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Business Services  •  Coronavirus Advice  •  Payroll Tax

Coronavirus: Preparing to use the Furlough Scheme – Payroll Information Needed

By RJP LLP on 14 April 2020

The government’s Coronavirus Job Retention Scheme (furlough scheme) portal is currently being beta tested and the site is expected to be operational by 20 April 2020. To ensure you can make claims promptly when the portal becomes available, employers should start gathering the information to claim for furloughed employees, including sourcing all the relevant information which will be required.

Who can claim?

Any UK business organisation with employees can apply, including:

  • Businesses;
  • Charities;
  • Recruitment agencies (for agency workers paid through PAYE);
  • Public authorities.

It is necessary to have created and started a PAYE payroll scheme on or before 28 February 2020 and to have a UK bank account.

Employees you can claim for

Furloughed employees must have been on your PAYE payroll on 28 February 2020 and can be on any type of employment contract.

If you made an employee redundant after 28 February, you can claim for them if you re-hire them.

Whilst on furlough, the employee’s wage will be subject to the usual income tax and national insurance contributions.

To be eligible, an employee cannot do any work for or on behalf of your organisation, including providing services or generating revenue.

For the organisation to be eligible to make a claim for any employee, you should write to them confirming they have been furloughed and keep a record of the communication.

If putting staff on furlough requires changes to their employment contract, these changes should be made by agreement and it may be necessary to seek legal advice.

Information required for furlough grant claims

The following information will be needed to process each application through the government portal from 20 April 2020:

  • The organisation’s ePAYE reference number;
  • The number of employees being furloughed;
  • The claim period (start and end date);
  • The amount claimed (per the minimum length of furloughing of 3 weeks);
  • The organisation’s bank account number and sort code;
  • A contact name at the organisation;
  • A contact phone number at the organisation.
  • The total amount being claimed for all employees and the total furlough period.

Employers will need to calculate the amount they are claiming. HMRC will retain the right to retrospectively audit all aspects of every claim.

Using RJP as your payroll agent

For employers who have authorised RJP as an agent for PAYE purposes, we will be able to make the claim on your behalf. Where we do your payroll for you, we will contact you separately for the required information.

If you use RJP as a ‘file only agent’ (this means we file your RTI return but don’t act for you on any other matters), we won’t be authorised to make a claim for you and you will need to make the claim yourself.

Making a furlough grant claim

As an employer, you will be making a claim for allowable wage costs through the scheme. These are as follows and on making a claim you will receive a grant from HMRC to cover the amounts you have calculated, being:

  1. The lower of 80% of an employee’s regular wage or £2,500 per month, plus
  2. The associated employer national insurance contributions; plus
  3. The minimum automatic enrolment employer pension contributions on that subsidised wage.

These amounts should be calculated by you when making the claim  and any fees, commission and bonuses should not be included.

The minimum amount you must pay each furloughed employee is the lower of 80% of their regular wage or £2,500 per month. You can choose to top up an employee’s salary beyond this but are not obliged to under the scheme, and any top-up salary together with associated employers’ national insurance contributions and pension contributions will not be funded through the scheme.

Employees whose pay varies

If the employee has been employed by your organisation for a full twelve months prior to the claim, you can claim for the higher of either:

  • The same month’s earnings from the previous tax year; or
  • Their average monthly earnings from the 2019/20 tax year.

If the employee has been employed by your organisation for less than a year, you can claim for the average of their monthly earnings since they started work with you.

If the employee only started in February 2020, you should use a pro-rata of their earnings so far.

National Living Wage/ National Minimum Wage

A furloughed worker who receives 80% of their salary may as a result receive a wage which is below the NLW/ NMW.

If however they are required to complete for example online training courses whilst they are furloughed, they must be paid at least the NLW/ NMW for that period, even if it exceeds 80% of their usual salary.

Claim

You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed. Claims can be backdated to 1 March 2020 if the employee has been furloughed since that date.

HMRC has suggested the first payments will be made around 30 April 2020 for the earliest applicants.

