⚠️ This is a news story and may not be up to date. You can find the date it was published under the title. Our Tax Guides feature the latest up-to-date tax information and guidance.
How to claim a Job Retention Scheme grant
The online claim service is open. If you are an employer with furloughed staff (including if you are the director of your own limited company), here we tell you how to access the system and what you will need to do to make your claim.
Note, at the time of writing there are several inconsistencies between HMRC guidance and the underlying scheme rules, indeed we have highlighted a few areas of ambiguity in our text. If the ambiguities affect you, we strongly suggest that you record all your reasoning and workings (including taking screen shots of guidance that you followed) so that you can demonstrate why you did what you did, in case of audit by HMRC. If in doubt, you should check your position with HMRC.
Employers will have to designate any qualifying employees as ‘furloughed workers’. Remember that furloughing is an employment law concept and if an employee is furloughed then this should be agreed and confirmed in writing with the employee concerned (there is some ambiguity as to whether an employee needs to formally respond).
Note that furloughed workers should not undertake any work for their employer while they are furloughed, including answering calls or emails. Employees can use the online 'fraud' reporting facility to report employers who ask them to work while they are furloughed. If their contract allows, they may be able to work for another employer.
Please note that there is some ambiguity as to whether it is possible to furlough employees who are currently on sick leave where Statutory Sick Pay is payable or liable to be payable. However, HMRC have told us that they feel the legislation and guidance are consistent and that employers should be relying on the guidance in this area which states that it is possible to furlough workers who are currently on sick leave (at which point their sick pay would end and their furlough pay begin).
⚠️ WARNING: It is not currently possible to make more than one grant application covering the same claim period. You must make sure your selected employee list is complete and correct BEFORE starting the claim.
How to claim
The only way for employers to claim the Job Retention Scheme grant is online. There may be a small number of 'paper filing' employers for whom this isn’t possible and we will seek to confirm with HMRC what they should do in the coming days.
The system will be available 24 hours a day, seven days a week. It is designed to be an easy to use, self-service, system with guidance in place to help employers navigate it.
Employers will need be enrolled for PAYE online and have their Government Gateway username and password to hand to access the online system.
Typically, a PAYE online account is set up automatically when you register as an employer (although you may not use it all that much or at all if you use payroll software that does the same thing as PAYE online). However if an agent such as an accountant or payroll bureau registered you as an employer on your behalf, or if you just aren’t registered for PAYE online for any other reason, you can do so now.
In order to register for PAYE online, you will need to hold an HMRC Online Services account as an ‘organisation' (as opposed to an 'individual'), so you may need to register for a new Government Gateway account as an organisation. You will need your employer PAYE reference and Accounts Office reference (issued upon registration as an employer).
You used to have to wait for an Activation Code (a security measure) to arrive in the post. HMRC have suspended this step for now to help speed up the process.
If you already have a Government Gateway/PAYE online account but have lost or forgotten the details, you will need to try and locate them. You can find information on what to do if you have forgotten your User ID, password or have other problems signing in on GOV.UK.
Using an agent
You can make the claim yourself even if you usually use an agent.
If you use an agent who is specifically authorised to act for you for PAYE online purposes, they will be able to make a claim on your behalf (using their log in credentials etc.) however you will need to tell your agent which UK bank account you want the grant to be paid into.
If you use a file only agent (who files the RTI return but doesn’t act for you on any other matters) they won’t be authorised to make a claim. You, as the employer will need to make the claim directly. Your agent will still probably need to assist you in obtaining the information needed for the claim, as listed below.
Your agent should be able to tell you whether they are specifically authorised to act for you for PAYE online purposes or whether they are file only agents. Guidelines for agents on how to switch from being a file only agent to being fully authorised has been produced.
Information you will need to be able to make your claim on the online system
You will need the following information for each furloughed employee you will be claiming for:
- National Insurance number (if you have any employees without NINOs, see our news piece Job Retention Scheme applications for employees with no NINO)
- Claim period and claim amount (see below).
- PAYE/employee number (optional).
- if you have fewer than 100 furloughed staff – you will need to input information directly into the system for each employee
- if you have 100 or more furloughed staff – you will need to upload a file with information for each employee; we understand the following file types will be accepted: .xls .xlsx .csv .ods.
As the employer, you will also need your:
- Self Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number (but only if you have them – some employers, such as employers of domestic staff or care and support employers might not have them and are just asked to provide the name of the employer instead)
- Bank account number and sort code (UK accounts only)
- Contact name
- Contact phone number
How to calculate the claim amount
The JRS allows employers to claim 80% of the wages of staff (up to a maximum of £2,500 per employee) that they have furloughed. Employers will need to calculate the amount they wish to claim themselves.
Employers can make the claim backdated to 1 March (for any staff designated as furloughed from this date) and for up to 14 days in the future.
⚠️ WARNING: Changes cannot currently be made once the claim is submitted. So employers need to ensure their claim is complete and correct BEFORE it is submitted.
You will need to have your recent payroll data to hand to allow you to calculate the claim amount, for example: salary, National Insurance and pension contribution information. You should do your calculation and split it into the component parts (80% wage amount, employer NIC, pension contributions) ready to input into the system as it is not possible to save the application half way through and the system may time out if you try and do everything there and then.
