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Furlough and Employers NI

What is reclaimable?

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Member of staff furloughed from 24th March (8 days of March)

Monthly salary of £2,666 paid in full for March (this has been the same through the full year and in March 2019)

Employment allowance claimed in full prior to March.

Is the Employers NI to reclaim £55.47 based on ((2666-719)*0.138)/31*8*0.8???

If a director is furloughed from the same date and receives £1,042 full pay in March from the same company what Employers NI can be reclaimed?  The employers NI paid on this was £143.80 - presumably we can't apply the same calc to this??

Thanks for your thoughts

Replies (8)

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JCACE
By jcace
18th Apr 2020 21:32

I would agree with the basis of your calculation of the reclaimable Employers NI for March for the staff member.
As for the director, I cant see anything in the guidance that refers to the annual calculation of directors' NI.
Per the guidance, in your scenario, you might be faced with "the relevant secondary National Insurance contributions threshold" being £nil for March (the ST having already been breached), in which case you would reclaim 80% of the total (which would seem fair). This would also mean that in April and May "the relevant secondary National Insurance contributions threshold" would not be breached so no Ers NIC could be reclaimed, which would again seem fair.
The alternative would be to follow the calculation for the staff member, meaning less NI being reclaimed in March than paid, but the opposite in April and May.
Hopefully there will be some further guidance to clarify this position.

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By Brian Gooch
22nd Apr 2020 13:09

I would say it has to be the former, on the basis that the grant is paid based on actual costs incurred. The alternative would be reimbursing a figure that has not been a cost to the company.

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By Matrix
19th Apr 2020 00:03

I think you need to go back to the steps in the guide.

Step 3: A

Furloughed pay

Lower of:
(£2,666 x 80%)/31 x 8 =£550.40
£2,500/31 x 8 = £644.20

Furloughed pay = £550.40

Step 3: B

Employer NI

Total salary is the unfurloughed pay of £1,978 + furloughed pay of £550.40 = £2,528.40.

NI = (£2,528.40 - £719) x 13.8% = £249.70

NI per day = £249.70/31 = £8.05

NI for furlough period = £8.05 x 8 = £64.44

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JCACE
By jcace
18th Apr 2020 23:39

Total salary is £2,666 ("Monthly salary of £2,666 paid in full for March ")

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By Matrix
19th Apr 2020 00:02

This is irrelevant. The calculations don’t use the salary actually paid to calculate NI but a new gross salary in B. I refer you to the link below. Sorry, edited to say it is B under Step 3.

The £2,666 is the equivalent to £2,400 in the example and the figure of £2,528.40 is equivalent to £2,229.70.

Please check if you agree since I will be using this to recalculate all my figures.

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

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JCACE
By jcace
19th Apr 2020 00:43

The £2,400 in the example was the reference salary paid in February and on which the furlough pay was then calculated. Total NI will always be calculated on actual salary paid, as normal. The example does not refer to pay that is topped up. For that you need to refer to the further guidance referred to at the end of Step 3 https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim...

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By Matrix
19th Apr 2020 01:13

Since there was only one example in the link I sent then I assumed that calculation was the one to copy every time. Multiplying by 80% makes it much simpler.

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By insolventnl
19th Apr 2020 11:50

The examples given calculate the Ers NI claimabe based on the furloughed salary - not actual salary.

Otherwise you are 'in the money' if you paying furloughed salary and hence due ers NI on that but are claiming on full salary

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