Frequently Asked Questions About Furlough

Gary Green
Gary Green
May 1, 2020

We've decided to address the most frequently asked questions about furlough in this article. If there's anything you want to know about the Coronavirus Job Retention Scheme, you'll find it below!

In today's article, we've collected the most frequently asked questions about furlough from our clients and readers. If you have any questions that aren't addressed in this article, feel free to get in touch and one of our furlough experts will get back to you.

Here are our other articles about furlough:

How Do You Furlough Employees?
I've Just Been Put On Furlough
More Detail On Furlough Payments
What Are The Alternatives To Furlough?
Furlough: The Small Print

If you’d like more information about the changes so far, check out our Coronavirus Tips. And be sure to visit our Coronavirus Update page.

Can employees work while on furlough?

No. According to the HMRC documentation, they are not allowed to work. This includes "making money" for you and/or "providing services" for you.

Do I have to top up wages to what they were on before?

No. You have to pay them the grant you get from the government (minus the usual payroll taxes). But you're not obliged to top up any further (you can if you want to, of course).

What if my employee refuses to go on furlough?

At this stage you will have to consider whether you can afford to keep them on. If not, you might have to consider redundancy.

What if my employee has more than one job?

Each job is considered separately and in isolation. The maximum allowances apply to each employer individually.

How often can I claim?

Furlough runs in 3 week periods. You can therefore claim every 3 weeks per employee if necessary.

When does the scheme start?

  • The employee must have been on the PAYE payroll since 28th February
  • Claims can be backdated to 1st March
  • The scheme is currently set to run for at least 3 months

Is it a grant or a loan?

It's a grant. This means you won't have to pay it back. But it is taxable for Income Tax and/or Corporation Tax purposes.

Can I continue to deduct employment costs?

Yes. The grant is taxable (see above). But you can still deduct employment costs to arrive at taxable profits.

How does this affect pension contributions?

You will still need to maintain minimum pension contributions. However, these can be reclaimed on top of the £2,5000 monthly maximum.

Can I choose a reduced or partial furlough?

No. Furlough is a discrete option. If the employee is on furlough they cannot work at all, even if their salary is reduced. If you want to take this approach, you would need to look into altering their contract rather than using a furlough scheme.

There are updates and clarifications from the government and HMRC coming out all the time. We'll have more information as soon as it becomes available. Be sure to check our blog for updates.

And please get in touch if you have any questions about what you've read in this article. We are staying on top of all the announcements from the government and can help you navigate this challenging time.

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