A significant number of small businesses in the UK do not take full advantage of HMRC-approved...
If you choose to utilise the Coronavirus Job Retention Scheme (furlough), make sure you check the small print. You need to make sure you stay compliant if your claim in to be upheld by HMRC.
The furlough scheme is simple on the surface, but it contains a fair amount of small print that you need to comply with. In today's article, we'll run through a few of the clauses that might have escaped your notice.
What Exactly Can Staff Do On Furlough?
Staff cannot do any work for you while on furlough. According to the official HMRC guidance page, this includes:
- making money for you
- providing services for you
They are allowed to undertake training or volunteer. However, whatever they do must be allowed according to the latest Public Health guidance.
HMRC has said repeatedly that they can, and will, audit furlough claims to ensure that the rules are being adhered to. Make sure you stick to the guidelines and retain all evidence and communication on the subject.
How Are Staff Payments Calculated?
The basic calculation is that you can claim the lower of...
- 80% of monthly staff salary
... for at least 3 weeks, up to 3 months. The employee still has to pay Income Tax, National Insurance and any other normal payroll deductions. You must also consider if this is affected by minimum wage laws. From HMRC:
If workers are required to for example, complete training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.
If you're not sure how to calculate this, you may want to work with an employment law specialist or chartered accountant. HMRC has plenty of guidance on the minimum wage, but the calculations can get quite complicated if the employee is also on furlough.
Pregnancy & Maternity Leave
Regardless of furlough status, the health and safety requirements around Maternity Leave still apply. Immediately following birth, your employee must take at least 2 weeks leave (4 weeks if she works in a factory or workshop).
You can choose to top up Statutory Maternity Pay. If this is included within the employee's contract, you can claim back the cost within the furlough scheme (subject to the maximums).
If an employee's earnings have been reduced due to furlough, this can affect the amount of Statutory Maternity Pay they receive. This would also apply to contractual adoption pay, paternity pay and shared parental pay.
The furlough scheme is extremely generous, and you should strongly consider it before taking the more drastic step of laying off staff. However, you must make sure you comply with (all) the rules to avoid getting in trouble with HMRC further down the road.
These are unprecedented and rapidly changing times. We'll have more information as soon as it becomes available. Be sure to check our blog for updates.
If you have any more questions about the furlough scheme, or would like to discuss working with us, please get in touch. We are staying on top of all the announcements from the government and can help you navigate this challenging time.