Owner Kate Upcraft Consultancy Ltd
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Coronavirus job retention scheme: Get the details right

The guidance for employers on the coronavirus job retention scheme (CJRS) was updated on 20 April and 27 April with details on eligbility, and this article has been amended based on that guidance as well as the earlier updates issued throughout April, to cover all the key points about this scheme.

30th Apr 2020
Owner Kate Upcraft Consultancy Ltd
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Coronavirus Job Retention Scheme details - 30 April update

Who can claim?

All employers can benefit from the scheme, even owner-managed businesses. On 17 April Rishi Sunak, Chancellor of the Exchequer announced that CJRS grants would be available to pay furloughed employees until the end of June. This extension is widely understood to be put in place to avoid businesses having to start redundancy processes to take effect from the end of May.

The government wants the support to be as inclusive as possible. There is no conditionality related to having sufficient funds which for example have been applied to the business interruption loans. However, the employer must have set up a PAYE scheme before 19 March 2020, enrolled for PAYE online and have a UK bank account.

Owner-managed businesses can make a claim from the CJRS, effectively they will furlough themselves, but see comments on directors below.

The following employers would therefore qualify:

  • Businesses
  • Charities and not-for-profit organisations
  • Individuals employing domestic staff (4 April update)
  • Public sector organisations (see below re: public funding)

Which employees?

To reclaim a CJRS grant from HMRC, the employer has to designate employees as furloughed (essentially a period of paid leave when they cannot work) other terms and conditions of employment continue unless these have been varied too, (see How to Furlough below).

Whilst furloughed staff can’t do any work for the employer that furloughed them, they can undertake training, work for other unconnected employers (see Direction para 6.2), work on a self-employed basis (see Directors below) or as a volunteer.

The guidance refers to employees (and occasionally workers). HMRC confirmed on 4 April that the following individuals are covered:

  • Employees on any type of employment contract including zero-hours, flexible, part-time or fixed term
  • Apprentices (make sure you follow the guidance on continuing apprentice training and NMW)
  • Agency workers (including those employed by umbrella companies)
  • Office holders (including company directors) - but only on their PAYE income 
  • Salaried members of Limited Liability Partnerships (LLPs).
  • Limb (b) workers - ie those on PAYE not those who are self-employed
  • Nannies and other domestic staff.

HMRC confirmed on 9 April 2020 the following employees are covered:

  • Unpaid leave - CJRS grant only covers employees who were on unpaid leave on, or after, 28 February 2020 and furlough can only begin when that period was due to expire eg return from sabbatical. Unpaid leave that begin after 19 March 20 cannot be covered under the CJRs
  • Maternity and paternity leave - those on statutory leave can return from that leave and be furloughed.
  • Sick leave - Furloughed employees who become sick can be moved on to SSP, and sick employees can be furloughed, but the CJRS only covers salary (SSP will not be paid by employer as SSP has ended)
  • Shielding - employees who are caring for someone or shielding can be furloughed.
  • Working for another employer - these employees can be furloughed as long as they are doing no work for the employer who is furloughing them.
  • TUPE transfers - where the transfer was made from 19 March onwards it does not affect the ability to furlough and make a claim. 
  • PAYE restructures – where employees are moved to a new PAYE scheme within the business to consolidate two or more schemes after 19 March 20
  • Deemed employees- those subject to the off-payroll rules in the public sector. These individuals can be furloughed and the CJRS can be claimed as long as there is no public money going to the individual from the project them were working on. Note this is a complete change from the previous position  for deemed employees as it was understood.

The following individuals will not be covered:

  • Workers engaged under a contract for services, ie sole traders being paid gross via an invoice. These individuals will have to claim under the self-employed support scheme. 

A business may need to furlough all employees if it has effectively closed down, as in hospitality or non-food retail. However, it can choose to furlough a group of employees, whilst key workers continue to work, or to rotate groups between furloughing and working.

Directors

The HMRC CJRS Direction confirms that company directors can be furloughed as long as they do no work for the business which employs them or for any "person" connected to that business. "Person" in this context includes individuals, charities and other companies. A director/ shareholder who controls a company remains connected with the company while he controls it, so any work he performs as a self-employed individual is treated as indirect work for the company (CJRS Direction para 13.4).  

