The major announcement at the end of last week was that the Government will pay 80% of the wages of inactive (“furloughed”) workers.
This measure is a huge intervention by the Government.
If you have workers whom you would otherwise have laid off, the Government will pay 80% of their wages. You keep them on your payroll and apply for a grant for the 80%.
The following are the highlights
- They are grants – you won’t have to pay this money back
- The grants have a monthly cap of £2500, i.e. they will cover 80% of the wages of someone earning a salary of £37500. If someone earns more than this, 80% of the £37500 cap is the maximum you can recover.
- The Government is encouraging employers to make up the extra 20% but they don’t have to
- For employees with variable earnings, the amount due is going to be based on whatever they earned in February 2020 (source: Paul Lewis, BBC Radio 4 Moneybox programme)
- Clients will need to be very careful which employees they include – anyone you claim for CANNOT do any work for the business, they must be at home not working
- The Chancellor said he wants this in place by the end of April at the latest
- It will be for an initial period of 3 months but could get extended
- Why not ask us for a copy of our excel cash flow tool?
Who can claim?
How do you claim?
Apparently you will ring HMRC and ask them for a grant. As soon as we are clear on the number to use we will update you. As above though, you need to do your homework first to make sure you are including the right team members. No doubt HMRC will know exactly what your employees have earned each month to date from your monthly RTI submissions, so you would need to know the employee’s name, NI number and the date from which they were “furloughed”. Our approach would be not to pay any furloughed pay until you have contacted HMRC.
We will continue to keep you updated.
Also, don’t forget that will be working additional hours so that we have spare capacity to support all clients that have been affected by this outbreak. From today (Monday 23rd March) our telephone lines will be open from 7 in the morning and will stay open until 7 at night.