Payroll-related help

This page is mainly about the ever-evolving furlough scheme aka the Coronavirus Job Retention Scheme. For non-payroll help, see this page.
Please read – or at least skim – to the FAQs at the bottom of the page.

JRS opened for claims on 20 April. You’ll receive the money within 6 working days of making your claim.

The scheme will continue in its current form until the end of June.
Phase 2 introduces various changes – if something is changing in Phase 2, it’s marked below with an asterisk (*). The technical details will be released on 12 June.

From July employers can bring furloughed staff back to work part-time.
From August, the government support will taper off and employers will be expected to contribute to the wage bill.

The scheme ends in October.

Coronavirus Job Retention Scheme (JRS)

• This is the 80% grant that everyone is asking about. Staff must have been employed under PAYE on 28 Feb 2020 to qualify.
  (15 April update – if you took on staff up to 19 March and notified HMRC then you can also claim for them. In practice, unless the person was weekly-paid and was declared on a weekly payroll return on or before 19 March, new starters still won’t qualify.)

• Understand what furloughing means. It’s all about keeping people in a job.
  If you have good staff that you want to keep, furloughing is the way to go.
  • You must tell your staff that you are furloughing them – here’s a template letter.
    Employees must be completely inactive, so JRS does not apply to employees on reduced hours*. Furloughed staff must not provide services or generate revenue for the employer*.
    From 1 July staff can work part-time and be part-furloughed.
    
  • You can furlough some or all of your workers.
  • You must pay your employee the lower of 80% of their regular wage or £2,500 per month. You can choose to top up an employee’s salary beyond this but that is voluntary and the top-up won’t be reimbursed.
  • 3 weeks is the shortest period for a furlough claim*. If you furlough someone for a shorter period, you won’t be able to reclaim the wages*. You can bring someone back from furlough to carry out some work, and then re-furlough them (“rotational furloughing”).
    From 1 July the minimum furlough period is removed.
  • Staff retain all their normal employment rights including holiday pay, which will continue to accrue during the period of furlough. Equality laws still apply and employers must take care not to discriminate when selecting staff for furloughing or returning to work.

• For full and part time salaried employees, the grant paid under JRS will be 80%* of the actual salary before tax, plus employers’ NIC and the legal minimum pension contributions*.
  This grant will gradually reduce from August onwards.
  
  Sammy normally earns £1000 per month before tax (gross)
  Employer’s National Insurance Contribution is £39
  Employer’s pension contribution is £15
  Total monthly cost to the employer is £1,054.
  The grant is payable on this total cost.
  In this case, the employer can claim £843.20 per month (80% of £1054).
  Sammy’s actual take-home (net) pay will depend on their tax code.
  
• For employees whose pay varies, including those on zero hours contracts,  the 80% is based on an average of their earnings from the 2019/20 tax year.
• You should continue to pay your staff. Otherwise you’ll be in breach of contract. So you may have to pay first and then claim it back.
• The scheme will be open until October. Phase 2 starts 1 July and government support will taper off as employers shoulder some of the cost.

Employers start to take on wage costs from Aug

• Limited company directors, who are employees of their own companies, are eligible.  Until 1 July, whilst furloughed, directors must only carry out statutory duties like accounts and payroll – any commercial or revenue-generating activities will fail the JRS requirements. This includes marketing, and hiring and managing subcontractors so don’t do it!
  Either you are shutdown, or you are providing services and receiving income. There’s no in-between. If the income isn’t enough, that’s a cashflow problem and you should look at CBILS or BBL.
  
  We expect stringent anti-fraud measures and we warn all business owners that if they abuse the system, they should expect public naming and shaming for what is, after all, illegal profiteering from a national crisis.
  HMRC has put in place an online portal for employees and the public to report suspected fraud.
  Prosecution and heavy penalties will follow for those who try to rip off the government in this way.