Paragraph 6.6 the CJRS Direction clarifies that directors may fulfil a duties or other obligations arising by or under an Act of Parliament relating to the filing of company accounts, or provision of other information relating to the administration of the director’s company. Those tasks are not counted as work for the company for CJRS purposes. HMRC guidance has indicated that the director must do no income generating work for their business.

Public sector bodies

The government expects that most public sector bodies will still have the majority of employees working in frontline services.

The 4 April HMRC guidance says: "Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs."

This has generated an area of major confusion as there are numerous employers who receive some sort of public funding even though they are not strictly in the public sector, such as nurseries receiving early years’ funding and universities. The public funding may be only a small proportion of their overall income and the rest of their income has been severely impacted as a result of COVID-19, so some clarity is needed as to whether any public funding causes the employer to be unable to furlough. Let’s hope we can rely on the phrase: where organisations are not primarily funded by the government’ (my italics).

When were they employed?

On 15 April HMRC changed the cut-off date for eligible employees from a start date of 28 February or earlier to 19 March 2020. However, all employees included in the CJRS claim must also have been reported to HMRC in an RTI submission by midnight on 19 March 2020, and must have received some pay in 2019/20.  

HMRC categorically confirmed on 28 April that employees and directors who had reported thier only 2019/20 earnings under RTI after 19 March 2020 cannot be included in the CJRS. This affects all employees, not just directors on annual schemes who tend to pay themselves at the end of March.

Where employees were added to a March payroll retrospectively because they missed the February payroll cut-off date, they may have still missed the 19 March cut-off date if the March FPS was not sent until after 19 March.

It is useful to see in the updated HMRC guidance on 4 April (and expanded on 15 April) that people could be re-employed by their old employer if they had resigned since 28 February and had now had their new job offer withdrawn. However, this is the employer's choice and not an employee's right.

Employers need to be aware of the pitfalls of re-employing former employees. For example is this a new contract with a different salary and benefits package or are they being reinstated on the previous terms? It could make a huge difference to the pay they are receiving and what the employer can legitimately reclaim. Also will this additional period of service give the employee two years of employment and therefore entitlement to redundancy pay in the future or protection from unfair dismissal? If the employer decides not to reinstate everyone who was made redundant in March could there be an issue of discrimination?

The CJRS is effective from 1 March so changes to March payrolls can be made retrospectively to change employees’ status to ‘furloughed’ and reinstate those who had already been made redundant due to COVID-19. However, the PAYE scheme must have been in existence on 19 March 2020 (as per 15 April guidance).
 

How to furlough

The CJRS doesn’t override employment law. The employer must mutually agree with an employee, ideally in writing as it’s a contract change, that the employer is designating them as furloughed (there is no work for them due to COVID-19) and what the employer is planning to pay them whilst furloughed.

Decisions to furlough and the amount to be paid are a contract change. HMRC confirmed on 4 April that this decision must be put in writing to the employee and the employer must retain a record of this communication for five years. However, the employee does nto have to respond to this communication in writing. 

In order to take advantage of the scheme employees should be paid at least 80% of their pay based on their pay in the last pay period before 19 March 2020, tax year 2019/20, or the same pay period last year, whichever is the higher.

Some businesses may choose to continue to pay full salary even though they can only reclaim 80% up to the cap. Other employers may only be able to pay 80% of regular salary or even less than that, until the CJRS grant arrives – but they must retrospectively pay the employee to meet the 80% value or will be in breach of the scheme.

An employee can be furloughed for a minimum of three weeks at a time and the government have extended the scheme to 30 June 2020. The individual could remain furloughed even if the CJRS is not extended, but then the employer would not have any grant funding to cover their wages. HMRC confirmed on 20 April that a furlough period can be extended for a shorter period thant three weeks as long as the initial period of furlough was at least 21 days.

Salary sacrifice

There have been lots of questions about salary sacrifice, particularly in respect to pensions where employees are concerned because of the reduction in their net pay and employers because of the increase in their pension contribution exposure. The HMRC guidance updated on 4 April now says that future contract changes (and that is crucial as a salary sacrifice contract change should be in place before the payday in which it takes effect – so not retrospectively) are acceptable even if the sacrifice hasn’t been in place for 12 months as this can be classed as a lifestyle event.

