provide either:

  • Your Corporation Tax unique taxpayer reference
  • Your Self Assessment unique taxpayer reference
  • Your company registration number

If you’re claiming for more than 100 furloughed employees, you’ll need to upload a file containing each employee’s:

  • Full name
  • National Insurance number
  • Payroll number (optional)
  • Furlough start date
  • Furlough end date (if known)
  • Full amount claimed

The format of the file you upload must be either:

  • .xls
  • .xlsx
  • .csv
  • .ods

After you have claimed you must:

  • Keep a copy of the claim reference number for your records
  • Keep a copy of your calculations in case HMRC need more information about your claim
  • Tell your employees that you have made a claim and that they do not need to take any more action
  • Pay your employee their wages, if you have not already

Find more information on the gov.uk website here

17 April 2020
1. What employees can I claim for?

Any employees you place on furlough must be furloughed for a minimum period of 3 consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.

What should I do next?
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.

To claim, you will need:

  • Your employer PAYE reference number

  • The number of employees being furloughed

  • National Insurance Numbers for the furloughed employees

  • Names of the furloughed employees

  • Payroll/employee number for the furloughed employees (optional)

  • Your Self Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number

  • 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

If you have fewer than 100 furloughed staff you will be asked to enter details of each employee you are claiming for directly into the system. If you have 100 or more furloughed staff you will be asked to upload a file (.xls .xlsx .csv .ods) with the information rather than input it directly into the system. 

You should retain all records and calculations in respect of your claims.

You should make your claim using the amounts in your payroll. Claims can be backdated until the 1 March 2020 where employees have already been furloughed. Wages should be reduced to 80% of their salary within your payroll before they are paid. This adjustment will not be made by HMRC.

15 April 2020
Who is it for? All UK Businesses that had or started a PAYE payroll scheme on 19 March 2020 are eligible (extended from the 28 February 2020) This includes:

What should I do next? If you use an agent who is authorised to act for you for PAYE purposes, they will be able to make a claim on your behalf, so please speak to them now. However, if you use a file-only agent (files your RTI return but doesn’t act for you in other matters), they won’t be able to make a claim for you and you will need to claim for yourself.

8 April 2020
HMRC launched beta testing for the furlough portal on 8th April 2020. The expected date for access to the portal is the 20th April 2020. We will update this briefing once the portal is live.

6 April 2020
How does it work?

Office Holders Office holders can be furloughed. The furlough, and any ongoing payment during furlough, will need to be agreed between the office holder and the party who operates PAYE on the income they receive for holding their office. Where the office holder is a company director or member of a Limited Liability Partnership (LLP), the furlough arrangements should be adopted formally as a decision of the company or LLP.

Company Directors As office holders, salaried company directors are eligible to be furloughed.

Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed.

Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.

Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, 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.

This also applies to salaried individuals who are directors of their own personal service company (PSC).

Salaried Members of Limited Liability Partnerships (LLPs) Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.

The rights and duties of a member of an LLP are set out in an LLP agreement and in the absence of an agreement, default provisions in the LLP Act 2000, based upon company and partnership law. Such an agreement may include separate agreement between the LLP and an individual member setting out the terms applicable to that member’s relationship with the LLP.

To furlough a member, the terms of the LLP agreement (or any such agreement between the LLP and the member) may need to be varied by a formal decision of the LLP.

27 March 2020
What employee I can claim for
Work out what you can claim
What I should do next

24 March 2020
First published.

Find out more about Mark Rusher

Mark Rusher

Mark Rusher

Mark is our Managing Partner.

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