In May 2020, further updates were made from the Chancellor on the Coronavirus Job Retention Scheme. We provide the latest information that will impact you and your business.

What is the Coronavirus Job Retention Scheme?

This scheme is a temporary measure opened up to all UK employers. The purpose of this is to allow employers the opportunity to provide their employees a salary if they are affected in these hard times. Employers can use a portal to claim for 80% of furloughed employees usual monthly wage costs. Originally these measures were put into place for 3 months with claims being backdated to the 1st March.

On the 12th May the Chancellor announced that the job retention scheme will be extended until the 31st October 2020. Those on furlough will continue to receive 80% of their latest salary (up to £2,500), however from the 1st August companies will be required to start ‘sharing’ the cost of the scheme. Employees will then be given the option to return to work on a part time basis in August, September and October. Further details will be provided.

When will the Job Retention Scheme be available?

In order to apply for the scheme, click on the following link: Job Retention Scheme Application.

This portal was opened by HMRC on Monday 20th April and will be ready to make payments by Thursday 30th April.

What is the criteria in order to apply?

This scheme is open to all UK employers that created and started a PAYE payroll scheme from the 28th February 2020. Furloughed employees must have been reported through your PAYE payroll by the 28th February 2020. Employees hired after this date cannot be furloughed or claimed for in accordance with this scheme. Employees/Employers must not be working at all during this time, this includes providing services or generating revenue.

How does this scheme affect you (the employer), and your Limited Company?

Based on the details provided, in theory, directors can be furloughed in the same way as other employees. However, a condition of furloughing is that the individual must not undertake any work for the company during this time. This is harder for a director to justify, particularly if they are the sole director. It may be necessary for the director to notify all suppliers, clients and other business contacts that the business has been suspended pending the end of the Coronavirus crisis.

In many cases this is impractical, because the director may wish to use this time working on improving the business or looking for new work. In these circumstances, furloughing may not be permitted. Ultimately, in this situation, the risk has to warrant the reward, and must be judged on a case by case basis.

Do I still pay myself a salary as a Limited Company director?

If your work has been directly affected by Coronavirus and you believe that you are furloughed, inform your accountant and keep paying your salary as normal. Clients of Integro Accounting will have this investigated on their behalf, with them processing the relief application with HMRC once it becomes available.

How does this affect employees of your Limited Company?

If you are unable to provide work to your employees you can choose to:

  • Pay them 80% of their salary and we can claim this back from HMRC once they enabled us to do so.
  • Pay them 100% of the salary and we will still claim back 80% from HMRC.

Again, to an employee on furlough, they can not undertake work for or on behalf of the company.

What if employees are working reduced hours?

Those employees on reduced hours, or on reduced pay, will not be eligible for this scheme. If the employee has more than one employer who they work for, they can be furloughed for each job. Each job is separate and the cap applies to each individual employer.

We hope the above information has been useful, and we will update you as and when more details are released.

Full details from HMRC can be found here: Covid-19: support for businesses

For further advice, visit our easy to read Covid-19 Business and Tax Guide and how it can impact your business. Alternatively, speak to one of our qualified accountants on 0207 0962659 or complete our call back request form here: Request a call back.