FINANCE
The Coronavirus
Job Retention Scheme
by Dave Hedges, Employment Tax Partner, Wilkins Kennedy
THE CHANCELLOR HAS MADE A
TREASURY DIRECTION UNDER SECTION
71 AND 76 OF THE CORONAVIRUS ACT
2020. FURTHER SUPPORTING GUIDANCE
AND DETAIL HAS BEEN PUBLISHED BY
HMRC ON THE JOB RETENTION SCHEME
(JRS) IN ACCORDANCE WITH THIS.
The Coronavirus Job Retention Scheme will be
open to all UK employers for at least three
months starting from 1 March 2020. Online
applications opened on the 20th April 2020 to
support employers whose operations have been
severely impacted by COVID-19. Through the
scheme, employers, or their nominated payroll
representative, will be able to use a portal to
claim for 80% of furloughed employees usual
monthly wage costs. This covers salary payments
up to £2,500 per month, plus the associated
employer NIC and minimum automatic
enrolment employer pension contributions on
that wage. Employers can use the scheme
anytime during this three-month period. February 2020 but re-hired can still qualify
even if reinstated after 19 March 2020. For
these employees, the reference date that they
must have been on the payroll remains as
28 February 2020.
Who can claim? How much to claim
• Crucially, the Government has announced a
change to the reference date of employees who
must have been on a payroll to 19 March
2020, the day before JRS was first announced.
• It has been clarified that a Real Time
Information (RTI) submission must have been
made to HMRC notifying of a payment to an
employee on or before 19 March 2020.
• This benefits those employees who are on
weekly or fortnightly payrolls who were
employed after 28 February but before JRS
was announced, on the proviso that they would
have been notified to HMRC on an RTI
submission on or before 19 March 2020.
• Unfortunately, a monthly paid employee who
was employed from, say 2 March 2020, would
not qualify for the JRS as they would not have
been notified to HMRC on an RTI submission
by 19 March 2020.
• Employees are to be furloughed for a minimum
of three weeks, or 21 calendar days. However,
rotating of furloughed employees within a
business is allowed.
Employees made redundant or left
after 28 February 2020
• Employees who were made redundant or who
stopped working for an employer after 28
54
Employees who are TUPE’d
• Where a business is transferred to a new
owner and the employees are TUPE’d they
would still qualify for the JRS even if this
transfer occurred after 19 March 2020. This
is on the assumption that they would have
been on the previous employer’s payroll on 28
February 2020.
• An employer can claim 80% of an employee’s
regular gross PAYE earnings (or reference
pay), capped at a maximum of £2,500. In
addition, the employer’s Class 1 NIC and the
minimum 3% employers automatic enrolment
pension contributions on the subsidised
furlough pay can be claimed.
• The reference pay to base the claim on is as
per the last pay period prior to 19 March 2020.
For monthly paid employees, this will be
February 2020.
• For employees who receive varied amounts,
employers are to claim the higher of the
following:
* The same pay period’s earnings from the
previous year, or
* An average of the earnings for the
2019/2020 tax year
Where such employees have been employed
for less than a year, earnings are to be
averaged for the period since they started
until they were furloughed.
• Regular earnings are any regular payments an
employer is obliged to pay their employees.
This includes wages, regular overtime,
compulsory commission, etc. Any discretionary
payments such as bonuses or tips are to be
excluded.
• Benefits in kind and any elements that are provided via
salary sacrifice schemes are to be
excluded, and all the furlough pay must be in the form of
money. It is recommended that any contractual benefits or
salary sacrifice arrangements are reviewed when placing
an employee on furlough.
The claim and availability of the JRS portal
• The HMRC portal whereby employers can submit their
JRS claims launched on 20 April 2020.
• Claims can be made up to 14 days before a payroll is run.
• HMRC are intending that funds should reach employers’
bank accounts within 6 working days of the
receipt/verification of a claim.
• Whilst a dedicated support telephone number will be
available, employers are asked to use gov.uk as a first point
of contact and to not contact HMRC before six working
days have passed, as they will not be able to help you with
your claim.
Our Employment Tax and Payroll teams are here to assist.
If you have any questions or would like to discuss the impact
of Coronavirus on your business, please get in touch.
Local offices:
Ashford: 01233 629 255 / Canterbury: 01227 454 861
Maidstone: 01622 690 666 / Orpington: 01689 827 505
Sandwich: 01304 249 997
[email protected]
www.wilkinskennedy.com
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