But this will not affect the  CJRS claim which is based on the last pay day before 19 March. The Pensions Regulator provided new guidance on salary sacrifice on 17 April. It is vital that employers do not further reduce furlough pay to meet a sacrifice agreement or they will be in breach of the scheme.

How much will be paid?

The grant from the CJRS will be the lower of £2,500 per month per employee or 80% of gross regular wages plus employer NIC on the grant figure plus 3% employer pension contributions on the grant figure using the qualifying earnings threshold (see example). On 9 April HMRC confirmed that employers must not claim for the 3% pension contributions if the employee is not in the pension scheme. 

The apprenticeship levy can’t be claimed as part of the CJRS grant.

The 9 April update clarified that any employers' NI covered by the employment allowance cannot be included in the CJRS claim.

When calculating claim values for directors of owner-managed companies you can only consider the salary that has been subject to PAYE, not any dividends paid to those directors.

HMRC has made a calculator available help you work out how much to claim, which on 22 April was updated to deal with employees with varible pay.

Running the payroll

It is important to distinguish between the CJRS grant funding and normal payroll operations which continue, other than that employees won’t necessarily be receiving their former contractual wages. On 23 April HMRC published guidance on reporting payments from the CJRS under RTI.

To decide how much to pay, employers will need to calculate how much the CJRS grant will cover. The £2,500 cap refers to regular wages as in their last pay period before 19 March (per 15 April guidance), excluding bonuses, fees, "compulsory" commission and tips paid from a tronc. The HMRC guidance update on 4 April confirmed that overtime is to be included, but not discretionary bonuses (including tips not from a tronc) and commission payments, nor non-cash payments.

For an individual with variable pay, such that the last pay period before 19 March was not an indicative week or month, their average earnings over 2019/20 or the period of employment during that year can be used. The HMRC calculator has now been updated to cope wiht employees who have variable pay.

The figure that is agreed with the employee to be paid in the period of furlough will treated as normal earnings, subject to all statutory and voluntary deductions, reported under RTI with the remittances paid over to HMRC by the normal deadline.

What is paid through the payroll will not necessarily equal what can be reclaimed from HMRC.

The claim

A standalone portal was introduced by 20 April 2020 to allow the CJRS grants to be claimed. HMRC has published a step by step guide for employers on how to make a claim. For more information on how to claim, see this AccountingWEB article

Repeated claims for CJRS will be required for the same employer if the furlough period is extended. As long as the next claim follows on sequentially by date from the claim before, the CJRS claims can be submitted more than three weeks apart.

On 15 April HMRC confirmed that the employer will have to provide the NI number and name for each employee included in the claim, but the payroll number is optional. However, some employees don’t have a NINO, in which case you should contact the HMRC  COVID-19 Helpline on 0800 024 1222 who can process their claim over the phone.

A major concern is that there may be a requirement to have a PAYE online account in order to make a claim. Thousands of businesses, particularly SMEs that outsource their payroll operation to a tax agent don’t have a PAYE online account. Those businesses will have furloughed employees in March on the understanding, from the initial HMRC guidance, that as long as they had a UK bank account and an operational PAYE scheme that was sufficient to be able to make a reclaim in due course. ICAEW have provided a step by step guide to agent authorisation as it stands at 20 March 2020.

As one amount of CJRS grant will be claimed for a group of employees you need to consider how this will be reconciled once it is paid into the company’s bank account (it needs to be a UK account).

HMRC will reserve the right to investigate claims and cross-reference them to RTI data.

 

Replies (222)

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By ChrisFinn88
30th Mar 2020 16:07

Good afternoon all,

While some of this is a lifeline, particularly to our firm, I cannot help but feel this is extremely unfair on those who run small one man band Ltd Co's on a low salary, high div ratio.

We have a few clients who have switched from ST to Ltd in the last few years and it seems like they have shot themselves in the foot through no fault of their own. As with such a high % of UK residents, many are living hand to mouth.

Does anyone think there is a realistic chance of Mr Sunak introducing any further measures?

Take care all.

C

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Replying to ChrisFinn88:
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By Sanjeev Nanda
31st Mar 2020 13:19

Chris, I am inclined to wholeheartedly agree with you. This ruling is a life-raft for companies like mine. Smaller establishments, enterprises, and folks working out of their homes, will see this as a confusing call to action, one that doesn't do it for them, but somehow does it for others at the same time.
~Sanjeev Nanda

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Replying to ChrisFinn88:
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By meadowsaw227
01st Apr 2020 09:41

Whilst I agree, presumably in most cases the sole reason for the change from a sole trader to a Limited Company was purely to save tax, you can`t have it both ways ! .

