Furloughed - what to do on payroll

Trying to establish what to process through payroll and what employees are to be paid

Didn't find your answer?

Just trying to nail down the exact process for the payroll and paying staff before further advising clients.

Assuming employee furloughed and employer not topping up the 20%, does the 80% gross go through payroll?

So, I would then assume employee to be paid net wages per payroll and employer later gets the grant funding. However the guidance states:

“You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted.”

However the guidance for employees states:

“You’ll still pay Income Tax, National Insurance contributions and any other deductions from your wage.”

Any thoughts appreciated.

Replies (4)

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JCACE
By jcace
27th Mar 2020 11:36

The 80%/£2,500 will be processed as pay in the normal way and therefore subject to income tax, NI and workplace pension contributions.
Nothing in your post is contradictory. Tax, NI and pensions won't be classed as fees and should be deducted as normal. The employer will be able to reclaim the gross plus employer's NI and employer's minimum pension contribution, but will also be liable to pay the employees' deductions to HMRC/pension provider, so the effect should be cash neutral.

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By SE_Confused
27th Mar 2020 14:49

I thought we are supposed to put the normal pay as usual and then claim the 80% via the new portal?

If the employer does not top it up then the employee just gets the 80%

Is NI and Tax due on the 100% or just the 80%? - it would be silly to do it on the 100% which brings me to there being no point in putting the pay as 100% ...

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Replying to SE_Confused:
By SteveHa
27th Mar 2020 15:43

If you put 100% through payroll, even though employee is being paid based on just 80% then you are articifially inflating their pay, which could have consequences for tax rate, UC etc.

You aren't thinking this through.

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By tom123
27th Mar 2020 15:52

I agree with Ste - your top line pay is whatever the gross to the employee is - ie 80% if that is the choice.

They would not thank you for showing a higher notional figure than they ended up with.

(All assuming proper arms length employment and unconnected employees and company etc)

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