• Employee rights – ACAS
• Employment Law FAQs

• Gov.uk Coronavirus guidance for employees
• Gov.uk Coronavirus JRS claims – guidance for employers
• HMRC YouTube channel –Coronavirus support

How to Claim under JRS

The claim process is very simple. The calculations are not. Things to remember:

• You can’t claim back the employer’s NI if you are claiming the Employment Allowance.
  (Most small businesses won’t use the full £4000 Employment Allowance in 2020/21. Since they effectively don’t pay employer’s National Insurance, they can’t claim it under CJRS.)
• If you are topping up the wages above 80%, you can’t claim the entire employer’s pension contribution. Check the calculation guidance for how to work it out – it’s not a flat 80% of the pension contribution.
• Ditto for employer’s NI, should you be able to reclaim it.

HMRC has released a step by step guide for employers. If you are making your claim yourself, read the calculation guidance several times, get your head round it and work out your figures before you login to government gateway. You can save a part-completed claim and return to it later, as it will time you out after a short (c.15 min) period of inactivity. It’s important to get it right. If you realise you made a mistake, you can’t yet amend a submitted claim online so you’d need to call the helpline.

Statutory Sick Pay

Employers can reclaim up to 2 weeks’ Statutory Sick Pay per eligible employee who has been off work because of COVID-19 self-isolating. Claims are made via PAYE Online in the same way as CJRS.

Frequently Asked Questions

How do I get the money to pay my staff?

You must pay your staff upfront and then get reimbursed. HMRC will pay direct into your business bank account.

Will J&K claim for me?

No. We have neither the capacity nor the authority with HMRC to do so for all our clients.

For most of our clients, we provide a filing-only service. This means we can file your normal payroll returns to HMRC, but we don’t have the power to do anything else.

We will of course give you the info needed to make your claim.

What if I can’t afford to pay my staff?

You should seek financial support from your bank e.g. BBL or CBILS.

When do I pay my staff?

Furloughed staff should get their wages on their normal payday. Any changes without their agreement would be a breach of their contract of employment.

Can I backdate it?

You can only backdate to the point that work stopped as a result of Covid-19. E.g. hospitality and leisure businesses closed after 20 March. You must pay staff for the hours that they worked up to 20 March. They are then furloughed from 21 March.

Do I have to furlough everyone?

You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake ANY work for you.
If you have some work available, you may choose to furlough part of your workforce while others carry on.
The point of the scheme is to keep people in jobs who would otherwise be made redundant due to the Covid-19 crisis.

How much do I pay?

You must pay employees the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.

How does flexible furloughing work?

From 1 July, staff can work part-time and also be furloughed. They must be paid normal wages for the hours worked – National Minimum Wage applies as normal – and furloughed for the rest of the week/month.

Can my staff work elsewhere?

Yes they can.

If they already have another job, they can be furloughed from each job.

A furloughed employee can take part in volunteer work, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.

What about holiday pay?

Furloughed staff continue to accrue holiday. If employees take holiday whilst furloughed, this must be paid at their FULL rate, i.e. topped up by the employer to 100% of their normal wage. This includes Bank Holidays, of which we’ve so far had 4!

My husband/wife is on my payroll. Can I furlough them?

Certain companies have added a partner/spouse to their payroll solely in order to benefit from claiming the Employment Allowance. HMRC has shown great interest in businesses where one spouse is considerably less active within the business than the other.

For CJRS we take the view that if the active partner is working, so is the spouse.
If your company was audited by HMRC, you would have to demonstrate that the spouse is a genuine employee, on a commercial wage, playing a part in the day-to-day running of the business.

We have clients – from pubs to beauty salons – that have genuinely lost all their income overnight.

Anyone wanting to take advantage of this national emergency needs to take a good hard look in the mirror.

Together we face an unprecedented situation, one in which 90% of us will do the right things:

• Don’t stockpile loo roll or anything else.
• Check on your vulnerable neighbours.
• Practise social distancing.
• Wash your hands.
• Be kind.