28th March 2020
Since our previous article there has been some further detailed guidance published in regards to the employee Job Retention Scheme (for furloughed worker) which we can now detail below.
Which employees can claims be made for?
The government guidance now includes zero hour workers and those on agency contracts as those who may be treated as furloughed. Please note that if an employee is working reduced hours or is on reduced pay they will not be eligible for this scheme.
What can be claimed for?
The grant can cover 80% of an employee’s regular wage or £2,500 per month, PLUS the associated employer NIC contributions and the minimum automatic enrolment employer pension contributions on that subsidised wage.
This is a significant development, as before it was thought the employer NIC and pension payments would form part of that 80% payment cap. HMRC said they will issue further guidance on how to calculate these claims prior to the scheme going live.
Practicalities of making a claim
– Information Needed
As mentioned before, employers will need to agree with staff any changes to their contract and legal advice may need to be sought. When making a claim to HMRC the following needs to be provided:
Employers will be required to calculate the amount they are claiming for.
– After the claim
HMRC will make BACS payments direct to the employer. All money must be paid as gross pay to the employee, no fees can be charged from grant money.
Other tax matters
Payments made to furloughed workers will be subject to tax in the usual way. Staff will continue to pay automatic enrolment contributions into a pension scheme, unless they have opted out.
Grants received by an employer will be taxable earnings when calculating taxable trade profits. Though the payments made to furloughed employees will be treated as deductible revenue costs (so the overall impact should be neutral).
When any further information is made available we will let you know.
Please remember we are here to help as much as possible through these challenging times. We will continue to keep you updated as further announcements are made over the coming days.
Links to our other articles.