Job Retention Scheme
Coronavirus Job Retention Scheme supporting businesses & employees
Under the new Coronavirus Job Retention Scheme, all UK employers will be able to access financial support in a bid to help the prevention of employees being laid off. The Coronavirus Job Retention Scheme continue means that you'll be able to pay part of your employees’ salary who would otherwise have been laid off during this crisis. This temporary scheme was originally in place for 3 months starting from 1st March 2020, has now been extended for a further month until the end of June.
How will I pay my staff?
One of the biggest concerns a business owner can face is how they're going to pay their staff, pandemic aside. The Coronavirus Job Retention Scheme mean that's all UK businesses can help retain their staff during this difficult period. With the initiative covering 80% of furloughed workers wages, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
All UK businesses are eligible regardless of their size are eligible to claim. You must have the following in place;
- 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
Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.
How to access the Coronavirus Job Retention Scheme
You will need to:
- designate affected employees as ‘furloughed workers,’ and notify your employees of this change
- furloughed workers are those whose employer cannot cover staff costs due to coronavirus, and as such they have been asked to stop working, but have not been made redundant
- changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
- submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
How much can you claim for furlough employees?
You can claim 80% of your employees wage when placed on furloughed leave, up to a cap of £2,500 per month. Along with the minimum automatic enrolment pension contribution.
You can choose to top up your employee’s salary, but you do not have to, this is at your discretion. Employees must not work or provide any services for the business while furloughed, even if they receive a top-up salary.
Which employees can you claim for?
You can only claim for furloughed employees that were on your PAYE payroll on or before 28 February 2020. Employees hired after 28 February 2020 cannot be furloughed and claimed for in accordance with this scheme.
Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Foreign nationals are eligible to be furloughed.
To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation. This includes providing services or generating revenue. Employers are free to consider allocating any critical business tasks to staff that are not furloughed. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.
When will I be able to claim?
You can claim now.
Earlier than expected HMRC have released access to their online portal for employers to begin the process of applying for a cash grant. You can begin your claim online through the Government Gateway, using your user ID and password that you got when you registered for PAYE online.
What you’ll need
To make a claim, you will need:
- to be registered for PAYE online
- your UK bank account number and sort code
- your employer PAYE scheme reference number
- the number of employees being furloughed
- each employee’s National Insurance number
- each employee’s payroll or employee number (optional)
- the start date and end date of the claim
- the full amount you’re claiming for including employer National Insurance contributions and employer minimum pension contributions
- your phone number
- contact name
You also need to provide either:
- your name (or the employer’s name if you’re an agent)
- your Corporation Tax unique taxpayer reference
- your Self Assessment unique taxpayer reference
- your company registration number
If you use an agent who is authorised to act for you for PAYE purposes, they will be able to make a claim on your behalf. If you use a file only agent (who files your RTI return but doesn’t act for you on any other matters) they won’t be authorised to make a claim for you and you will need to make the claim yourself. Your file only agent can assist you in obtaining the information you need to claim (which is listed above). We are making the claim process as straightforward as possible.
If an agent makes a claim on your behalf you will need to tell them which bank account you would like the grant to be paid into.
If you’re putting more than 100 employees on furlough
If you’re claiming for more than 100 furloughed employees, you’ll need to upload a file containing each employee’s:
- full name
- National Insurance number
- payroll number (optional)
- furlough start date
- furlough end date (if known)
- full amount claimed
The format of the file you upload must be either:
After you’ve claimed
Once you’ve claimed, you’ll get a claim reference number. HMRC will then check that your claim is correct and pay the claim amount by BACS into your bank account within 6 working days.
- keep a copy of all records, including:
- the amount claimed and claim period for each employee
- the claim reference number for your records
- your calculations in case HMRC need more information about your claim
- tell your employees that you have made a claim and that they do not need to take any more action
- pay your employee their wages, if you have not already
Should your business need short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan (CBIL). For more information on obtaining funding, please click here.