Progress is being made. In parallel with HMRC starting to…
Job Retention Scheme Update
Some more details on the announcements and how they apply to you…
Pleasingly, there’s some clarity emerging which can be found here. Salient points are as follows:
What we already knew
- The online portal for claims is expected to be ready by the end of April. Our expectation is that first repayments will happen in May.
- The scheme operates for (an initial) 3 months from 1st March.
- The employer must have been operating a payroll scheme by February 28th and have a UK bank account. Employees must have been employed by that date.
- The employee cannot undertake any work of any nature whilst on furlough. If on reduced hours or pay that is not furlough.
- Existing employment law still applies. We recommend you take specialist advice. You must check first whether you have the right to place an employee on furlough – then if so, write to them and keep a copy (we recommend detailed records of all communication and decisions).
- Existing tax law also still applies in the event of parental leave.
- Employees on SSP for self-isolation or sick leave can be placed on furlough after their sick leave has finished.
- We should operate PAYE as normal (albeit decreasing to 80% of salary if you feel that appropriate). You have no legal obligation to pay more than the 80%.
- Employees on furlough continue to have the usual employment rights to redundancy payments, parental leave etc.
- The grant is taxable income as it offsets taxable expenditure, in effect making the transaction tax neutral.
What has been clarified
- The scheme covers employers national insurance and minimum auto-enrolment pension contributions for the 80%. The scheme does NOT cover these expenses for any top-up pay.
- Do not include fees, commission or bonuses in the 80% calculation.
- Employees on flexible or zero hour contracts are included
- Employees cannot take another job, but can volunteer (e.g. for the NHS) or complete training. You must pay them over and above the 80% for the time they spend training.
- For those on variable pay there’s an averaging calculation with an option to select instead the earnings from the same month in the previous year if higher, for those employed for more than a year.
- The minimum period an employee can be furloughed is three weeks.
- HMRC (unsurprisingly, and quite rightly) retain the right to retrospectively audit all aspects of any claim.
- Claims can only be submitted once every three weeks.
- Once the portal is running, claims should be submitted alongside the payroll run. If you are a Blu Sky client and we run your payroll, we will do this on your behalf at no extra cost.
- You cannot charge any administration fees to the employee.
We have a webinar in conjunction with the HR Dept on this very topic at 10am on Wednesday, April 1st. You can sign up here.
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