Payroll grants of 80% to prevent job losses
Firstly, owner/directors of small limited companies can furlough.
Whilst it remains completely beyond us as to why the Government has elected to pretty much ignore small limited companies and simply tell them to borrow their way through Coronavirus, CJRS is something that you should be seriously looking at.
The scheme is administered by HMRC and all UK Businesses are eligible provided they had created and started using a PAYE scheme before 19 March 2020.
To access the scheme, employers have to:
- Register for PAYE online;
- Designate affected employees as ‘furloughed workers’ (the minimum furlough period is 3 weeks);
- Submit to HMRC information about the furloughed employees and their earnings via the online portal;
- Make wage/salary payments to furloughed workers that will then be reimbursed;
- Continue to operate your PAYE scheme as usual.
How to calculate pay
If the employee has been employed (or engaged by an employment business) for a full 12 months prior to the claim you can claim for the higher of either:
- The same month's earnings from the previous year; or
- Average monthly earnings for the year.
If the employee has been employed for less than a year you can claim for their monthly earnings since they started work.
A ‘furloughed worker’
Furloughed workers are “workforce who remain on payroll but are temporarily not working during the coronavirus outbreak” as defined by this GOV.UK news story.
You must notify a worker that they have been furloughed. This is a change in their employment status and is subject to existing employment law and the contracts of employment that is in place. It may be subject to negotiation, so get advice from an employment lawyer.
For clarity, this is an employee that you cannot pay because you have no work for them as a result of COVID-19 and under normal circumstances you would have made redundant. A furloughed employee can work for another employer without affecting the grant.
What you'll need to claim:
You can claim yourself and it is pretty straight forward - if a bit laborious. If you're not confident enough then most accountants are processing claims for around £35 per claim (not per employee!)
- Your UK bank account number and sort code (only provide bank account details where a BACS payment can be accepted)
- Your employer PAYE scheme reference number
- The number of employees being furloughed
- Each employee’s National Insurance number (if you have one or more without a National Insurance number please contact HMRC)
- Each employee’s payroll or employee number (optional)
- The start date and end date of the claim
- The full amount you’re claiming for including employer National Insurance contributions and employer minimum pension contributions
- Your phone number
- Contact name
You also need to provide either:
- Your name (or the employer’s name if you’re an agent)
- Your Corporation Tax unique taxpayer reference
- Your Self Assessment unique taxpayer reference
- Your company registration number
Typically HMRC are processing grants within 6 working days - as in you get the money which, frankly is impressive.