Further information

More detailed information on using the furlough scheme and individual eligibility criteria, for instance, if you have employees on unpaid leave, or are an individual with an employee e.g. a nanny, is available in the latest guidance from the government: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

To contact us for support with the furlough scheme email payroll@rjp.co.uk

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The government’s Coronavirus Job Retention Scheme (furlough scheme) portal is currently being beta tested and the site is expected to be operational by 20 April 2020. To ensure you can make claims promptly when the portal becomes available, employers should start gathering the information to claim for furloughed employees, including sourcing all the relevant information which will be required.

Who can claim?

Any UK business organisation with employees can apply, including:

  • Businesses;
  • Charities;
  • Recruitment agencies (for agency workers paid through PAYE);
  • Public authorities.

It is necessary to have created and started a PAYE payroll scheme on or before 28 February 2020 and to have a UK bank account.

Employees you can claim for

Furloughed employees must have been on your PAYE payroll on 28 February 2020 and can be on any type of employment contract.

If you made an employee redundant after 28 February, you can claim for them if you re-hire them.

Whilst on furlough, the employee’s wage will be subject to the usual income tax and national insurance contributions.

To be eligible, an employee cannot do any work for or on behalf of your organisation, including providing services or generating revenue.

For the organisation to be eligible to make a claim for any employee, you should write to them confirming they have been furloughed and keep a record of the communication.

If putting staff on furlough requires changes to their employment contract, these changes should be made by agreement and it may be necessary to seek legal advice.

Information required for furlough grant claims

The following information will be needed to process each application through the government portal from 20 April 2020:

  • The organisation’s ePAYE reference number;
  • The number of employees being furloughed;
  • The claim period (start and end date);
  • The amount claimed (per the minimum length of furloughing of 3 weeks);
  • The organisation’s bank account number and sort code;
  • A contact name at the organisation;
  • A contact phone number at the organisation.
  • The total amount being claimed for all employees and the total furlough period.

Employers will need to calculate the amount they are claiming. HMRC will retain the right to retrospectively audit all aspects of every claim.

Using RJP as your payroll agent

For employers who have authorised RJP as an agent for PAYE purposes, we will be able to make the claim on your behalf. Where we do your payroll for you, we will contact you separately for the required information.

If you use RJP as a ‘file only agent’ (this means we file your RTI return but don’t act for you on any other matters), we won’t be authorised to make a claim for you and you will need to make the claim yourself.

Making a furlough grant claim

As an employer, you will be making a claim for allowable wage costs through the scheme. These are as follows and on making a claim you will receive a grant from HMRC to cover the amounts you have calculated, being:

  1. The lower of 80% of an employee’s regular wage or £2,500 per month, plus
  2. The associated employer national insurance contributions; plus
  3. The minimum automatic enrolment employer pension contributions on that subsidised wage.

These amounts should be calculated by you when making the claim  and any fees, commission and bonuses should not be included.

The minimum amount you must pay each furloughed employee is the lower of 80% of their regular wage or £2,500 per month. You can choose to top up an employee’s salary beyond this but are not obliged to under the scheme, and any top-up salary together with associated employers’ national insurance contributions and pension contributions will not be funded through the scheme.

Employees whose pay varies

If the employee has been employed by your organisation for a full twelve months prior to the claim, you can claim for the higher of either:

  • The same month’s earnings from the previous tax year; or
  • Their average monthly earnings from the 2019/20 tax year.

If the employee has been employed by your organisation for less than a year, you can claim for the average of their monthly earnings since they started work with you.

If the employee only started in February 2020, you should use a pro-rata of their earnings so far.

National Living Wage/ National Minimum Wage

A furloughed worker who receives 80% of their salary may as a result receive a wage which is below the NLW/ NMW.

If however they are required to complete for example online training courses whilst they are furloughed, they must be paid at least the NLW/ NMW for that period, even if it exceeds 80% of their usual salary.

Claim

You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed. Claims can be backdated to 1 March 2020 if the employee has been furloughed since that date.

HMRC has suggested the first payments will be made around 30 April 2020 for the earliest applicants.

Further information

More detailed information on using the furlough scheme and individual eligibility criteria, for instance, if you have employees on unpaid leave, or are an individual with an employee e.g. a nanny, is available in the latest guidance from the government: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

To contact us for support with the furlough scheme email payroll@rjp.co.uk