This page is dedicated to new measures being brought in due to the COVID-19 virus that relates to PAYE and workplace pensions.
Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme is open to all employers who had created and started a PAYE payroll scheme by the 28th February 20. The scheme is currently due to run for three months and can be back dated to 1st March 20.
The company must be enrolled for PAYE online which can take up to 10 days.
Employers can use a portal to claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly costs, up to £2,500/mth, plus the associated employers NI and minimum automatic enrolment employer pension contribution on that wage. The employee’s wage will be subject to usual income tax and other deductions.
An employer can choose to top up an employee’s salary beyond the 80%, but this is up to the employer and at their own cost.
Fees, commission and bonuses should not be included when calculating the pay for a furloughed worker.
HMRC are currently working on the portal which will be used by employers to claim the grant, though this isn’t available yet. The scheme is expected to be launched on the 20th April 2020.
Employers should discuss the scheme with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process.
Who can claim?
Any UK organisation with employees can apply, including:
- Recruitment agencies (agency workers paid through PAYE)
- Public authorities
Where a company is being taken under the management of an administrator, the administrator will be able to access the Coronavirus Job Retention Scheme.
The government expects that the scheme will not be used by many public sector organisations. For further information click here.
Which employees can you claim for?
Furloughed employees must have been on your PAYE payroll on the 28th February 20, and can be on any type of contract, including:
- employees on agency contracts
- employees on flexible or zero-hour contracts
If an employee was made redundant since the 28th February 2020 they can be rehired and will then be covered by the scheme.
An employee, when furloughed, cannot undertake work for or on behalf of the organisation. This includes providing services or generation revenue.
Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.
Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.
If an employee is on sick leave or self-isolating they should get SSP, but they can be furloughed after this. If an employee is shielding in line with public guidance they can be furloughed.
If your employee has more than one employer they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.
For detailed guidance when an employee is on Maternity Leave, contractual adoption pay, paternity pay or shared parental pay please click here.
How do you calculate furloughed workers pay?
HMRC will cover the lower of 80% of an employee’s regular wage or £2,500/mth, plus the associated employers NI and minimum automatic enrolment pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%.
Grants will be prorated if the employee is only furloughed part way through an earnings period.
How do you calculate furloughed pay for variable pay workers?
If an 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, work out a pro-rata for their earnings so far, and claim for 80%.
Will the scheme cover additional workplace pension contributions?
Employer 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).
What do I need to make the claim?
To claim, you will need:
- your employer PAYE reference number
- the number of employees being furloughed
- NI numbers for the employees you want to furlough
- names of the employees you want to furlough
- payroll/works number for the employees you want to furlough
- 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
You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.
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. If you use a file only agent (who files your RTI return but doesn’t act for you on any other matters) they won’t be authorised to make a claim for you and you will need to make the claim yourself. Your file only agent can assist you in obtaining the information you need to claim (which is listed above). We are making the claim process as straightforward as possible.
How do you claim?
HMRC are currently working on the portal which will be used by employers to claim the grant, though this isn’t available yet. The first payments are expected to be made at the back end of April 2020.
Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.
You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.
To read the full detailed guidance please click here!
The government hasn’t released all the information on the Coronavirus Job Retention Scheme yet. We will update the page as and when further information is released.
- Under government rules entitled employees will now start to receive SSP from their first day of self-isolation due to COVID-19 under the government rules
- The UK government will cover the cost of 14 days SSP per employee, for those off with coronavirus. This only applies to small and medium sized businesses
- It’s not yet clear how an employer will claim back SSP from the government. It could be several months before systems are in place for the SSP to be refunded.
Entitled employees must receive SSP if they need to self-isolate because;
- they have coronavirus
- they have coronavirus symptoms, for example a high temperature or a new continuous cough
- someone in their household has coronavirus symptoms
- they’ve been told to self-isolate by a doctor or NHS 111
If someone has symptoms and lives alone, they must self-isolate for 7 days.
If someone lives in a household and is the first to have symptoms, they must self-isolate for 7 days. Everyone else in their household must self-isolate for 14 days.
If anyone else in the household starts displaying symptoms, the person with the symptoms must self-isolate for 7 days. This is regardless of where they are in the 14-day isolation period.
Click here to go directly to the government business support page for further details.
Time To Pay
- HMRC have set up a dedicated phoneline for COVID-19 queries relating to small businesses being unable to pay their taxes on time
- There will be options to defer or delay payment, whether this be for Corporation tax, PAYE, income tax or VAT.
- HRMC will also waive late payment penalties and interest.
Payroll Service Offer
Alderley Payroll Services – Coronavirus New clients – Your first 2 payrolls foc (or 4 payrolls for 4 or fewer employees) and remember there is no tie in period, no minimum charges, no payroll setup fees, no new employee setup fees, no leaver fees, no RTI filing fees, no year end P60 fees (a year end P60 fee applies where the total payslips in the tax year is fewer than 25) – click here!
Alderley Payroll Services – Coronavirus Existing clients – refer a new client and we will pay a monetary value equivalent to the new client’s saving for all referals who become a client – click here!