UK Job Retention Scheme – answers to your questions

  • All businesses in the UK are eligible to apply for this scheme
  • All employees who pay PAYE are eligible for the scheme, including zero-hours contracts
  • If you’ve been out of work since 1st March (or made redundant) your employer can switch you to leave-of-absence instead, and claim you as a furloughed employee to”furlough” someone means to put them on standby; you are still employed but you are not allowed to do any work
  • When employers furlough an employee, the employee must agree to be furloughed. This is likely to happen as the harsh reality is that the employer’s only other option is to make them redundant (which pays less)
  • The scheme, for now, is in effect from 1st March to 31st May; and may be extended beyond that date
  • If you pay your staff on a monthly basis, and they were furloughed halfway through the month, then you can only claim for the portion of time that they were furloughed (not for the whole month)
  • Employers should keep details on how they have furloughed their staff; do this by tracking their time spent furloughed, and how much you have paid
  • HMRC are due to open a portal where you can report furloughed wages; and it is expected to be opened in late April

Advice Sessions (30 minutes per unit)

  • Unfortunately, this means that employers are likely to only be reimbursed for furloughed staff when this portal becomes operational, expect at least a two month delay in reimbursement
  • I have posted a cashbook worksheet to help businesses plan this
  • This also means that, in agreement with the employee that is furloughed, the employer can pay the employee on the same date that the employer receives reimbursement from HMRC
  • Although the employer receives back 80% of the employees pay, the employer can choose to pay between 80% or 100% of gross pay provided it does not fall below the minimum wage
  • If the employer makes you redundant, and then claims relief for you, they must pay you this relief
  • We’re not sure on the detail yet but we believe that the £2,500 cap means that this is the maximum the employer can claim back, and not the maximum net pay the employee can expect t receive. £2,500 will most likely include PAYE, NICsee and er and pension payments
  • Staff on furlough will still pay PAYE and NICs/pension
  • Staff on furlough will still accrue holidays
  • New starters can be furloughed but this is open to fraud, expect HMRC to check
  • If you are caught working for your employer during your furlough, HMRC will likely prosecute you
  • Sole directors being paid under PAYE scheme will likely not be eligible for furloughing, because they can work on other elements of the business
  • If there is a group of directors, and some directors actually do no work, they can be furloughed
  • If your staff have fallen ill due to Covid-19 (or suspected), then you can claim £94.25 in SSP relief for a maximum of two weeks, provided you have less than 250 employees
  • They need a fit note from a GP to claim this
Common Sense
  • If it looks unethical it probably is – don’t mistreat this scheme because we’ll all end up paying for it anyway
  • Keep records of how your business was affected – more schemes may be made available. The more info the better
  • Use common-sense. Stay at home if your employees can work remotely.
  • HMRC will contact you with more details – they are working on it tirelessly. It’s going to be the biggest relief package anyone has seen in the UK.

Uh-oh. I’m still unsure how this works, help!

Talk to your accountant – or even better, talk to us! Hopefully the Job Retention Scheme is a little more clear and a little less scary to you. Of course, if you are still boggled by it or just want to make sure it is done right, book a free Discovery Call with us today.
Disclaimer: This guide is for informational purposes only and specific accounting and tax advice should always be obtained where appropriate.
Colin Sweetman, ACCA

Colin Sweetman, ACCA

Colin is a chartered certified accountant and founding director of First Accounts and FutureME, as well as a contributor on The Accounting Channel (Breakeven By Breakfast) and "Finance & The Common Good".