25th March 2020

What we know so far about The Coronavirus Job Retention Scheme (Furloughed workers) (see our updated post on 27.3.2020)

We are aware that there is a lot of uncertainty and differing information being presented on this scheme. We are currently working hard to get as many answers as we can, before we can provide more concrete information. We wanted to set out what we do know, and the areas of uncertainty.

There is an employment law aspect to this that cannot be ignored either. Employers will need to consult and agree on which each employee that they are being furloughed.

What we do know

The Government will provide money (a grant) to cover 80% of workers costs. This is for workers that would otherwise be made redundant due to coronavirus, on the payroll as at 29 February 2020. The 80% reimbursement will be capped at £2,500 per employee, per month.

It is available from 1 March 2020 (i.e repayments will be backdated to this date) for 3 months, and it will be extended if necessary.

All UK employers are eligible.

Workers should still be paid through payroll using Real Time Information (RTI). The money paid to workers will be liable to tax, National Insurance (both employees and employers) and pension contributions.

HMRC will be setting up a portal for submitting claims.

The money received is a grant, not a loan, so it will not be due back to HMRC.

We are uncertain on the following because the legislation is yet to be released

  • What the basis for the repayments is made on. We believe it to be earnings in February 2020, but this has not been confirmed.
  • If the amount received as a grant is 80% of furlough payments to workers, and the employer is to make up the 20% difference, or is the grant 80% of a set amount and the employer can decide to ‘top up’ the remaining 20%. Early reports from Croner Tax Wise suggest that unless there is a contractual obligation, an employer is not obliged to top up from the 80%. It remains to be seen.
  • Does the 80% reimbursement cover the Employers National Insurance, pension or bonuses. There has been nothing released.
  • How the scheme interacts with employees who are already receiving Statutory Sick Pay.
  • When the repayments will be received. We are expecting April, but as HMRC have stated this is an unprecedented system so it may take some time for these to be paid.
  • What information will be required to be submitted to HMRC for the claims.
  • We do not know how the repayments will be made, but we presume it will be through the portal.
  • How this impacts on close companies where the director has a small salary and additional earnings are paid through dividends. Early reports from Croner Tax Wise suggest it would not include dividends, but again, this remains to be seen.

We will update you when we know more.

If you are new to Revel and are keen to find out more, please call our consultant Will Bolter FCCA MAAT ATT  (our designated COVID-19 response advisor) on 07379 451484 or contact us by email here.