How Do You Furlough Employees?

Gary Green
Gary Green
March 27, 2020

In today's article, we'll explain what "furlough" means, how to furlough employees and how to claim the money back.

A number of our clients have been contacting us for information on how to furlough employees. Companies are now allowed to designate staff as furloughed under the Coronavirus Job Retention Scheme.

We introduced this idea in our Coronavirus Summary Tips article. Today we'll give a little bit more detail about how the scheme works and how to apply.
Please also check out our Coronavirus Update if you haven't already.

What Does Furlough Mean?

Furlough is defined as:

A temporary leave of employees due to special needs of a company or employer, which may be due to economic conditions at the specific employer or in the economy as a whole.

The old definition implied that the workers wouldn't be paid while they were away. However, in the case of the coronavirus scheme, the employee continues to be paid.

When you furlough staff, you send them home but keep them on the payroll. This allows them to avoid losing their jobs. It also means that when you are ready to start doing business again, you can bring them back to work with minimal admin.

It would obviously cripple most businesses if they had to pay for this scheme themselves. So the government has agreed to cover most of the cost.

How Does The Scheme Work?

Instead of laying off staff, the government is encouraging businesses to place them on temporary furlough leave.

As a business owner, you can claim (per month) the lower of:

  • 80% of the employee's regular wage
  • £2,500

At a minimum, you must pay the employee all the money you receive from HMRC. It is then up to you if you want to make any top-ups to the payment to ensure the employee receives his normal net salary.

There may be some complications with Living Wage / Minimum Wage regulations. We encourage you to check out the HMRC guidance on this specific issue.

How Do I Apply & Claim?

As long as you pay your staff via PAYE, you will be eligible for the scheme. The government seems committed to making the process as streamlined as possible.

First of all, you need to let the employee(s) know that they have been furloughed. It's worth paying attention to the exact way that HMRC phrases this requirement:

To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.

According to the official HMRC page you need the following details to make a claim:

  • ePAYE reference number
  • Number of employees being furloughed
  • Claim period (start and end date)
  • Amount claimed (per the minimum length of furloughing of 3 weeks)
  • Bank account number and sort code
  • Contact name
  • Your phone number

Claims can be backdated to the 1st of March. You can only submit one claim every three weeks. And the government will pay you the money via BACS to your bank account.

Next Steps

If you have been affected by any of the issues in this post, please do not hesitate to get in touch. We are experts at all aspects of tax, payroll and bookkeping and can handle all the admin and red tape of the furlough process for you.

We are getting more information all the time during the crisis. Please continue to check back on our blog for updates as soon as we have them.

Interested in our services?
Fill in your details and a member of our experienced team will be in touch shortly to discuss your needs.
Contact Form Demo (#1)
We adhere to strict GDPR rules and do not reveal or sell your data to any third-parties. For more, please read our Privacy Policy.
Latest Insights
October 23, 2023
PAYE Investigations

Dive into the world of PAYE investigations. Uncover the facts, implications, and insights in this informative blog

September 29, 2023
London-based accountancy business acquired by Key Business Consultants

Exciting Merger Alert: London's Reed Taylor Benedict & Benedict Leff Accountants Acquired by Key Business Consultants.

September 18, 2023
Tax Tribunals – An Overview

Dive into the realm of Tax Tribunals: A comprehensive overview shedding light on this crucial aspect of taxation.

September 2, 2023
What Is A COP8?

Learn about COP8, a tax-related Code of Practice issued by HMRC for suspected tax avoidance cases. Discover when COP8s are used and the penalties associated with them.

August 20, 2023
HMRC Compliance Checks

Navigate the complexities of HMRC compliance checks confidently. Our comprehensive guide covers everything you need to know about handling tax inspections and more.

August 6, 2023
Tax Evasion and Tax Fraud

Untangling the complexities of tax evasion and fraud. Delve into our comprehensive guide to understand the differences, consequences, and preventive measures.

June 18, 2023
Which Jobs In The UK Have The Best Salary Growth Potential?

Explore the top UK jobs with the highest salary growth potential. Uncover promising career paths and industries that offer substantial earning potential.

May 23, 2023
How To File Dormant Accounts Through Companies House

Learn the step-by-step process of filing dormant accounts through Companies House with our comprehensive guide.

May 19, 2023
Customs Declaration Service (CDS) and VAT

Discover how the Customs Declaration Service (CDS) and VAT intertwine in this insightful blog article.

View Our latest insights »
Get the latest UK tax & business news and guidance delivered straight to your inbox
Newsletter Form (#2)
We care about the protection of your data. No spam. Unsubscribe anytime.
Copyright © 2022 Key Business Consultants LLP. Reg: E&W OC389322
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram