WellTax Blog

Support for businesses through the Coronavirus Job Retention Scheme.

March 4, 2020

From Monday 23 March, the entire UK has been put into lockdown by the government and citizens have been instructed to stay at home. As a response to that, Chancellor Rishi Sunak announced the Coronavirus Job Retention Scheme. This measure is considered as the most effective manoeuvre in the fight against COVID-19.

For employees that otherwise would be redundant (Furloughed Workers), the Scheme implies a reimbursement equal to 80% of employees’ wages up to £2,500 of their monthly salaries and the correspondent NIC Employer contribution and Minimum Employer Pension Contribution (3%). The remaining percentage of their salaries (20%) could be added by the employer at its full discretion as a “top-up” wage. Doing so, the employer would be liable for the NIC liabilities (only related to the top-up amount). Wages of furloughed employees will be subject to Personal Income Tax and Employee National Insurance as usual. Employees will have also to pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt-out or to cease saving into a workplace pension scheme.

The scheme will last until May 2020 (however, it could be extended). After the scheme, the employer must decide whether to make the employees redundant or to re-employ them. The employer can also re-employ redundant employees made so after the 28th of February. Employees must not work at all while they are furloughed. However, there are some exceptions for voluntary work and training. The minimum length of furloughing is three weeks. An employee can, however, be furloughed multiple times, subject to the minimum term of three weeks, as often as the employer and employee agree. The scheme is not available yet but it will be by the end of April. It is anticipated that government funds will not be available until May 2020.

Employers can decide whether to keep employees under their payroll by agreeing with them for a salary reduction or place them under the scheme. Employees who have more than one job can also apply to the scheme.

Once HMRC has received Employer’s claim and eligibility for the grant has been approved, the payments will be made via BACS transfers to a UK bank account.

Payments will be made as usual via RTI Submission. Employers should make their claim under actual payroll amounts when they submit their payroll or even in advance.

All the grant received by the employers under this scheme must be paid to the employees, no fees can be withheld from what has been granted.


Support for businesses who are paying sick pay to employees

SMEs who are not able to pay COVID ill employees will get a grant of 2 weeks from the government covering the SSP (Statutory Sick Pay). Employers in order to be eligible need to have fewer than 250 employees. Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.

Related articles

01 December, 2023

UK Autumn Statements 2023: what does it mean for individuals?

08 December, 2022

Truss vs Sunak: an overview of the proposed fiscal policies of the two candidates

Search something