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Replying to meadowsaw227:
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By tanyajackson
01st Apr 2020 10:28

I disagree with that statement. Many sole traders are forced to incorporate because their customers won't give them work otherwise. Their customers are trying to avoid the IR35 rules and up until recently making suppliers limited put that responsibility on our clients. Also dividends are already taxed through Corporation Tax and then again through personal tax, although slightly better off, not enough to leave them out of the aid packages.

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Replying to tanyajackson:
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By raju m
23rd Apr 2020 09:52

A lot of NIC savings as well!!

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Replying to tanyajackson:
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By raju m
23rd Apr 2020 09:52

A lot of NIC savings as well!!

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Replying to tanyajackson:
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By raju m
23rd Apr 2020 09:53

A lot of NIC savings as well!!

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Replying to tanyajackson:
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By raju m
23rd Apr 2020 09:53

A lot of NIC savings as well!!

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Replying to tanyajackson:
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By raju m
23rd Apr 2020 09:53

A lot of NIC savings as well!!

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Replying to tanyajackson:
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By raju m
23rd Apr 2020 09:53

A lot of NIC savings as well!!

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Replying to meadowsaw227:
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By ChrisFinn88
01st Apr 2020 11:48

Good morning Meadows,

While I do understand where you are coming from, nowadays the difference is very little in the overall tax position, assuming that all profits are drawn, as with most small single director and employee businesses. I still cannot help but feel this is a kick in the teeth to the person working in the garden office earning a modest income to support his/her family. The furlough scheme will not cut it for most.

C

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Replying to meadowsaw227:
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By InterimAccountant
01st Apr 2020 12:23

Completely agree but perhaps deemed employees should be included in the Job retention scheme.

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Replying to ChrisFinn88:
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By kevin503
17th Apr 2020 10:48

For people who went the "Low salary, high div ratio" route, it's difficult to feel too much sympathy. They made a choice that resulted in them being quids in at the time, now the situation has changed, and it turns out that avoiding tax and NI has consequences. For the record I also take dividends, but only after paying myself a proper salary through PAYE, not an artificially low one.

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By spuddle
30th Mar 2020 16:29

"Owner managed companies" and directors are specifically mentioned but is there any distinction made between directors who have a service contract / contract of employment who I think would correctly be treated as "employees" and those without any contract as I suspect is the case with most directors of small companies as otherwise they would have been subject to minimum wage regulations and should not have been on the typical minimal salary?

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By ocooper
30th Mar 2020 19:33

Thanks Kate, a really useful article.

Can you please tell me your source for the part where you say:

"Owner-managed businesses can make a claim from the CJRS, effectively they will be furloughing themselves and the understanding is that they do no income generating work for their business but can continue to run the business from a statutory perspective, for example preparing their accounts and returns".

I haven't seen anything that states that, so would be useful to see where you found it.

Thanks

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Replying to ocooper:
Northumberland flag
By MJShone
31st Mar 2020 09:02

Kate might have it from a different source but Ben Kerry from the Treasury team that designed the CJRS, speaking on a CBI webinar on Friday (or was it Thursday?) referred to directors not earning for the company but still being able to carry out "statutory duties". Some have interpreted this very widely, but I think it refers to "admin" such as filing accounts (as Kate says).

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Replying to MJShone:
Helen Froggett Thomson
By Helen Froggett-Thomson
06th Apr 2020 20:44

Hi, if you scroll down in the link below to almost half way, you will find this info:
Company Directors
As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.

Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.

This also applies to salaried individuals who are directors of their own personal service company (PSC).
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus...

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Replying to Helen Froggett-Thomson:
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By markmorley
13th Apr 2020 10:25

Hi re directors the companies act requires records to be maintained. The thorny questions seems to be whether raising invoices falls in necessary duties or generating revenue (one might argue if someone else performed the service )the director is doing statutory duty if there wasn't a practical alternative to them doing so . Any ideas or any seen clarification?

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Replying to Helen Froggett-Thomson:
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By markmorley
13th Apr 2020 10:25

Hi re directors the companies act requires records to be maintained. The thorny questions seems to be whether raising invoices falls in necessary duties or generating revenue (one might argue if someone else performed the service )the director is doing statutory duty if there wasn't a practical alternative to them doing so . Any ideas or any seen clarification?

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Replying to markmorley:
Morph
By kevinringer
13th Apr 2020 10:47

I have queried this too and raised it on HMRC's Agent Forum. So far all I've not seen any guidance which specifically answers this question. HMRC have said that directors are permitted to undertake statutory duties and this is a statutory duty. I feel there is a solution to this problem. The self-employed and continue to work. I feel directors should be permitted to continue working too.

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By valakot
31st Mar 2020 00:21

Hello, does anyone know answers to this questions about CJRS:
1) If an employee is furloughed on 20th March and earns £2,000 per month can this be completely backdated to 1st March or will it be apportioned as 1st to 19th normal pay (£1225.81) and 20th to 31st 80% furlough pay (80% of £774.19)?
2) If employer choose to pay furloughed employee 80% (grant) and not to up 20% while he still must run through payroll 100% of wage (as normal) how do you later account for 20% which will be underpaid?
3) Anyone knows how you will be able to claim 80% grant when the online portal opens? Will you be able to provide information about each employee because some might have been furloughed on 20 March and some for example on 29th of March. So do you have to provide details about each employee or simply make the calculations and claim the lump sum for all employees simply stating how many employees are furloughed and the beginning date of the first furloughed employee?
This seems like it is still not clear on the gov guidance.

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Replying to valakot:
By SteLacca
31st Mar 2020 10:31

valakot wrote:
2) If employer choose to pay furloughed employee 80% (grant) and not to up 20% while he still must run through payroll 100% of wage (as normal) how do you later account for 20% which will be underpaid?

Where are you getting 100% still goes through payroll even if only 80% is being paid? That makes no sense, and I haven't seen anything to that effect.

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Replying to SteLacca:
Helen Froggett Thomson
By Helen Froggett-Thomson
06th Apr 2020 20:50

It is my understanding that the employee is expected to be paid full and usual salary until the date where they are furloughed. From which date til the end of the month, they will be paid at 80% if that is what the company are claiming for. You can only claim furlough from the time the employee was at home, not working for you.
I also believe that we will have to submit details for each employee separately for the reason you have highlighted - they will have different start dates for furlough.

'Grants will be prorated if your employee is only furloughed for part of a pay period.

Claims should be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they written to confirming their furloughed status.' Extract from https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus...

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Replying to Helen Froggett-Thomson:
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By Brian Gooch
07th Apr 2020 08:41

"they will be paid at 80% if that is what the company are claiming for." Not quite, the amount claimed does not determine the amount paid to the employee, that is determined by their employment contract and any variation you have now agreed with them, from £2,500/80% to 100%. The amount paid determines the amount the employer can claim up to £2,500/80%.

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By Siobhan1986
31st Mar 2020 08:46

Hi Kate, I have a question that I hope you can help me with.

We have zero hour contracts with all employees (it’s a pub)

When calculating average weekly pay how would this be done as it’s very seasonal if I was to use their annual pay / 52 it would not give a representative figure per week as one employee in particular earns £200 a week on a week he is working but then may not work for 6/7 weeks? Any help would be appreciated as hmrc will not answer the phones
Kind regards

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Replying to Siobhan1986:
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By rmillaree
31st Mar 2020 13:25

Hello Siobhan

Does the linked (from top of article direct to covid advise) info copied below not sort of cover your question?

Employees whose pay varies
If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:

the same month’s earning from the previous year
average monthly earnings from the 2019-20 tax year
If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.

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Replying to rmillaree:
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By Siobhan1986
01st Apr 2020 10:07

No as the employee has been employed for over 12 months therefore cannot pro data based on since employment began. I’m just confused if it should be over the 52 weeks of the year or over the actual weeks worked for the year?

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Replying to Siobhan1986:
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By Lamancha
01st Apr 2020 10:33

We are in the same situation - small Pubco - a number of variable staff averaged far less than their current regular wage either by previous year's month or by tax year average.

I'm interested by the statement;

"For an individual with variable pay ie 28 February was not an indicative week or month, their average earnings over 2019/20 or the period of employment during that year can be used."

