What is the Coronavirus Job Retention Scheme?
One of the measures announced is the Coronavirus Job Retention Scheme. This is intended to run for at least three months from 1 March 2020 but will be extended if necessary.
This is designed to acknowledge the impact of the pandemic for employers due to lack of demand for goods and services, or an employer’s ability to provide goods and services as a result of the pandemic. The scheme offers to cover 80% of a ‘furloughed workers’ usual employment wage costs up to £2,500 a month. On 26th March, it was announced that in addition to this, the associated employer National Insurance contributions and minimum auto-enrolment employer pension contributions of the furloughed wage are also available.
Employers are not required to top this up to 100%, although they can do so if they wish to do so.
How does it work?
Employees impacted are designated as “furloughed workers” and must be notified of this change. It will be necessary to submit information to HMRC about these employees through a new online portal, which is being worked on at present (due end of April 2020). Furloughed employees must have been on your PAYE payroll on 28 February 2020 and while on furlough, the employee’s wage will be subject to usual income tax and other deductions
Importantly, to qualify for the scheme, employees should not undertake work for their employer while they are furloughed.
Do they continue to be employees?
Yes, employees continue to be employed whilst furloughed. This means that pension contributions and other contractual benefits would continue to apply.
What will happen to pension contributions?
The Pensions Regulator have confirmed that pension contributions will continue to be payable. Contributions could be calculated on the income that is paid to each furloughed employee.
Where can I get more help?
If you would like further information or advice, please contact Brunsdon Financial by email at firstname.lastname@example.org
This document is intended for all Brunsdon Financial Clients and this information should not be communicated elsewhere. If you are not the intended recipient you are hereby notified that any disclosure, copying, distribution or reliance upon the contents of this document is strictly prohibited. The information provided does not constitute advice or recommendation. Any information regarding tax treatment is based on our current understanding of UK tax law and HM Revenue and Customs practice which may be subject to change. Your company’s circumstances may also impact on tax treatment. For full details visit www.gov.uk