01 Apr The Job Retention Scheme Overview
COVID19 1 April 2020
HMRC is in the process of setting up a new portal from which you will be able to make the claims for the 80% grant to pay your employees. We do not know when this is likely to be up and running.
Job retention scheme overview
Employees you can claim for:
1. Employees – can only be furloughed if they were employed on 28th February 2020.
The scheme includes employees on a flexible or zero-hour contract along with employees on agency contracts.
If you have an employee on Maternity leave they are still paid SMP in the usual way, however if you offer enhanced (earnings related) contractual pay to your maternity employees this is a wage cost and you can claim through the scheme as per the scheme guidelines.
2. Directors – It is our understanding that Directors can be furloughed; however, we are awaiting full details of how the scheme will operate from HMRC, including for directors paid via PAYE but not receiving a consistent, regular monthly salary. We understand the intention of the scheme is to include those on irregular earnings, but full details on how the amount of the grant will be calculated for these individuals have yet to be released. As with other businesses, such directors would need to have been on the payroll on 28 February 2020 and they cannot work while they are on furlough leave. We do not yet know the extent to which minor directorial duties would be disregarded, or whether the requirement that a furloughed employee should do ‘no work’ would prohibit this. We will update all directors as soon as we receive further information.
What Employers can claim
1. If you have furloughed any employees you will be entitled to claim 80% of the furloughed employees’ usual monthly wage costs, up to a maximum of £2500.00 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. (further guidance on how to calculate these claims will be released prior to the portal going live)
2. The 80% will be based on the employee’s regular wage and will not include any overtime, bonuses or commission.
3. For employees where pay varies:
If they have been in employment with you for at least 12 months you can claim the higher of the same month’s earnings the previous year or the average monthly earnings from the 2019-20 tax year,
4. If they have been employed less than a year you would need to claim for an average since employment began.
5. Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working. Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.
Criteria of the scheme
1. Where you have furloughed employees, this should be done in writing with written acceptance from your employee and a copy kept on file.
2. You must furlough workers for a minimum of 3 weeks to be eligible.
3. Whilst on furlough the employee is not allowed to undertake any work for you.
4. You will only be able to submit a claim once every 3 weeks, this means for employers paying their employees weekly you will need to either pay staff out of your cash until the funding comes through or speak to your employees and advise them that they will only be paid once every claim is processed.
5. This scheme is only for 3 months from 1st March 2020.
Ways to help with cashflow
Government and Local Authority backed schemes
1. Apply for the Business Interruption Scheme loan with your bank, this is a government backed scheme and as such they will pay the interest for the first 12 months so you will benefit from lower initial monthly repayments and no upfront costs.
2. You may be eligible for business rates deferral, contact your council to ask for time to pay. If you are in the Retail, hospitality and Leisure industry you will be eligible for a business rates holiday for the 2020/2021 year.
3. Small business grant scheme for businesses that pay little or no rates due to small business rate relief (SBRR) or rural rate relief (RRR), which is a one-off grant of £10,000. If you are eligible for this your local authority will contact, you. Should you wish to clarify if you are eligible you can give them a call. However, you will be eligible only if you have a business rates account with your local council.
4. If you are in the Retail, hospitality and Leisure industry you may be eligible for a grant. If your property has a rateable value of up to £15,000 you may be eligible for a grant of £10,000.
5. If your property has a rateable value of £15,000 to £51,000 you may be eligible for a grant of £25,000. If you are eligible for this grant your local authority will write to you, if you have not yet received anything and want to know if you are eligible you can call your local authority.
1. Vat deferral of any VAT payment due between 20th March and 30th June 2020 (this will need to be paid by 31st March 2021)
2. HMRC have set up a time to pay department whereby you can contact them and arrange payment terms on any tax outstanding on an individual basis
3. If you have a second payment on account due on 31st July 2020 you can defer this until 31st January 2021 if necessary.
Further possible options
1. If you are unable to pay the 80% wages prior to receiving the funding from HMRC you can talk to your employees and agree with them that they will get paid once the portal is up and running
2. Ask your landlord for time to pay the rent
3. Contact all suppliers and ask for time to pay or set up payment plan.
4. Speak to your bank about a temporary overdraft or short-term loan
If you have any questions please email Sue on email@example.com and we will get back to you as soon as possible. We will continue to provide further details on the various COVID-19 support packages as we become aware of them.
We hope that you and your families and loved ones are kept safe and well through these difficult times.