Chancellor Rishi Sunak, has introduced a Treasury Direction under Sections 71 and 76 of the Coronavirus Act 2020, which states that HMRC is responsible for the management and payment of amounts to be paid under the Coronavirus Job Retention Scheme (CJRS).
This document includes confirmation of some of the recent updates to the employer guidance around CJRS. The main change is that employees who were employed on or before 19 March 2020 are eligible for furlough, if their employer had submitted an RTI return for that employee to HMRC by that date. This changed the earlier guidance which stated that an employee needed to be on PAYE payroll on or before 28 February 2020 to be eligible for furlough.
In addition to this, the document reveals that CJRS claims should not be made in respect of an employee if it is abusive or is “otherwise contrary to the exceptional purpose of CJRS.” Payments should only be made for the purpose of CJRS and must be returned to HMRC immediately if the person making the claim becomes unwilling or unable to use the payment for that purpose.
The document confirms that employers with multiple PAYE schemes must make separate claims for each scheme and the amount of any payment under CJRS will need to be calculated separately for each scheme.
Moreover, it confirms that the Scheme is not only available to employees who would have otherwise been made redundant, but that it is also open to any employees furloughed due to circumstances caused by coronavirus.
There is further confirmation that a director who is furloughed may continue to complete statutory duties, unlike other individuals who have been furloughed who must cease all work in relation to their employment. It is believed that this includes a director running a payroll for employees, if this makes up part of their normal duties. There is still no further information relating to the subject of annual leave, which the employer and employee guidance on the CJRS also remain silent on.
HMRC have, once again updated the guidance around CJRS. The latest guidance can be found here, but some of the main additions are shown below.
Who can claim
You must have:
- created and started a PAYE payroll scheme on or before 19 March 2020
- enrolled for PAYE online
- a UK bank account
Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.
Employees you can claim for
You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020.
How much you can claim
Full or part time employees on a salary
Claim for the 80% of the employee’s salary, as in their last pay period prior to 19 March 2020.
If, based on previous guidance, you have calculated your claim based on the employee’s salary as at 28 February 2020 (and this differs from their salary in their last pay period prior to 19 March 2020) you can choose to still use this calculation for your first claim.
What you’ll need to make a claim
As you prepare to make a claim, please note:
- the online claim service will be launched on GOV.UK on 20 April 2020 – please do not try to access it before this date as it won’t be available
- the only way to make a claim is online – the service should be simple to use and any support you need available on GOV.UK; this will include help with calculating the amount you can claim
- you can make the claim yourself even if you usually use an agent
- claims will be paid within 6 working days; you should not contact us unless it is absolutely necessary – any queries should be directed to your agent, representative or our webchat service
- we cannot answer any queries from employees – they will need to raise these with you, as their employer, directly.
Information you will need before you make a claim
In addition to the information in our previous email, you will need to have the following before 20 April 2020:
- a Government Gateway (GG) ID and password – if you don’t already have a GG account, you can apply for one online, or by going to GOV.UK and searching for 'HMRC services: sign in or register'
- be enrolled for PAYE online – if you aren’t registered yet, you can do so now, or by going to GOV.UK and searching for 'PAYE Online for employers'
- the following information for each furloughed employee you will be claiming for:
- National Insurance number.
- Claim period and claim amount.
- PAYE/employee number (optional).
You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.
If you have fewer than 100 furloughed staff, you will be asked to enter details of each employee you are claiming for directly into the system - this will include their name, National Insurance number, claim period and claim amount, and payroll/employee number (optional).
If you have 100 or more furloughed staff you will be asked to upload a file with the information rather than input it directly into the system. They will accept the following file types: .xls .xlsx .csv .ods
The file should include the following information for each furloughed employee: name, National Insurance number, claim period and claim amount, payroll/employee number (optional).
You should retain all records and calculations in respect of your claims.
HMRC cannot provide your employees with details of claims you make on their behalf. Please help by keeping your employees informed, answering any questions that they might have. Please ask them not to contact HMRC.
If you use an agent who is authorised to act for you for PAYE purposes, they will be able to make a claim on your behalf. If you use a file only agent (who files your RTI return but doesn’t act for you on any other matters) they won’t be authorised to make a claim for you and you will need to make the claim yourself. Your file only agent can assist you in obtaining the information you need to claim (which is listed above).
If an agent makes a claim on your behalf you will need to tell them which bank account you would like the grant to be paid into.
You should make your claim using the amounts in your payroll - either shortly before or during running payroll. Claims can be backdated until the 1 March where employees have already been furloughed.
If appropriate, workers’ wages should be reduced to 80% of their salary within your payroll before they are paid. This adjustment will not be made by HMRC.
After you’ve claimed
HMRC will check your claim, and if you’re eligible, pay it to you by BACS to a UK bank account.
You must pay the employee all the grant you receive for their gross pay in the form of money.
Furloughed staff must receive no less than 80% of their reference pay (up to the monthly cap of £2500).
Employers cannot enter into any transaction with the worker which reduces the wages below this amount. This includes any administration charge, fees or other costs in connection with the employment.
Tax Treatment of the Coronavirus Job Retention Grant
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.
Individuals with employees that are not employed as part of a business (such as nannies or other domestic staff) are not taxable on grants received under the scheme. Domestic staff are subject to Income Tax and National Insurance Contributions on their wages as normal.