Is there any specific guidance to confirm the "indicative" here? We have stuck strictly to the average guidance and then uplifted staff to 39 hrs with the belief we would have to make up the difference.

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Replying to Siobhan1986:
By coops456
01st Apr 2020 11:22

We totalled the hourly pay for the tax year, then divided that by the number of weeks worked. This gives their average weekly earnings. Furloughed pay is 80% of that figure.

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Replying to Siobhan1986:
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By joanne.dixon62
01st Apr 2020 13:31

I was advised that for seasonal workers and zero hour contracts pay will be calculated on an average for 2019/20

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Replying to joanne.dixon62:
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By Siobhan1986
01st Apr 2020 14:00

Thanks Joanne I understand that my question is what is the average is it divided by 52 or the number of weeks they have worked in the year? Thanks

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Replying to Siobhan1986:
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By Vicky Brough
06th Apr 2020 17:41

Hi,

I am a member of CIPP and I contacted the advisory team for the input on this as I did not believe that HMRC were clear at all.

They have come back to me and confirmed that the average would be based on the weeks worked not 52 or 53 weeks (unless they worked them). I have a client that has 2 casual employees and they have both only worked 32 weeks in 2019-20 so i have taken their earnings for 2019-20 and divided by 32 to gather my average to base the 80% furlough pay on.

I hope this clears it up a bit more.

Thanks :)

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Replying to Siobhan1986:
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By mands44
06th Apr 2020 20:00

Hi you would need to average the earnings according to actual weeks worked in the tax year not just /52. If you use sage an average earnings report will do this for you if not a spreadsheet using formulas of total earnings/weeks worked with give you the answer

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Replying to Siobhan1986:
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By sallyrichardson
07th Apr 2020 18:06

So here's the issue - we have several payrolls that work term time only. If we divide their pay by the 39 weeks they work in the year, the amount we come out with for April is a lot higher than their pay would have been as they usually have 2 weeks off. But for May the average would be about right. If this is extended and we get as far as last 2 weeks in July / Aug (lets hope we don't) they wouldn't normally be paid at all. Is it OK to come out with an "average" that's much higher than they would have received in reality?

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Replying to sallyrichardson:
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By Brian Gooch
08th Apr 2020 08:17

That was exactly my concern with using only weeks worked in the calculation, you end up with an "average" that is above the true average earnings and could be much higher. It would make more sense and seem the right answer if it was all weeks since they started work (if they started in the year), so if they only worked one week in four their monthly average would be the same, not 4+ times as much. In other words, rather than dividing by number of "weeks worked", divide by number of "weeks since started working".

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Replying to Brian Gooch:
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By s23sgn
08th Apr 2020 09:42

I'm with you Brian, I've divided by weeks since started working. Otherwise you will get a higher average to pay weekly and my concern was that HMRC will disagree with this and not pay it out. Especially with casual staff don't work every week so why would you pay them furlough pay each week.

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Replying to Brian Gooch:
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By sallyrichardson
08th Apr 2020 09:49

Thanks Brian - for backing up my feelings. I will work it out using the average for 2019-20 as all the staff involved worked all last year. I think as long as the calculations we do are reasonable compared to what the staff are usually paid it will be fine if reviewed. Thanks again

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By rmillaree
31st Mar 2020 13:22

Hellllppppppppp

This advise article directly contradicts the icaew advise in on key area. Is there a missing link?

icaew advise here
https://www.icaew.com/insights/viewpoints-on-the-news/2020/mar-2020/coro...

Here it says
Owner-managed businesses can make a claim from the CJRS, effectively they will be furloughing themselves and the understanding is that they do no income generating work for their business but can continue to run the business from a statutory perspective, for example preparing their accounts and returns.

per icaew.com

The pub closed on 20 March as instructed by the Prime Minister. and following the Chancellor’s announcement on 20 March, Pubco has furloughed its staff other than Mr & Mrs Fuller who are still living above the pub and dealing with the company administration. The contracts of employment of the other staff have been varied to permit furloughing and the three permanent staff members have agreed to accept a pay reduction to 80% of the previous level. The seasonal staff for this year have not yet been hired.
No grant support is available to support the living costs of Mr & Mrs Fuller.

Whats the difference ? maybe its me being dumb as a dumbell?

