The latest guidance from HMRC was finally out last night and their portal opens 8am Monday. There are still some unanswered questions for HMRC, which the accountancy & tax professions are pushing for answers on, but the standard information is clearer now.

There are some fiddly bits, but most of the ‘we don’t know yets’ probably won’t affect most payrolls – but let us know if you have any employees on payroll with no NI number (eg from overseas or under 16yo), or any of zero hours contracts, or any new starters in late Feb/March, these are all trickier.

If we are preparing your claim, for example because we already operate your payroll, we will already have been in touch with you.

These are notes for those employers who are preparing their own grant claims.

The process:

You will login through your employer’s Govt Gateway but you’ll need to also be registered for PAYE online and have an ePAYE number. Do this here: https://www.gov.uk/paye-online/enrol

It may be a struggle to get the claim uploaded, paid and into your account by 25th April, if you’re a ‘last Friday’ payday, but hopefully by 30th April, but this all depends on whether the portal is stable to cope with the millions of users!

If you don’t have funds to make the April payrolls, you should put a contingency plan in place.  Speak to us if you need further help with this.

You’ll make your first grant claim for March and April together, then one per pay period after that.  You can upload your grant claim from 14 days before the payday.

Get all your information ready for the claim – suggest you’ll need a spreadsheet! You’ll have to enter all furloughed employees individually if you have less than 100, you can bulk upload an excel spreadsheet if you have more than 100 employees to claim for.

There is no ‘save and return’ option and you’ll be kicked off after 30 mins of inactivity – so keep doing keystrokes to keep yourself on there, whilst you check information.  Try and be as prepared as you can be before you logon.  There will be a calculator on the portal if you are stuck but try and work it out yourself on spreadsheet first, as that will be quicker.

Common situations:

1. Holiday Pay – you can allow holidays and it doesn’t break furlough (which otherwise needs to be a min of 3 weeks each time); but you have to claim just 80% for the grant amount and then top up to 100% for your payroll; same for bank holidays, if they’re normally taken as leave. Or you can just assume it’s a working-furlough-day, claim the furlough amount and add their extra holiday days onto entitlement for ‘post lockdown’.  Your decision probably depends on how much all these accrued holidays are going to cause you a problem later in the year. You need to remember that the holiday top up element is not just basic pay that you might have used to calculate the furlough grant element but should include commission, bonuses etc.
2. If you normally claim £4k NI employment allowance (based on your business’ last year’s Class 1 Employers NIC being less than £100k) then you still have to take that in April, and until it’s used up. You will probably need to do some working out of this on a spreadsheet, as the Employers NIC element of your grant must be the lower amount.
3. The worked examples on the HMRC handout show how to calculate pro-rata pay and NIC for furlough/non-furlough days –you include all dates in the month, 7 days a week.  If you are using average pay because they had uneven pay amounts, check what you can and cannot include (list on handout) and note that you need to average it for the tax year 2019/20 up to the date each employee was furloughed – using number of days from 6^th April 2019 until the date they were furloughed (if before 6/4/20).

Suggestions:

1. Prepare a reconciliation sheet of your grant claim and eventual payrolls – there may be some adjustments to make such as topping up apprentices to App Min Wage, topping up holiday pay, or pension contributions, for example;
2. If there is anything you’re not sure about, make a judgement and note why you considered that to be the correct treatment. Then you can check in the coming days/weeks when things are clearer and adjust either grant claims and/or payrolls next time.
3. Make sure you write down the submission number or take a screen shot as HMRC are advising an email confirmation will not be sent!

The Job Retention Scheme is a really important tactic for businesses looking to retain good employees and save cash. We’ve updated our notes on the scheme, which is copied below for reference.

About the CJRS and Updates (including guidance 4/4/2020)

1. HMRC will be the body that administers the grant scheme.
2. Now confirmed that Charitable and not for profit organisations will be eligible.
3. Whilst the scheme is backdated to the 1 March grants will only be available when employers have agreed furlough terms with their employees and they have stopped work, subject to employment law in the usual way.
4. Available to all employees on the payroll at 29 February.
5. The employer will pay the employee through payroll and as such RTI submissions will still be maintained. This actually makes a lot of sense as it is a system that already works well.
6. Relevant employees must be designated as furloughed employees.
7. The scheme will not cover dividends where directors/ shareholders of owner managed companies pay small salaries and the balance as dividends.
8. The grant will cover all employment costs including; salary, employer pension contributions and employer NIC.
9. The grant will be taxed and should be included in the profits computation for the relevant year.

What you’ll need to make a claim

To make a claim you will need the following information:-

• your ePAYE reference number
• the number of employees being furloughed
• the claim period (start and end date)
• amount claimed (see note – how much can you claim)
• your bank account number and sort code
• your contact name
• your phone number.

HMRC advise that business owners will need to calculate the amount you are claiming. However, HMRC will retain the right to retrospectively audit all aspects of a claim.

HMRC advise that claims can be made using payroll data either “shortly before or during running payroll.”

How much you can claim?

• 80% of your employees’ wages up to a maximum of £2,500.
• Minimum automatic enrolment employer pension contributions on the subsidised wage.
• Grants will be prorated if your employee is only furloughed for part of a pay period.
• Claims should be made from the date the employee finished work and starts on furlough leave, not when the decision is made or they were written to.
• Employers National Insurance contributions.

Funding problems

One of the problems with the scheme is the delay in being able to make claims and receive funds. The grant covers a period of three weeks and could split a payroll period if it falls in between. If an employee was furloughed on 20 March there could be 11 days available for the March claim.

The employer would need to pay the employees net pay on 31 March and 30 April well before potentially being able to make a claim in early May for receipt sometime in mid to late May.

Whilst we can’t be sure this will apply for all businesses, Banks may be willing to extend or arrange overdrafts for a limited time for the amounts expected to be claimed.

Original Article (published 21 March)

The Government has announced a new scheme to protect people’s jobs during the crisis. The scheme is open to all UK businesses and will see the Government pay part of the wages of employees that would otherwise have been laid off. The scheme will be open for an initial three months from 1 March however Rishi Sunak said “… and I will extend the scheme for longer if necessary”.

This is a grant from the Government, not a loan, so it will not need to be repaid.

To access the scheme employees, or certain employees, need to be designated as “furloughed workers”. You will need to notify these workers of the change, in writing (email will be fine) making sure you follow a fair selection process.

It’s worth noting that the Government is not changing employment law to allow this to change in status. Therefore, making this change to an employee’s status remains subject to employment law.

You have the option of topping up the remaining 20%, but it is not mandatory.

You must not make the employees redundant and guidance will most likely be issued, in due course, about the time frame the Government expects you to keep them employed after society and business can return to normal. If you have already laid staff off, you can reverse this decision if you wish, as this scheme is backdated to 1st March.

HMRC are developing a system that will allow employers to provide this information through an online portal and once processed they will issue reimbursement. At the time of writing this (21 March 2020) there was no method of reimbursing these costs and the system isn’t expected to be available until April. Therefore, managing cash during this intervening period is still crucial.

There is a cap on the reimbursement of £2,500 of the employee’s wage costs per month, based on their regular salary. It should also be noted that the employee should be shown on the February pay run and that a claim will be possible for periods from 1 March 2020.

It is not clear yet how much those on zero hours’ contracts or fluctuating wages will be treated, but it is expected that it will be either the amount which was paid through last month’s payroll or an average of the past few months.

Careful planning and consideration of employee’s contracts of employment is required when considering this scheme but it is certainly a significant boost to companies in what are unprecedented times.