*Updated 1 June 2020*
On 29 May, Chancellor Rishi Sunak confirmed that the furlough scheme will remain as is for the months of June and July, with Government providing 80% of employee monthly wages up to £2,500 for those that have been furloughed.
From August onwards, the government has asked companies to "start sharing" the cost of the scheme. Employers will be required to cover National Insurance and employer pension contributions in August, stating this accounts for about 5% of the total cost of paying that employee.
By September, businesses will pay 10% of wages for furloughed staff, and in October 20%, the UK chancellor says.
However, he confirmed that no new entrants will be allowed to join from 30th June and that the scheme will close from the end of October. If there is a second spike requiring a second lockdown, there will not be another furlough support scheme.
For any help in forecasting how these changes will impact your business and to understand what the additional costs may look like, please do not hesitate to get in touch with AAB's COVID-19 Support team at email@example.com.
Using the Coronavirus Job Retention Scheme Portal
The portal for making claims through the furlough scheme opened on Monday 20 April and over 185,000 businesses applied on day 1, covering 1.3million workers which shows the volume of businesses utilising this scheme. Having already completed over 100 claims on behalf of clients, currently totalling over £2.5 million, the summary below includes some of the key points to be aware of in making a claim and navigating the portal:
- You need to confirm, in writing, to the employee being furloughed and keep the correspondence on file for at least five years. The employee doesn’t need to respond provided the confirmation of furlough is done in a way that is consistent with employment law. Please ensure you detail a furlough start and end date, this can be extended if needed.
- You can only make one claim per claim period.
- If you have more than 1 payroll per PAYE reference, if you have both a weekly and monthly payroll for example, all information needs to be collated together and processed as one claim.
- You must claim for all employees in each period at one time.
- If you are claiming for 100 or more employees you can upload the claim via a spreadsheet directly into the system, but if the claim is for 99 employees or less this need to be inputted manually (although you can copy and paste from excel).
- You must allocate your nominated UK bank account to receive the claim – the monies cannot go to your agent or lawyer for example, nor can they go overseas.
- You can make your claim in anticipation of an imminent payroll run, at the point you run your payroll or after you have run your payroll. Please note however, you can only make a claim in advance if your claim period end date is within the next 14 days.
- You can backdate to 1st March or the first date an employee was furloughed to end of imminent pay run.
- You cannot amend a claim, and therefore have to make sure everyone is included, although HMRC are working on this to allow amendments to be made.
- If you are submitting a claim for someone who doesn’t have an NI number, or you can’t get access to your PAYE number, you can now do this over the phone - 0800 0241222 or alternatively using a default code of AA000000A.
- If you do not finish your claim in one session you can save a draft but will require to complete it within 7 days.
- You should keep details of your claim reference number once completed.
- Tell your employees that a claim has been made and they don’t need to take any further action.
- Funds should be in your bank account within 3-6 working days of making the claim.
Given that the application must be completed in its entirety it is important that you must have all of the relevant data to hand when making the claim; which includes bank account details, PAYE scheme reference number, each employees National Insurance number and pension contributions to name but a few. Preparation is key here and making sure you have all of the detail to hand will hopefully ease your experience in using the portal, particularly given that HMRC are still currently working on a solution to correct claims, which isn’t currently in place.
Additionally, you must know the values you are claiming for as the portal system does not calculate the values for you. There is a basic calculator online which can assist with these calculations however it only deals with the most simple of scenarios. So, if for example you have anyone on a pro-rata period or any complications where they have variable pay rather than straightforward salary, the calculator will not address these variations.
Salary Sacrifice and Flexible benefits adds an extra layer of complexity into the furlough calculation process and we therefore encourage you to seek advice from your pension & benefit advisors prior to finalising he calculations.
HMRC are completing random security checks when processing claims so there is a chance that HMRC will make contact with you to verify the claim.
Lastly, make sure you keep a copy of your salary calculations completed with a note of what you have done and the basis for doing so. HMRC have said since the setup of the scheme that they reserve the right to audit any claims at any later date and the guidance around this scheme is constantly changing. Therefore we recommend keeping a record of your calculations on file for a minimum of 6 years which will make things easier in the event of a future enquiry.
Full details of the requirements and guidance for making a claim can be found on the GOV UK website.
At AAB we always, and particularly now, view our client relationships as a partnership. We are all in this together and we are here to support businesses through these challenging times.
By Katy Christiansen, Director, Payroll & Employment Taxes