Furlough Scheme Extended and Further Economic Support announced

The Coronavirus Job Retention Scheme has been extended for a month with employees receiving 80% of their current salary for hours not worked and further economic support announced.

Published 31 October 2020

From:   HM Treasury and The Rt Hon Rishi Sunak MP

People and businesses across the UK are being provided with additional financial support as part of the government’s plan for the next phase of its response to the coronavirus outbreak, the Prime Minister announced today (31 October).

Throughout the crisis the government’s priority has been to protect lives and livelihoods. Today the Prime Minister said the government’s Coronavirus Job Retention Scheme (CJRS) – also known as the Furlough scheme – will remain open until December, with employees receiving 80% of their current salary for hours not worked, up to a maximum of £2,500. Under the extended scheme, the cost for employers of retaining workers will be reduced compared to the current scheme, which ends today. This means the extended furlough scheme is more generous for employers than it was in October.

In addition, business premises forced to close in England are to receive grants worth up to £3,000 per month under the Local Restrictions Support Grant. Also, £1.1bn is being given to Local Authorities, distributed on the basis of £20 per head, for one-off payments to enable them to support businesses more broadly.

To give homeowners peace of mind too, mortgage holidays will also no longer end today.

Chancellor Rishi Sunak said:

Over the past eight months of this crisis we have helped millions of people to continue to provide for their families. But now – along with many other countries around the world – we face a tough winter ahead.

I have always said that we will do whatever it takes as the situation evolves. Now, as restrictions get tougher, we are taking steps to provide further financial support to protect jobs and businesses. These changes will provide a vital safety net for people across the UK.

Job Retention Scheme

Employers small or large, charitable or non-profit, are eligible for the extended Job Retention Scheme, which will continue for a further month.

Businesses will have flexibility to bring furloughed employees back to work on a part time basis or furlough them full-time, and will only be asked to cover National Insurance and employer pension contributions which, for the average claim, accounts for just 5% of total employment costs.

The Job Support Scheme, which was scheduled to come in on Sunday 1st November, has been postponed until the furlough scheme ends.

Additional guidance will be set out shortly.

Mortgage Holidays

Mortgage payment holidays will no longer end today. Borrowers who have been impacted by coronavirus and have not yet had a mortgage payment holiday will be entitled to a six month holiday, and those that have already started a mortgage payment holiday will be able to top up to six months without this being recorded on their credit file.

The FCA will announce further information on Monday.

Business Grants

Businesses required to close in England due to local or national restrictions will be eligible for the following:

·         For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks;

·         For properties with a rateable value of between £15k-£51k grants to be £2,000 per month, or £1,000 per two weeks;

·         For properties with a rateable value of £51k or over grants to be £3,000 per month, or £1,500 per two weeks.

Today’s announcements are only part of the government’s world-leading economic response to coronavirus – the largest package of emergency support in post-war history – to protect, create and support jobs.

The furlough scheme protected over nine million jobs across the UK, and self-employed people have received over £13 billion in support. This is in addition to billions of pounds in tax deferrals and grants for businesses.

Further information

GRANTS

·         Business grant policy is fully devolved. Devolved Administrations will receive Barnett consequentials which they could use to establish similar schemes.

JOB RETENTION SCHEME

·         This extended Job Retention Scheme will operate as the previous scheme did, with businesses being paid upfront to cover wages costs. There will be a short period when we need to change the legal terms of the scheme and update the system and businesses will be paid in arrears for that period.

·         The CJRS is being extended until December. The level of the grant will mirror levels available under the CJRS in August, so the government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions (NICs) and pension contributions only for the hours the employee does not work.

·         As under the current CJRS, flexible furloughing will be allowed in addition to full-time furloughing.

·         Further details, including how to claim this extended support through an updated claims service, will be provided shortly.

·         The Job Support Scheme will be introduced following the end of the CJRS.

Who is eligible?

Employers

·         All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.

·         The government expects that publicly funded organisations will not use the scheme, as has already been the case for CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements apply to these employers.

Employees

·         To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
*As under the current CJRS rules:

·         Employees can be on any type of contract. Employers will be able to agree any working arrangements with employees.

·         Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. Such calculations will broadly follow the same methodology as currently under the CJRS.

·         When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.

·         Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.

·         For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.

What support is being provided and employer costs:

·         For hours not worked by the employee, the government will pay 80% of wages up to a cap of £2,500. The grant must be paid to the employee in full.

·         Employers will pay employer NICs and pension contributions, and should continue to pay the employee for hours worked in the normal way.

·         As with the current CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.

·         The Government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.

