Here are some updates and reminders on the above scheme.
Getting ready to make your first furlough grant claim
The online service we will all use to claim is not available yet. HMRC expect it to be available by 20th April.
If Bayliss Ware operate your payroll, rest assured we are gearing up to make the first claims for you. It has been confirmed that we can do so on your behalf, as long as we are registered with HMRC as your agent for PAYE.
The first claims will include the appropriate period in March from when you first furloughed staff, plus April. Let us know the bank account to which you would like the grant sent.
Note that if you cannot afford to pay your staff until the grant arrives, you should still run their pay and give them their payslips. Then you would pay the wages as soon as the grant comes. HMRC are saying –
- claims will be paid within 6 working days; you should not contact us unless it is absolutely necessary – any queries should be directed to your agent, representative or our webchat service
A reminder of the scheme as published by HMRC
If you cannot maintain your current workforce because your operations have been severely affected by coronavirus (COVID-19), you can furlough employees and apply for a grant that covers 80% of their usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and pension contributions (up to the level of the minimum automatic enrolment employer pension contribution) on that subsidised furlough pay.
This is a temporary scheme in place for 3 months starting from 1 March 2020, but it may be extended if necessary and employers can use this scheme anytime during this period. It is designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy. However, all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus.
A significant extension from when you can claim
HMRC have just reported that you can now claim for employees that were present on a registered PAYE payroll scheme who started on or before 19 March. This is an improvement on the previous date which was 28 February.
BUT you can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020.This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020.
This has just been published and we can only read it literally at present. The RTI submission is automatically made to HMRC via payroll software, when the payroll is run. This seems to rule out new employees that started in March by 19th but are paid monthly and the payroll was run at the end of the month. We will report any clarification to this as it arises.
Date also changed from when you can base the wages on which you are claiming
For full or part time employees on a salary –
Claim for the 80% of the employee’s salary, as in their last pay period prior to 19 March 2020.
If, based on previous guidance, you have calculated your claim based on the employee’s salary as at 28 February 2020 (and this differs from their salary in their last pay period prior to 19 March 2020) you can choose to still use this calculation for your first claim.
To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation or any linked or associated organisation. This includes providing services or generating revenue. Employers are free to consider allocating any critical business tasks to staff that are not furloughed. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.
Further confirmation that directors can be furloughed
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 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.
This also applies to salaried individuals who are directors of their own personal service company.
Get your records right
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.
Claims will be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they write to confirming their furloughed status.
The way you work out your employees’ wages is different depending on what type of contract they’re on, and when they started work.
You should retain all records and calculations in respect of your claims.
Minimum furlough periods
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.
After you’ve claimed
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 in the form of money.
Furloughed staff must receive no less than 80% of their reference pay (up to the monthly cap of £2500).
Employers cannot enter into any transaction with the worker which reduces the wages below this amount. This includes any administration charge, fees or other costs in connection with the employment.