HMRC have revised their guidance notes on the Job Retention Scheme. Here are the key updates giving clarity on who can be furloughed plus what you can (and cannot) claim for.
At the end of this post, you will find links to the government advice pages. We recommend you visit both pages to ensure you are fully up to date with the latest guidance.
What you need to make a claim
To make a claim you must have:
- Created and started a PAYE payroll scheme on or before 28 February 2020
- Enrolled for PAYE online – this can take up to 10 days
- A UK bank account
If you do not have access to PAYE online, we advise that you apply for this now to ensure it is set up for when the HMRC portal opens (towards the end of April).
Who can be furloughed
Employees can be furloughed multiple times
HMRC have clarified that employees can be furloughed multiple times, (i.e. furloughed and then brought back to work and furloughed again) so long as each period of furlough is a minimum of three weeks. Whilst this always appeared to be the case, clear guidance is welcome.
Directors can be furloughed
Again, whilst we knew this anyway, HMRC have clarified that Company Directors can be furloughed. Directors who are furloughed must not provide any work for the company but can still perform their Directors’ Statutory duties.
Employees can start a new job whilst furloughed
HMRC has clarified that a furloughed employee CAN start a new job – meaning furloughed staff could earn 80% of wages from one employer and 100% of wages from the new employer!
Employees with caring responsibilities
Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For example, employees that need to look after children can be furloughed. This is a somewhat vague and inconclusive statement, but we believe it means that, if you have an employee who is currently taking unpaid emergency leave or holidays to look after children or family members AND YOU DO NOT HAVE WORK FOR THEM TO DO, you are able to apply for the grant for them too.
What you can claim for
YOU CAN claim for:
Compulsory Commission Payments, Fees and Overtime
Whilst previous guidance had indicated that bonus and commission payments could not be included in any claim, HMRC have clarified that compulsory commission payments CAN be included. This is likely to include contractual commission payments. Anything that is discretionary remains excluded. Fees (there is no definition of what constitutes a fee) can also be included.
Past overtime payments
Unfortunately, there is no guidance on whether this includes overtime which is sporadic or only applies to that which is compulsory and/or regular overtime.
Employer National Insurance and Pension Contributions
You will still need to pay employer National Insurance and pension contributions on behalf of your furloughed employees, and you can claim for these too.
YOU CANNOT claim for:
Additional National Insurance or pension contributions that you make because you chose to top up your employee’s salary.
Any pension contributions you make that are above the mandatory employer contribution.
Employers MUST confirm the furlough in writing
Once employers have agreed a furlough status with employees HMRC have clarified they MUST confirm this in writing and must keep this written record for a period of 5 years. It will be important to ensure the furloughing of staff is done correctly and properly recorded, presumably to avoid HMRC investigations in further years.
Links to guidance notes
You will find the full guidance notes for employers here.
You will find the full guidance notes for employees here.