Job Retention Scheme - PAYE vs date of employment

Gap between start of employment and entry into PAYE system

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https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

I have a couple of payrolls where employees were employed before the end of February but first pay date (and therefore first entry on an RTI return) was in March.

The guidance says:

"Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract"

and then

"Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme."

Which leaves the gap of people hired but not on the PAYE system. So do they qualify to be furloughed or not?

Or maybe my brain is just fried and I'm missing something obvious.

Replies (17)

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By SteveHa
01st Apr 2020 14:58

I would say yes, they can be furloughed, but like everyone else, I'm just poking in the dark with a blunt stick.

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By Matrix
01st Apr 2020 17:01

What does it say on the new starter declaration and on March RTI? On my software it would say their start date on the RTI statement.

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By moboffsol
01st Apr 2020 17:14

Apologies if my query has been asked before. I have looked but unable to find anything.
I have a couple of clients who became directors in April 2019 and have been placed on the payroll at £12,500 pa.
Prior to becoming directors they were self-employed earning significantly more than £12,500.
Are they able to take their previous income into consideration or are they only able to claim 80% of the £12,500 if furloughed?

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Replying to moboffsol:
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By Matrix
01st Apr 2020 17:23

I thought they had to be currently self-employed?

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By moboffsol
01st Apr 2020 17:52

2 different scenarios. Was self-employed up until April 2019 when they became Ltd company directors on the payroll earning (through payroll) at least a 3rd of what they were when self-employed.
Once year end accounts completed they will have dividends to declare but this, I understand, is irrelevant.
If they had stayed self-employed their 80% would have been much higher than that of their £12,500 salary.
Hindsight and all that!

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Replying to moboffsol:
RLI
By lionofludesch
01st Apr 2020 18:00

moboffsol wrote:

2 different scenarios. Was self-employed up until April 2019 when they became Ltd company directors on the payroll earning (through payroll) at least a 3rd of what they were when self-employed.
Once year end accounts completed they will have dividends to declare but this, I understand, is irrelevant.
If they had stayed self-employed their 80% would have been much higher than that of their £12,500 salary.
Hindsight and all that!

What's two different scenarios ?

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Replying to moboffsol:
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By Matrix
01st Apr 2020 18:05

I think it is very clear that they don’t meet any of the criteria under Who can apply.

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-...

Surely they took most of their income as dividends in 2018-19 so why are they any different to any of our other limited company clients?

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By lionofludesch
01st Apr 2020 18:19

Matrix wrote:

I think it is very clear that they don’t meet any of the criteria under Who can apply.

Why not ?

Which benefit are we talking about here ?

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By moboffsol
01st Apr 2020 18:27

Matrix wrote:

I think it is very clear that they don’t meet any of the criteria under Who can apply.

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-...

Surely they took most of their income as dividends in 2018-19 so why are they any different to any of our other limited company clients?


They didn't take any dividends in 2018-2019 as they were self-employed in that year. I think I have received the answer to my question. Hindsight is a wonderful thing, they would have been better off staying SE.
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Replying to moboffsol:
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By lionofludesch
01st Apr 2020 17:56

moboffsol wrote:

Apologies if my query has been asked before. I have looked but unable to find anything.
I have a couple of clients who became directors in April 2019 and have been placed on the payroll at £12,500 pa.
Prior to becoming directors they were self-employed earning significantly more than £12,500.
Are they able to take their previous income into consideration or are they only able to claim 80% of the £12,500 if furloughed?

No, they can't include any self employed income.

Even if they could, employed folk are just looking back over the past year so earnings before 1st April 2019 would have been of little or no import.

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Replying to moboffsol:
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By kestrepo
01st Apr 2020 18:04

I didn't think Directors qualified for furlough! They are neither classed as workers nor employees.

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Replying to kestrepo:
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By lionofludesch
01st Apr 2020 18:23

kestrepo wrote:

I didn't think Directors qualified for furlough! They are neither classed as workers nor employees.

It's pretty well established now that they do qualify.

Subject to them not working, etc etc.

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Replying to lionofludesch:
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By kestrepo
01st Apr 2020 19:47

Thanks. In my defence I dont think I have had the time to look up since Friday!

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By moboffsol
01st Apr 2020 18:24

They do

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By kestrepo
01st Apr 2020 18:13

If they were employed and physically working before the end of February and you have documentation to prove this (like a signed and dated employment contract or timesheet) I would include them in Furlough Leave. I would also be interested in keeping records close to hand for any workers employed in March who did not qualify. You would then be able to prove a clear and distinct cut off point that you have adhered to in these uncertain circumstances if it was ever needed.

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By insolventnl
01st Apr 2020 20:05

I am guessing they will miss out purely because now they can manipulate the system. Whilst they want to hep out they do not want people to cheat the system.

Hence why maybe they are not accepting people who are self employed for this 19/20

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By alfredpennypinch
02nd Apr 2020 11:26

Thank you all for your help, it is much appreciated.

Unless and until more guidance emerges on this specific area, I'm thinking they probably will qualify to be furloughed, the grant can be applied for and I'll have to keep records of signed contracts, timesheets etc for HMRC to poke their noses into when the dust settles.

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