Support for businesses through the Coronavirus Job Retention Scheme

Under the scheme companies will still be able to pay part of employees salaries who would have otherwise been made redundant during the current crisis. Up to 80% of the employees salary, capped to £2,500, is reclaimable as a grant from the government. The £2,500 is with reference to the average UK monthly salary.  Please note, the grant will be treated as a taxable receipt for corporation tax. A system will be put into place to register affected employees and claim the grant in due course.

Employees subject to the scheme must be ‘furloughed’ – this means that they can do no work for their employer. Furloughed workers must have been on the payroll as at 28th February 2020 to be eligible for the scheme with the scheme coming into force from 1st March 2020 and is expected to last for three months. Staff that have already been let go can be brought back and the termination in effect reversed so they may be treated as furloughed workers.

When deciding what you will pay furloughed workers remember that furloughed payments are still liable to Employer National Insurance and employer pension contribution where they are applicable. The Government grant is 80% (or £2,500 where lower) of total employment cost. So if an employer wishes to furlough an employee on a no cost to them basis the revised gross payment to the employee needs to take account of employer national insurance and pension payments.

PAYE and NIC will continue to apply as normal on payments to furloughed workers and specifically the payment of PAYE/NIC liabilities by the employer on time.

There are still many unanswered questions that we will require further detail on such as the specific method of claiming the grant, how will employees with irregular payments be dealt with? And how long will employers wait for receipt of the grant? When we have more information this release will be updated.

Please do not hesitate to contact your relationship partner should you wish to discuss any of the above.

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