All UK employers should make sure they’re up to date with the latest information from HMRC, but there is a lot to go through. Below is a summary of the 29th May update, highlighting the points most important to my clients and other small businesses.
- Support will be reduced gradually from 1st August onwards – after this date, employers will be reimbursed for most costs but not all
- From 1st July it will be possible to bring back employees part-time, and claim furlough for the time they would usually be working (more details will be available 12th June)
- The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have already furloughed for at least three weeks prior to 30 June.
Further details on point 1 – Support will be reduced gradually from 1st August onwards:
- Until the end of July the scheme will continue in its current form (government reimbursing 80% of pre-Covid basic pay plus related employer NI contributions and pension contributions).
- From 1st August, HMRC will continue to reimburse 80% of pre-Covid basic pay, but not employer NI or pension contributions
- From 1st September, employers will be reimbursed only 70% of pre-Covid basic pay. Employees must still be paid 80% (minimum) so employers will need to contribute the remaining 10% as well as NI and pension contributions
- From 1st October, employers will be reimbursed only 60% of pre-Covid basic pay, again they will have to make up the difference themselves.
- The £2500 cap on HMRC contributions will be reduced proportionally. June-August the cap will remain at the lower of 80% or £2500. September HMRC contributions will be capped at 70% or £2187.50. October contributions will be capped at 60% or £1875.
Employee X was paid £2000 per month basic pay before Covid-19. She was furloughed before May on 80% of her salary. Her monthly employment cost from 1st May is £1752.18:
Basic pay = 80% x £2000 = £1600
Plus employer NI contributions plus employer pension contribution = £152.18
Total cost = £1752.18
|HMRC repays||Cost to employer|
|May (current)||HMRC pays full amount||£1,752.18||£0|
|June||HMRC pays full amount||£1,752.18||£0|
|July||HMRC pays full amount||£1,752.18||£0|
|August||HMRC pays 80% wage only, employer pays contributions||£1,600.00||£152.18|
|September||HMRC pays 70% wage only, employer pays contributions and 10%||£1,400.00||£352.18|
|October||HMRC pays 60% wage only, employer pays contributions and 20%||£1,200.00||£552.18|
Further details on point 2 – From 1st July it will be possible to bring back employees part-time:
- From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. Employers will be able to agree any working arrangements with previously furloughed employees.
- Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period. For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.
- To be eligible for the grant, employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing.
- More details on how to calculate claims will be published on 12 June.
Further details on point 3 – The scheme will close to new entrants from 30 June:
- The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June.
- This means that the final date by which an employer can furlough an employee for the first time will be the 10 June, in order for the current three-week furlough period to be completed by 30 June. Employers will have until 31st July to make any claims in respect of the period to 30 June.
- From 1 July the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed
If you’re an employer and need assistance with any of the above, feel free to email me with your questions at firstname.lastname@example.org – we’re always happy to help.