To cap it off the official government advise mentions volunteering being allowable but unless my interpretation of english is pp - it is kinda like gibberish speak to me.

"If your employee does volunteer work or training
A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation."

Translations of what the above means in plain english would be appreciated.

Practicably spekaing i am presuming we are ok to separte employment duties earning money from directoral admin duties and practicably say those directoral non earning duties are non relevant - i am happy with that being the case - it just seems ridiculous they dont simply say that in plan speak.

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Replying to rmillaree:
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By susieq
01st Apr 2020 09:49

I thought I had read somewhere that if living accommodation is provided to the employee they cannot be furloughed but can't find it now. Which would explain Mr & Mrs Fuller example being excluded.

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Replying to rmillaree:
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By Brian Gooch
01st Apr 2020 10:02

The difference is that the part of the article above only applies to companies and their directors, although that is not clear from the phrase "Owner-managed businesses" used, whereas the icaew extract is about a partnership.

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Replying to Brian Gooch:
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By susieq
01st Apr 2020 11:07

It does say "Pubco" is run as a limited company with Mr & Mrs Fuller taking a salary of £8600 each (doesn't refer to a partnership that I can see)

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Replying to susieq:
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By Brian Gooch
01st Apr 2020 12:19

Oops, you're right - I didn't read it properly.
It says they don't qualify because they are doing company administration - presumably that extends beyond statutory duties to things like running payroll, cancelling supplier orders, paying invoices, etc. However, you would have thought that one of them could handle all that, whilst the other one is furloughed, or they could reasonably be furloughed for 3 weeks and deal with everything in the 4th.

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Replying to Brian Gooch:
Helen Froggett Thomson
By Helen Froggett-Thomson
01st Apr 2020 13:30

I agree with the conclusions in this thread, but I would add that you can actually work FOR SOMEONE ELSE other than the company who is furloughing you, while you are furloughed. (and I can provide the gov.doc to back this up)
Also you can be furloughed by any number of different employers, say you had a few part time jobs, you don't have to just 'choose' one to furlough you.

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Replying to Helen Froggett-Thomson:
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By petero
01st Apr 2020 18:21

Helen, please can you provide the source re working FOR SOMEONE ELSE, as I've not seen that online.

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By Sanjeev Nanda
31st Mar 2020 13:26

While not perfect, we stand way better than 90% of the developed world, which has yet to give its fledgling entrepreneurs, any life-line of sorts. Even USA has yet to rule in favor of their small-to-medium entrepreneurs, they too stand distressed at the moment. My only gripe is that the literature is still weak in some places. Nevertheless, a pulse of optimism is slowly rising in me, after weeks of coronavirus pandemonium.
~Sanjeev Nanda

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By meadowsaw227
01st Apr 2020 09:38

Hi all,
Just a general question about the minimum wage increase from the 1st April , do we have to adjust the hourly rate to take into account the increase before calculating the amount of furlough pay ?

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Replying to meadowsaw227:
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By sallyrichardson
01st Apr 2020 09:56

It is our understanding that furloughed pay claims will be based on the historic wages. As they are furloughed and not working NLW and NMW do not apply or need to be adhered to. This was on the HMRC website. So no - you cannot adjust it to the new levels for furloughed workers, just for people that are still working.

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By mkowl
01st Apr 2020 09:48

I can't say I empathise too much with those that have utilised the low salary / rest as dividends approach. They have contributed less in tax (yes it is now marginal I appreciate) but it has been deliberate behaviour fully in the knowledge it mitigated tax and maximised net pay.

To then seek a handout because they took that advantage seems disingenuous

Had an argument on Twitter with a football commentator - where he said there was no tax advantage and he was glad I wasn't his accountant. I suggested I was a better accountant than he was commentator

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Replying to mkowl:
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By norstar
01st Apr 2020 10:07

They are not seeking "a handout because they took that advantage", they are asking for help because like millions, all of their income has suddenly ceased and they can't afford to live...

I'm absolutely fed up with this rhetoric that people who simply set up in the way the tax rules of the country encouraged them to do (unless they were stupid or incompetent) are somehow less worthy of help than those who didn't. We all need to eat.

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Replying to norstar:
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By ChrisFinn88
01st Apr 2020 16:08

Here, here Norstar. Well said.

No one could have forecasted this, and very little would ever think to plan for such a situation.

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