More detail provided on the Coronavirus Job Retention Scheme (CJRS)
As originally announced the CJRS was, perhaps understandably, lacking in detail but HMRC has now provided more details of the scheme. These include:
government to cover employer National Insurance and pension contributions of furloughed workers – on top of 80% of salary and over and above the £2500/mth/worker cap
salary (or wage) does NOT include fees, commission or bonuses
there is no requirement to ensure that furloughed employees are paid the National Living Wage (NLW) or National Minimum Wage (NMW); they must be paid the lower of 80% of their salary or £2500 even if, based on their normal working hours, this would be below the NLW/NMW
those furloughed can volunteer for the NHS without risking their pay
employees made redundant after 28th February 2020 can be re-employed and placed on furlough
employees must be furloughed for a minimum of 3 weeks but an individual employee may be furloughed multiple times. This means that employers can rotate furloughed workers as long as they keep to the minimum 3 week furlough period
furloughed employees will accrue holiday because they are still employed
employees on sick leave can be furloughed when they are fit to return to work but not before
employees who are shielding (i.e. self-isolating because they are in the “high-risk” group) can be furloughed
furloughed employees retain all the same rights they did previously including SSP entitlement, redundancy pay, maternity and other parental rights, etc.
Importantly, information has now been released about how to make a claim for reimbursement of the 80% although it is not expected that the online claims service will be available until the end of April. Claims can be submitted no more than once every three weeks and can be backdated to 1st March 2020.
The following information will be required:
your PAYE reference number
the number of employees being furloughed
the claim period (start and end date)
amount claimed (per the minimum length of furloughing of 3 weeks)
your bank account number and sort code
your contact name
your phone number
If your payroll is handled by HullJady then we will be in touch with you about making the claims.
HMRC retain the right to retrospectively audit all aspects of each claim.
Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.
Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.
The delay in obtaining reimbursement for furloughed employees is causing significant problems for some business owners who simply do not have the capital available to pay employees’ wages until the end of April. Unfortunately for such business owners the only options currently available under the Covid-19 support schemes would seem to be the cash grants of £10K for all businesses in receipt of small business rate relief or £25K for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000 or the Coronavirus Business Interruption Loan Scheme (CBILS) providing loans of up to £5M for SMEs.
The grants are being disseminated to businesses by the local authorities and our experience is that how quickly the process is happening depends very much on which local authority you come under. If you envisage having issues in meeting your salary costs in the short term then do get in touch with your local authority to chase up your grant if you are entitled to one.
If you believe that the CBILS may be of assistance to you then contact us and we will be happy to discuss this and help with the process. More information on the scheme and how to apply can be found here: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/for-businesses-and-advisors/