Further to Mr Sunak’s announcement on Friday, we are still awaiting further details regarding the above scheme, and we will keep you updated as soon as these are released. In the meantime our understanding of how this new scheme will be operated and what it will involve is as outlined below:
• All employers will be eligible for the scheme, this will not be restricted by the number of employees they have.
• The employer will run the scheme and will have to agree with his/her employees to them being furloughed. Furlough is a term which we have not previously used in UK employment law, and we understand that this scheme will be run on the basis that the employee is not working at all. There seems to be no middle ground, say for an employee who has lost 50% of his working hours. This would appear to be an all or nothing arrangement.
• The scheme will be operated through a new online portal. Revenue guidance so far only states that information about the employees and their earnings will have to be submitted through the portal. We do not yet know what information will be required for each employee. Further details of that to come.
• The scheme will run for an initial period of 3 months, backdated to 1st March 2020.
For directors on a small salary and dividend top up we are waiting on more information and will update you as soon as we have this.
• There was no specific mention of zero-hours workers, however, the Chancellor did state that this scheme would cover all those paid under PAYE, we wait to find out if these workers will be covered by an averaging basis.
• It is understood that the subsidy will cover workers already laid off due to this crisis provided they are brought back into the workforce and furlough is agreed between both parties.
• The top-up will be up to 80% of the employees monthly pay which would be capped at £2,500. Although details have not been released we assume that this figure will be gross before PAYE tax and national insurance deductions.
• HMRC say they are working urgently to set up both the online portal and a system to reimburse the employers as there are no such existing systems in place.
The initial provisions the Chancellor made for self-employed workers have been disappointing and should he make any changes to these we will endeavour to contact all clients affected by this as soon as possible.
We will continue to monitor the ongoing situation and will update you as and when there is more information released regarding the above scheme and all other help that is becoming available to both businesses and individuals throughout this difficult time.
As always should you have any queries, please feel free to contact us but at present, we are experiencing a large volume of calls so please if not urgent, please email us.
Please Stay Safe.