The most recent support measure announced the new Chancellor, Rishi Sunak, was a multibillion package which aims to protect jobs with a government commitment to pay 80% of salaries for private sector employees, who are forced to take a leave of absence during the coronavirus crisis, a three-month deferral of VAT payments until the end of June, and the self-employed will be eligible for statutory sick pay (SSP). We look at what we know about the Coronavirus Job Retention scheme.
The government’s coronavirus job retention scheme is open to all private employers regardless of size. Initially this will be in place for three months. Government grants will cover 80% of the salary of retained workers up to a total of £2,500 a month. The scheme will be backdated to 1 March 2020.
HMRC is working on changing their IT systems to set up the scheme. It is anticipated that this will take until April to complete as it will require complex changes to PAYE reporting.
Once updates are received from HMRC, advo’s own payroll system will be adapted to the new rules.
Further to our recent update giving background information to what has been announced so far this is what we know so far about the job retention scheme.
Support for businesses through the Coronavirus Job Retention Scheme
Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. All UK businesses are eligible.
HMRC will reimburse 80% of ‘furloughed’ workers wage costs, up to a cap of £2,500 per month.
HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
Once the new HMRC process is set up, to access the scheme you will need to:
- Designate affected employees as ‘furloughed workers,’ and notify your employees of this change – Please note that changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
- Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.
You can find out more about this and the wider support packages available from the Government website here.
You can read our first COVID-19 Payroll Update here.
We are here to help. If you are an advo client and need guidance on your payroll or payroll related queries included in the enclosed update then please get in touch with the team on firstname.lastname@example.org.
Andy Henderson, advo Payroll Manager