By Nikki Spoor, Travel, Audit & Tax Director at White Hart Associates
Chancellor of the Exchequer Rishi Sunak was lauded when he announced unprecedented measures to help save businesses during the current virus pandemic.
The Government revealed it will, for three months, pay a grant of 80% of the salary of staff who are kept on by their employer, up to £2,500 a month.
Under the Coronavirus Job Retention Scheme (CJRS), firms apply to ‘furlough’ staff – effectively put them out to grass and have the government pick up the bulk of their wages for this period.
Many travel companies are seeing this as a vital lifeline as they attempt to stay in business during a period when bookings have completely dried up.
However, we advise companies to be cautious and have a back-up plan for paying staff because the grants will take time to come through and the support may not be as comprehensive as it appears.
Her Majesty’s Revenue & Customs (HMRC) recently engaged with accountants and other professionals within the industry via a dedicated CJRS webinar. It led to as many questions as answers.
The portal for claiming the grant is not even due to open before the end of April and we don’t know when monies will be paid. Tens of thousands will be queuing for this new system and there will be no hotline or HMRC member that will be able to push your claim ahead of others. It’s not clear how many deductions HMRC are going to make for further unpaid liabilities like the PAYE/National Insurance contributions for April, due by May 2019.
A number of attendees to the webinar asked if directors were included in the process and surprisingly HMRC could not give a clear answer. We also don’t know if a company can rotate furloughed staff, so that some can work one month and others another month. There are many more questions and we don’t yet have the answers because HMRC doesn’t have them.
They are, of course, dealing with an unprecedented situation and say they are working day and night to provide answers and further guidance. But we are naturally cautious when information is being given piece-by-piece by a Government overwhelmed by COVID-19.
In the meantime, this is our latest guidance for companies who wish to furlough staff:
Making a claim:
- You can only submit one claim per employee at least every three weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the March 1, 2020 if applicable.
- A portal is being built which will enable online applications and is expected to be live by the end of April 2020.
- To claim, you will need:
- Your e-PAYE reference number
- The number of employees being furloughed
- The claim period (start and end dates)
- Amount claimed (per the minimum length of furloughing of three weeks)
- Your bank account number and sort code
- Your contact name and number
After the claim is made:
- Once HMRC have received your claim and deemed you are eligible for the grant, they will pay it via BACS payment to the UK bank account applied in your application process.
- You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.
- You have to pay the employee all the grant you receive for their gross pay. No fees can be charged from the money that is granted. You can choose to top up the employee’s salary, but you are not obligated to do so.
Employer National Insurance and Pension Contributions:
- Employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.
- You can claim a grant from HMRC to cover 80% of an employee’s regular salary up to £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.
If an Employee is Furloughed:
- They cannot carry out any work on behalf of their employer. They are permitted to volunteer to help the NHS in its fight against COVID-19
*For those who need help discussing their tax situation, the new Covid 19 Tax payment support telephone number is 0800 024 1222. Please note it replaces the previous number.
Disclaimer: We hope you have found the information above useful, and whilst White Hart Associates have tried to ensure all details are correct from the sources cited, the above is for guidance only and cannot be relied upon completely, due to the lack of proper detail released by the Government and the portal for claiming CJRS not yet being open and active. As things are changing fast, please ensure to keep up-to-date with Government and HMRC announcements.
White Hart Associates are specialist accountants for the travel industry. Visit whitehartassociates.com or contact 0208 878 8383 for more information.