The claims process for the Coronavirus Job Retention Scheme went live today. The scheme allows employers to apply for grants to cover salary costs of furloughed employees.
The grant allows for a recovery of 80% of usual monthly wage costs, up to £2,500 per month, plus associated employer National Insurance contributions and employer pension contribution. The scheme is temporary, and will allow for recovery of these costs from 1 March 2020 through to 30 June 2020, though an extension is possible.
Please see our note on the employment law considerations in relation to the scheme.
Now that the scheme is open to employers to make claims, we thought a reminder of some of the practical considerations would be timely:
- claims are to be made via the Government Gateway portal;
- employers are required to make the calculations (using the HMRC calculator) and provide these to HMRC with their applications;
- agents can make applications on behalf of employers if they have formal agent payroll authorisation. Businesses should note that the authorisation process for new agents can be slow, and may delay the claims process;
- employers can continue to pay furloughed individuals through their regular payroll (i.e. no separate PAYE reference number is required);
- employers are not required to request new tax codes for furloughed individuals; and
- furlough payments should be included as income for income tax and corporation tax calculation purposes, but employment costs can be deducted as normal when calculating taxable profits.
HMRC has stated that claims will be verified and funds issued within six working days. Given this quick turnaround, we do expect to see a high number of HMRC audits when the dust starts to settle. Employers should therefore ensure calculations are accurate, and records are retained, so that evidence can be provided to HMRC if it is requested at a later date.