COVID SUPPORT - JOB RETENTION SCHEME
The Government have agreed to provide Grants to all UK Businesses operating a Payroll (PAYE) Scheme at the 29th February 2020.
The Grant will be available to support all eligible employees on PAYE at the 29th February 2020.
The Government (via HMRC) will reimburse 80% of Gross Payroll costs for all employees laid off (Furloughed) as a consequence of the COVID-19 Virus. The maximum Gross Pay cost is capped at £2,500 per month.
We still await specific guidance from HMRC but the following has been suggested by our Professional Body:
For salaried employees (full or part time) the Grant will be calculated on their Gross Salary at 28th February 2020, (excluding fees, commissions and bonuses).
Employees on variable pay, who have worked for an employer for a full 12 months prior to the claim can claim the higher of:
a) Average monthly earnings for the tax year 2019/2020 i.e. to 5th April 2020
b) The same earnings for the prior year.
If an employee has been employed for less than a year, the Grant will be based on the average monthly earnings since they started work.
For employees who started employment in February 2020 the Grant should be based on the pro-rata earnings to the date of the claim.
There will inevitably be further clarification of the workings of the Grant Scheme in due course. We will keep you informed of any developments.
Gross Payroll Costs include Gross Pay, Employers NIC, Employer Auto Enrollment Pension Contributions. We understand that Benefits in Kind are not to be included in the calculation of Gross Pay.
Furloughed staff cannot do any work for an employer for whom they have been laid off. Employees who may have other jobs can continue to work for their other employers.
The Grants will be available for at least 3 months commencing 1st March 2020.
PAYE will be payable on the amounts paid to employees. The employers must pay at least the value of the grant to their employees.
It is suggested that you get written agreement from furloughed employees that they have agreed to change their terms and conditions of employment. (We can provide you with an example letter in due course if required).
We understand that Personal Service Company clients will be eligible for the Grant. We await further clarification from HMRC. Grants will only be available on the Salary cost element of funds drawn from the Company i.e. Not Dividends.