Updated 12th April 2020 13:45
Recent announcements about the claim process
On 12th May the chancellor announced further information in relation to the extension of the existing job retention scheme. The key points from the announcement were as follows:
- The scheme will be extended to 31 October 2020 (previously 30 June 2020);
- The scheme will operate unchanged from existing rules until 31 July 2020;
- From 1 August ‘new flexibility will be introduced’ allowing employers to bring back furloughed workers on a part time basis. From this date employers will be expected to contribute to payments to furloughed workers, with the government also continuing to contribute. This will see workers continue to receive payments of 80% of salary costs, but via a combination of employer and government contributions; and
- There will be no sector or geographical restrictions imposed.
Full details of the changes to the scheme effective from 1 August 2020 will be released by government by the end of May 2020. This page will be updated to cover this details as they become available.
The chancellor announced on the 17th April that the scheme has now been extended until at least 30 June 2020. This is welcome news, providing increased certainty for businesses in the coming months.
HMRC has confirmed the portal for submitting claims will be open from 8am on Monday 20 April, together with a calculator to help employers determine what can be claimed. A step by step guide for employers has also been released which can be accessed on the following link.
HMRC has also provided further clarification on a number of areas in its guidance for employers. There is new information added on the scheme extension, fraud, claims for employees you made redundant or who stopped working for you, fixed term contracts, agency workers and retaining records. Also, a new guide has been published with information on holiday pay, employees returning from family-related statutory leave and sick pay, how to treat grant payments in Real Time Information and how to claim – see link.
HMRC announced on the 8th April that they expect that the portal to enable the grant to be accessed will be launched on 20 April. Jim Harra, Chief Executive of HMRC, told the Treasury Committee on the same day that claims will then be dealt with within 4 to 6 working days, so the cash should be in the employer’s bank account by the end of April.
This is positive news and will hopefully allay some fears that the grant will not being received until a much later date.
It is important that businesses have their reference number for the PAYE online service. Whilst for most clients who have recently accessed the government gateway you will be able to add this service, we are aware that some clients have experienced problems with selecting the relevant options (see below). If this occurs contact HMRC – 0300 200 3600 (Technical support) or 0800 024 1222 (COVID) as they will need to reset your registration. For those who have not previously registered online this enrolment process may take up to 10 days.
Enrol for PAYE online
- If you already have an online account for other taxes, e.g. Corporation Tax or Self-Assessment then login to your Government Gateway account and select the option to enrol for ‘PAYE for Employers’ under ‘Services you can add’ and enter your details.
- If you don’t have an online account, then you will need to enrol as a new user at the following https://www.gov.uk/paye-online/enrol and select ‘PAYE for Employers’ under ‘Organisation’. Once you have completed the registration process you will need to wait for a letter from HMRC containing your activation code which will be valid for 28 days.
Information required to claim this grant
- You will need the following information:
- 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 (the minimum length of furloughing is 3 consecutive weeks)( Note whilst not on the government website at the HMRC Employment and Payroll group meeting they stated that this would need to be split between gross, employers National Insurance and pension contribution by employee. We wait to see if this becomes official policy)
- your bank account number and sort code
- your contact name
- your phone number
The government have said that it is up individual businesses to calculate the amount that is to be claimed.
How to Claim this grant
For entities with less than 100 furloughed staff you will need to enter the following details directly into the portal for each employee (presumably line by line):
- Employees name
- National Insurance number
- Claim period
- Claim amount
- Payroll/employee number (optional)
For entities which have 100 or more furloughed staff you will be asked to upload a file with the above information into the portal. HMRC have said they will accept .xls xlsx .csv .ods file types.
HMRC will then review your claim and if eligible pay the grant into your UK bank account by BACS
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.
The basic details are set out below, however we advise that you review the detailed government guidance before making any decisions on your workers.
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage (3%). Employers can top up salaries, however this would be at the employer’s expense, including associated employer’s national insurance and pension contributions. Whichever option the employer choses the normal employee taxes will still need to be calculated and deducted. Support will initially be available for the three month period from 1 March 2020 to 31 May 2020 but may be extended further.
Who is eligible?
- The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 19 March 2020. (amended 15th April from 28 February)
- Eligible workers must have been on your PAYE payroll on or before 19 March 2020 and an RTI submission including those individuals made to HMRC on or before 19 March.
- The scheme is available to anyone on any of the following types of contract:
- full-time employees
- part-time employees
- employees on agency contracts
- employees on flexible or zero-hour contracts
- As well as employees, the grant can be claimed for any of the following groups, provided they are paid via PAYE:
- office holders (including company directors)
- salaried members of Limited Liability Partnerships (LLPs)
- agency workers (including those employed by umbrella companies)
- limb (b) workers (those who pay tax on their trading profits through self-assessment may instead be eligible for the Self Employed Income Support Scheme.
- More details for each of the above groups can be found on the government website.
- The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
- Employees already absent should be dealt with as follows:
- o Those on unpaid leave on 28 February 2020 cannot be included until after the date which it was agreed the individual would return from unpaid leave.
o Those on short-term sick leave, or self-isolating, should be paid SSP until they are fit to return to work. They may be furloughed from the point they can return to work.
o Those who are shielding under public health guidance or are on long term sick leave can be furloughed.
o Those unable to work due to care responsibilities arising as a result of COVID-19 can be furloughed, this includes those unable to work due to childcare commitments.
Furlough of Company Directors
Whilst the government have confirmed that it is possible to furlough Company Directors, care should be undertaken to ensure that furloughed individuals are able to comply with the restrictions placed on the duties that can be undertaken during any furlough period. The government have issued the following guidance on this matter:
As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. 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, i.e. 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.
The statutory duties of a company director are set out in the Companies Act – https://companieshouse.blog.gov.uk/2019/02/21/7-duties-of-a-company-director/
Directors will need to carefully interpret whether the duties that the will be required to perform during any furlough period are compatible with the duties set out in the Companies act. Should you require any support in interpreting your individual position then please contact your usual Clive Owen contact.
What can you claim for?
- Eligible costs for determining the 80% rate are to be benchmarked as follows:
- Those paid a regular monthly amount should be based on February 2020 gross pay (includes past overtime, fees and compulsory commission, but excludes discretionary bonuses (including tips) commission payments and non-cash payments.
- Those with variable pay are more complex:
- If employed for 12 months or more you can claim the higher of either:
- same month’s earnings from the previous year; and
- average monthly earnings for 2019-20
- Where an employee has been employed for less than 12 months the 80% claim will be based on their average monthly earnings since they started
Other factors to consider
- Furloughed workers cannot undertake any work whatsoever during the period of furlough. There is no option to offer reduced working hours. It is not necessary to furlough all employees. The minimum furlough period is three weeks. Employees can be furloughed multiple times, but each must be a minimum of 3 weeks.
- Employees with multiple jobs can be furloughed by one or more employers.
- Employees can undertake volunteer work provided they do not provide a service or generate a revenue for the employer
- Apprentices on furlough can engage in training provided they do not provide a service or generate a revenue for the employer. They must be paid at least the Apprenticeship Minimum Wages, National Living Wage or National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time spent on this training.
- Employers wishing to access the scheme should designate affected employees as ‘furloughed workers,’ and notify your 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
- All grants received will be taxable income for corporation / income tax purposes
- Guidance for your employees is also available via the government website
Read more about the Coronavirus job retention scheme:
Read more about Coronavirus Financial support: