COVID-19 FAQ's on furloughing your team.
By Phil Ellerby
We have put together a list of frequently asked questions by our clients on the subject of furloughing your team. Take a look and as always do get in touch if you have any other burning questions on this or any other aspect of COVID-19.
First of all …
HMRC is reserving the right to audit at a later date and your records must be kept for 5 years. They will audit and check the validity of historic claims so you must do everything in your power to comply with the guidelines produced at the time of the claim.
The Job Retention Scheme Portal
The Government has announced that they are ready to launch the online portal on 20th April 2020 and payments with start to be made from 30th April 2020
The Access rules
To access the portal and to make the claim it is of paramount importance that:
1. That a PAYE payroll scheme was creaated and set up on or before 28th February 2020
2. It is a UK bank account
3. That the business enrolled for PAYE online. If nobody has done this yet it is important to get the ball rolling. The link below will help:
Be warned that the activation code could take up to ten days in which to arrive and it might be sent to the business address which may possibly still be in lockdown.
Who can make the claim?
Only the business and agents authorised to act on behalf of the client for PAYE matters will be able to make the claim. That agent could be the accountant or another third party.
Please note that file only agents, which could include some Payroll Bureaus, will not be able to access the service due to data protection reasons.
A decision that needs to be made
Who is going to make the submission to HMRC, you or us? If it is us you need to confirm (we will send you an email, simply hit reply).
What do you need to make a claim?
You need the following information
1. The bank account number and sort code you would like us to use when we pay your claim.
2. The name and phone number of the person in your business for us to call with any questions.
3. Your Self-Assessment UTR (Unique Tax Reference), Company UTR or CRN (Company Registration Number).
4. The name, employee number and National Insurance number for each of your furloughed employees.
5. The total amount being claimed for all employees and the total furlough period.
Where do I get my Self-Assessment UTR (Unique Tax Reference), Company UTR or CRN (Company Registration Number)?
Northern Accountants will email you these details.
How do I calculate the furlough pay?
An employee can be furloughed multiple times but each furlough period has to be a minimum of 3 weeks.
When calculating the deemed salary for a furloughed employee you can include wages, past overtime, fees and compulsory commission payments. Discretionary bonuses, including tips, commission payments and non-cash payments must be excluded.
The ‘salary’ should not include taxable benefits in kind or benefits through the salary sacrifice arrangements. Normally it is not easy to switch out of a salary sacrifice arrangement unless there is what is called a ‘life event’. Under these circumstances, HMRC accepts this is a ‘life event’ so a switch out can be done as long the employment contract is updated.
National Minimum Wage only comes into play if an employee is working or treated as working under the NMW regulations. So if the furloughed employee is training during the furlough period then for that time they must be paid at least the NMW. Where the furlough payment is less than the NMW, the employer will need to make up the difference.
When do I make my claim?
The claim should be made either shortly before or during the running of the payroll. Retrospective claims can be made back to 1st March.
Can Directors be furloughed?
Yes they can, they are only allowed to complete works to deliver their legal obligations as Directors defined in the Companies Act 2006.
It is important to officially confirm in writing that they have been furloughed but continue to carry out directorial duties to comply with the Companies Act.
Can Salaried members of an LLP be furloughed?
For salaried members of an LLP to be furloughed, the member’s agreement may need to be varied to reflect the fact that the member cannot work and the impact it will have upon their remuneration. For this scheme’s purpose, the reference salary will be the member’s profit allocation excluding any amounts determined by the LLP’s member’s performance or that of the LLP Itself.
Can apprentices be furloughed?
Apprentices can be furloughed. They can continue to be trained whilst furloughed. If training then the apprentice must be paid at least the Apprenticeship Minimum Wage/NMW or NLW during the training period. The difference between the 80% of the wage and that must be met by the employer.
Can people unable to work be furloughed?
Vulnerable employees who are shielding in line with Public Health guidance can be furloughed if unable to work from home.
Employees who have caring responsibilities and are unable to work can be furloughed.
Who else can be furloughed?
Employees on fixed-term contracts can be furloughed. You can extend or renew the contract and furlough.
Office holders including directors, salaried members of LLP’s, agency workers including those who are in umbrella companies and those with deemed worker status can be furloughed.
Who is not eligible to be furloughed?
Employees on reduced hours or reduced pay are not eligible for the scheme.
Can furloughed team members take another job?
If contractually allowed an employee can work for another employer whilst furloughed by your business. If taking on a furloughed individual, a business should ensure that the individual completes Statement C on the starter checklist.
We hope you find these FAQ’s useful. We will keep updating you as we receive more information about any legislation during this time of the pandemic.
In the meantime, please contact the team on 0113 218 9552 if you need guidance on any of our updates, from our blogs or videos. Please find all our previous updates on our designated COVID-19 Response page here https://www.northernaccountants.co.uk/covid-19-response