JOB RETENTION SCHEME
On Friday 20th March 2020 the Government announced the introduction of the Job Retention Scheme grant to help support employers who would otherwise need to make employees redundant.
The scheme will require employers to designate those effected workers as ‘furloughed workers’ on their payroll system. HMRC will reimburse 80% of furloughed workers wage costs up to £2,500 per month plus Employers NI and Pension contributions.
The Chancellor announced that this will be for 3 months initially from 1st March 2020 (extended to the end of June 2020 on 17th April 2020). On Tuesday 12th May 2020 it was announced that the Job Retention Scheme would be extended to October 2020.
WHO IS ELIGIBLE?
Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.
You must have:
created and started a PAYE payroll scheme on or before 19th March 2020
enrolled for PAYE online
a UK bank account
You can claim for employees on any type of employment contract, including full time, part time, agency, flexible or zero-hour contracts.
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.
HMRC have put together a comprehensive list of examples of who can and cannot claim which can be found here.
HOW DO YOU FURLOUGH EMPLOYEES?
To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming through the scheme. Collective agreement reached between an employer and a trade union is also acceptable for the purpose of such a claim. There needs to be a written record, but the employee does not have to provide a written response. A record of this communication must be kept for five years.
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.
HOW LONG DO YOU NEED TO FURLOUGH EMPLOYEES?
Any employees you place on furlough must be furloughed for a minimum 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 of 3 consecutive weeks. Each period of furlough can be extended by any amount of time whilst the employee is on furlough.
HOW MUCH CAN YOU CLAIM?
As an employer you can claim back 80% of the gross pay of the employee per month, up to a maximum of £2,500 and also employers NIC and employers pension contributions on top of this.
You can decide whether or not to top up the employees pay to 100% but this will need to be covered by the employer and not included as part of the claim.
You will process the pay through your payroll system and report to HMRC via RTI as normal.
HMRC has detailed guidance and examples of how to calculate employees pay including an online calculator which can be found here.
HOW DO YOU CLAIM FROM HMRC?
To make a claim, you will need:
to be registered for PAYE online
your UK bank account number and sort code (only provide bank account details where a BACS payment can be accepted)
the billing address on your bank account (this is the address on your bank statements)
your employer PAYE scheme reference number
the number of employees being furloughed
each employee’s National Insurance number (if you have one or more without a National Insurance number please contact HMRC)
each employee’s payroll or employee number (optional)
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 name (or the employer’s name if you’re an agent)
your Corporation Tax unique taxpayer reference
your Self Assessment unique taxpayer reference
your company registration number
If you use an agent who is authorised to do PAYE online for you, they will be able to claim on your behalf.
If you have over 100 employees to make a claim for you will be required to upload a file containing the information for each employee.
The Online portal opened on Monday 20th April 2020 and so claims are able to be made now.
HMRC have put together a step by step guide of how to make a claim which can be found here.
For further information of how to make a claim and the information required please see HMRC guidance here.
WHEN WILL YOU RECEIVE THE GRANT FROM HMRC?
Once you’ve claimed, you’ll 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 any questions or need help in making a claim please feel free to contact us.