What you’ll need

To make a claim, you will need:

·         to be registered for PAYE online

·         your UK bank account number and sort code (only provide bank account details where a BACS payment can be accepted)

·         the billing address on your bank account (this is the address on your bank statements)

·         your employer PAYE scheme reference number

·         the number of employees being furloughed

·         each employee’s National Insurance number (you will need to search for their number using basic PAYE Tools if you do not have it, or contact HMRC if your employee has a temporary number or genuinely has never had one)

·         each employee’s payroll or employee number (optional)

·         the start date and end date of the claim

·         the full amounts that you’re claiming for including:

·         employee wages

·         employer National Insurance contributions (for claims up to 31 July)

·         employer minimum pension contributions (for claims up to 31 July)

·         your phone number

·         contact name

You also need to provide either:

·         your name (or the employer’s name if you’re an agent)

·         your Corporation Tax unique taxpayer reference

·         your Self-Assessment unique taxpayer reference

·         your company registration number

If you’re claiming for employees that are flexibly furloughed, you’ll also need:

·         the number of usual hours your employee would usually work in the claim period

·         the number of hours your employee has or will work in the claim period

·         you will also need to keep a record of the number of furloughed hours your employee has been furloughed in the claim period

It is important that you provide the data we need to process your claim. Payment of your grant may be at risk or delayed if you submit a claim that is incomplete or incorrect.

Using an agent to do PAYE online

If you use an agent who is authorised to do PAYE online for you, they will be able to claim on your behalf.

If you’re using an agent you must:

·         get their agent ID (your agent can get this from their HMRC online service for agents account under ‘authorise client’)

·         be enrolled for PAYE online for employers

·         give them your UK bank account details (only provide bank account details where a BACs payment can be accepted)

If you would like to use an agent, but do not have one authorised to do PAYE online for you, you can do that by accessing your HMRC online services and selecting ‘Manage Account’.

You can also use this service to remove authorisation from your agent if you do not want it to continue after they have submitted your claim(s).

If you’re putting 100 or more employees on furlough

For claim periods starting on or after 1 July, you can download a template if you’re claiming for 100 or more employees and upload this when you claim.

Using this template will help ensure your claim is processed quickly and successfully. Your template may be rejected if you do not give the information in the right format.

How to claim

You’ll need the Government Gateway user ID and password you got when you registered for PAYE online.

If you do not finish your claim in one session, you can save a draft. You must complete your claim within 7 days of starting it. All claims must be submitted no later than 30 November 2020 and you will not be able to add to that claim after 30 November.

If you want to delete a claim in the online service, you must do this within 72 hours of starting it.

Online services may be slow during busy times. Check if there are any problems with this service.

Claim now

If you’ve claimed the wrong amount

Find out what to do if you’ve claimed too much from the scheme.

Find out what to do if you’ve not claimed enough from the scheme.

After you’ve claimed

Once you’ve claimed, you’ll get a claim reference number. HMRC will then check that your claim is correct and pay the claim amount by BACs into your bank account within 6 working days.

You must:

·         keep a copy of all records for 6 years, including:

·         the amount claimed and claim period for each employee

·         the claim reference number for your records

·         your calculations in case HMRC need more information about your claim

·         for employees you flexibly furloughed, usual hours worked including any calculations that were required

·         for employees you flexibly furloughed, actual hours worked

·         tell your employees that you have made a claim and that they do not need to take any more action

·         pay your employee their wages, if you have not already

You must pay the full amount you are claiming for your employee’s wages to your employee. You must also pay the associated employee tax and National Insurance contributions to HMRC, even if your company is in administration. If you’re not able to do that, you’ll need to repay the money back to HMRC.

You must also pay to HMRC the employer National Insurance contributions on the full amount that you pay the employee. If you have submitted a claim for the employer National Insurance contributions and pension contributions, then the full amount you claim in respect of these must be paid or you will need to repay the money back to HMRC.

Employers cannot enter into any transaction with the worker which reduces the wages below the amount claimed. This includes any administration charge, fees or other costs in connection with the employment. Where an employee had authorised their employer to make deductions from their salary, these deductions can continue while the employee is furloughed provided that these deductions are not administration charges, fees or other costs in connection with the employment.

When the government ends the scheme

When the scheme closes in December 2020, you must decide to either:

·         bring your employees back to work on their normal hours

·         reduce your employees’ hours

·         terminate their employment (normal redundancy rules apply to furloughed employees)

30 November is the last day that you can submit claims for periods ending on or before December 2020. After this date you will not be able to submit any further claims or add to existing claims.

Tax Treatment of the Coronavirus Job Retention Grant

Payments you’ve received under the scheme are to offset the deductible revenue costs of your employees. You must include them as income when you calculate your taxable profits for Income Tax and Corporation Tax purposes.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

Individuals with employees that are not employed as part of a business (such as nannies or other domestic staff) are not taxable on grants received under the scheme. Domestic staff are subject to Income Tax and National Insurance contributions on their wages as normal.

How to report grant payments in Real Time Information

Find out how to report Coronavirus Job Retention Scheme grant payments on Real Time Information submissions.

If you have not claimed enough

If you made an error in your claim that has resulted in receiving too little money, you will still need to make sure you pay your employees the correct amount. You should contact HMRC on or before 30 November to amend your claim and as you are increasing the amount of your claim, we may need to conduct additional checks. You will not be able to amend your claim to increase the amount you have claimed after 30 November.

30 November is the last day that you can submit claims for periods ending on or before December 2020. After this date you will not be able to submit any further claims or add to existing claims.

Subscribe here

to receive email updates
for any new posts

Join 212 other subscribers.

Refund Policy

For online payments taken via the Invoice Payment page, no refunds can be given as payment is only taken after my service has been provided.

 

%d bloggers like this: