COVID-19 Job retention scheme

UK Government is providing numerous grants and reliefs to help employers retain employees. Find below a summary of these measures: retention scheme.

Employers who find it necessary to put employees on temporary ‘furlough’ can apply to HMRC for a grant to help retain those staff. The grant will cover up to 80% of the employee’ usual monthly wage costs up to a maximum of £2,500 per employee per calendar month, plus the associated employer’s NIC and minimum automatic enrolment employer pension contributions on that wage. Employers can top this up to give employees their normal level of wages while on furlough.

** what is Furlough? Cambridge dictionary defines it as “a period of time that a worker or a soldier is allowed to be absent, especially to return temporarily to their own town or country”. In current context, it means an employee not working but still on the business payroll.

Who is eligible?

  • Any business or organization who had a PAYE scheme established before 28 February 2020; and
  • needs to furlough employees who were engaged before that date.

The grant is only payable in respect of furloughed employees: those who continue to provide services or generate income (even part time) are not covered.

What is covered?

Employee PAYE and NIC is still payable as usual; and

Employer NIC and minimum automatic enrolment pension contributions will be covered.

How to claim?

Use HMRC’s especially designed portal to make a claim- available to employers by the April end.

Tax treatment:

Businesses are to treat any claim as business income and will be subject to the Corporation/Income tax and wages paid out to furloughed workers are also treated as a business expense.

Financial difficulty?

If you are struggling to meet your employer’s PAYE/NIC commitments, then you can contact the HMRC Covid-19 time to pay helpline (0800 024 1222) to seek a deferral arrangement. Evidence of financial hardship will be needed. This is expected to be a straightforward process but if you have difficulties in reaching agreement with HMRC, feel free to contact us. This briefing is for general advice only and has been prepared in relation to legislation in place and announcements made up to 29 March 2020.

Feel free to contact us for any advice.

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