Coronavirus Job Retention Scheme

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As I am sure you will already know the government have announced a scheme to help employers whereby 80% of salaries are covered by HMRC grants.  However, what you may not know are details of the scheme and how it will operate.  The scheme is called Coronavirus Job Retention Scheme – catchy title isn’t it………

The salary is capped at £2,500 per month, and applies from the 1st March lasting for 3 months, whether the 3 month period could be extended is unclear at this time.

It is available to employees on the payroll as at the 29th February.

The employer can top up the employees wages to the full amount of their normal wages if they wish.

The employer pays the employee through the payroll, so we will continue to provide payroll services for our clients as normal throughout the period of this scheme.

In order to access the scheme the employer notifies the employees that they have been furloughed, that is laid off.

The employer has to provide information to HMRC through a new online portal.  This portal has not been set up yet as it is in the process of being built.

In the meantime, in order to help cash flow, you may but is expected to be able to access loans though the Business Interruption Loan Scheme.  It is not clear at this time whether access to the loan scheme would available for this purpose or whether it would be conditional.

For directors the 80% applies to salary only, that is it does not apply to dividends payments.

For those who work irregular hours then an average will need to be established.  However, we don’t know what that average will be based on.  For example it might be based on the same 3 months last year, or an average of the 12 months to March, but at this point in time we do not know.

What we do know is that the workers cannot work during the time that they are paid this grant.  It is a condition of the grant that employees must not do any work at all during the furlough period. The reason behind this is that the intention of the scheme is to allow employers to pay staff who are without work.  Although advice would indicate that staff can study and if the employee has more than one job and the jobs are with different employers, that are not connected, that member of staff could still be working for the other employer. This would apply to directors as well as other employees.

You can access more information from ICAEW

I will provide more information as it becomes available.

Keep safe distancing, stay safe and keep smiling 😊


About the Author:

Koreen is a Member in Practice of The Association of Accounting Technicians, which means that she is both licensed and regulated by the AAT. However Koreen is also a Fellow Member which is an acknowledgement by the AAT of her senior status in terms of knowledge and experience.
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