Although the online service to facilitate claims is not available yet, the government has issued some further refinements and responses to questions in relation to the Coronavirus Job Retention Scheme. The full details can be accessed online www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme/
There is now a lot of information available to cover specific working practices and situations. We have noted below some of the key clarifications from the update on 4 April both in relation to amounts which can be claimed and those which cannot.
More about who can claim
- Office holders, and salaried company directors, including those who are directors of their own personal service companies who receive salaries. See our separate update ‘Office Holders and Company Directors – where are we now?’
- Private individuals who are employers can furlough employees such as nannies;
- Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme on the assumption that an administrator would only access the scheme if there is a reasonable likelihood of rehiring the workers
- Employees who are unable to work because they have caring responsibilities such as the need to look after children, resulting from coronavirus (COVID-19) can be furloughed
- Employees are permitted to work for another employer whilst on furlough if the contract of employment allows this or the employer otherwise agrees
- Members of LLPs who are deemed to be employees for tax purposes (‘salaried members’) are eligible to be furloughed and receive support through this scheme.
- Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.
More about how much can be claimed (the ‘reference salary’ amount)
- All claims should be made using the amounts in payroll either shortly before or during running payroll. If relevant, worker’s wages should be reduced to 80% of their salary within the payroll before they are paid as this adjustment will not be made by HMRC.
- Employers can claim for any regular payments they are obliged to pay to their employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded from the calculations.
- The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind.
- Similarly, benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay also should not be taken into account.
- Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.
Some specific points should be noted as to sums the employer cannot claim for
- Additional National Insurance or pension contributions made because the employer has chosen to top up the employee’s salary.
- Any pension contributions that are above the mandatory employer contribution.
Administrative points of note
It should be noted that HMRC states clearly that claimants must pay the employee all the grant amount received as gross pay, no fees can be charged from the money that is granted.
In addition, 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 and so should be carefully considered.
To be eligible for the grant employers must confirm in writing to their employee that they have been furloughed. A record of this communication must be kept for five years.
Our primary focus is supporting you and your business through this uncertain time. Please contact the Mercer & Hole team to discuss.