This scheme applies to all UK employers, big or small, whereby they have had to “furloughed workers”, which means their work / attendance at work, is no longer required due to drop in business or Coronavirus impact, i.e. the business has had to temporally close. If your business falls into this category you will be able to claim up to 80% of the wages for the employees who have been “furloughed” up to a maximum of £2,500 per month.
The scheme starts from the 1 March 2020 and therefore any members of staff that have been made redundant or laid off on or before the 28th February 2020 may be rehired and placed on the scheme. Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.
To apply for the scheme, you shall need to use the HMRC’s online portal, which shall be opened late April 2020 and provide the following details;
- your employers PAYE reference number
- the number of employees being furloughed
- Evidence that you have written to your employee confirming that you have enrolled them into the Scheme
- 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
When the employee is enrolled on the Scheme, they cannot undertake work for or on behalf of the organisation. This includes providing services or generating revenue. If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.
Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this.
All National Insurance and Tax shall be deducted from the payment in accordance with the usual PAYE scheme and all statutory payments such as Maternity Leave, contractual adoption pay, paternity pay or shared parental pay shall not be affected and the usual principals shall apply.
Payments received by a business under the scheme are made to offset wages and therefore must 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.