HMRC's step-by-step guide explains the information that employers need to provide to HMRC to make a claim. It also contains a useful example of a calculation for an employee on a fixed salary. The government have issued detailed guidance, with examples on how to prepare claims in a variety of more complex situations including variable pay.
Note that HMRC have provided a claim calculator to allow you to work out your claim on an individual employee by individual employee basis but it only covers basic scenarios at the moment and the questions are not very understandable (meaning the answers you give may be wrong and so the result may not be accurate), so you should not rely on it.
Hints and tips
Here are a few explanations and tips to help you understand the available guidance and how to do your calculations:
Although the guidance to date seems to have assumed that everyone is paid monthly, it is now clear that it is fine to work things out on a weekly (or other) basis. For example, if you have a variable, weekly paid employee, you would work out their claim on the basis of 80% of the same week's wages from the previous year (up to a maximum of £576.92 a week) or 80% of the average weekly wages for the 2019/20 tax year (up to a maximum of £576.92 a week). You do not have to try and work out what this is on a monthly basis.
HMRC's examples are worked out based on calendar days, rather than working days, so for example, the £2,500 per month maximum amount (£576.92 per week), works out as a daily amount of £83.33 per day for April, based on 30 calendar days, rather than £113.63 based on 22 working days. Mostly, any differences under the two approaches will be small (although this may be little comfort to employers who have paid out more than they can now seemingly claim back), but it is important that you are consistent when doing your calculations, otherwise you could unduly restrict entitlement.
Example: Lucas was furloughed from the week beginning 23 March 2020. Although he usually only works Monday to Friday, his employer should count the week of 23 to 29 March as 7 days in his calculations, not 5 days. So the maximum grant claimable is the weekly amount of £576.92 and not £416.65 (that is 5 days x £83.33).
For employees whose pay varies and were employed from 6 April 2019, you can work out their furlough pay based on their 2019/20 average earnings or by looking at the same period last year. If you want to check what weekly paid employees earned in the same period last year, it is probably easiest (and we trust, acceptable to HMRC) to do this by looking at their figures in the corresponding tax week rather than the dates.
Example: Lucas's pay date in the week 23 to 29 March 2020, is on Friday 27 March. This date falls in week 51 in the 2019/20 tax year. From his payroll records Lucas's employer can't really work out how much he was paid in the exact same period 23 to 29 March 2019 - the dates fall over two pay periods last year, but he can see he was paid £211.65 in week 51 in the 2018/19 tax year.
Employers are allowed to claim additional money from the government to cover the costs of Employer National Insurance and auto enrolment pension contribution due on the 80% grant amount. For most small employers, with only one or two employees, the £4,000 Employment Allowance (up from £3,000 in 2019/20) will probably mean there is no Employer National Insurance to worry about at all (employers that will have some Employer National Insurance to pay should remember that the Employment Allowance is frontloaded). There are also other categories of workers that escape Employer's National Insurance altogether – for example, those who are under 21.
If an employer tops up an employee's pay to 100% and there are Employer's National Insurance contributions due, then the employer themselves will have to fund the Employers National Insurance on the 20% extra salary that they pay.
Example: Lucas's average earnings in the 2019/20 tax year were £336.89 per week, which is now his furlough pay amount. Even though Lucas's employer can only claim 80% of this amount back from the government, Lucas's employer decides to pay him 100% of the amount. If Employer National Insurance was due on this amount, the government would only fund the Employer National Insurance due on £269.51 and Lucas's employer would have to fund the Employer National Insurance due on the balance.
If an employer tops up an employee's pay to 100% or pays pension contributions for them in excess of the minimum amount required under the auto enrolment rules, then the employer themselves will have to fund the 'extra' amounts – that is, the pension contributions on the 20% extra salary and/or the extra pension contributions over and above the 3% required under the auto enrolment rules.
Directors of their own personal service companies should remember that they are not entitled to the £4,000 Employment Allowance and may not be in a pension scheme under the auto enrolment programme as they are exempt.
Guidance on GOV.UK is being regularly updated so please review it frequently for any updates.
After making the claim
No email confirmation of a submitted claim is sent, so it is very important to print the confirmation screen, or take a screen shot. HMRC will check each claim, and if an employer is eligible, pay it by BACS to a UK bank account.
Claims should be paid within 6 working days; you should not contact HMRC about your claim unless it is absolutely necessary as HMRC just won’t have the capacity to deal with all the calls.
Once you have received the money, you should keep whatever amount reimburses you for the costs of furlough pay you have covered yourself to date (if any). You should then use the grant to pay your employees the amount they are due via the payroll - deduct tax, NIC, pension and student loan deductions, as you would normally.
For employer guidance on how to report Job Retention Scheme payments for RTI purposes, please see GOV.UK.
You should retain all records and calculations in respect of your claims. HMRC will retain the right to retrospectively audit all aspects of the claim.
Example: It is 20 April 2020. Lucas's employer makes a claim through the Job Retention Scheme for a grant of £1,617.07, that is 6 weeks x £269.51. This represents six weeks furlough pay from 23 March to 3 May 2020 (the furthest date possible a claim can cover as at 20 April 2020) of £336.89 x 80%.
There is no Employers National Insurance to reclaim because of the Employment Allowance and Lucas has opted out of auto enrolment, so there are no pension contribution amounts due from the employer.
Once the £1,617.07 amount is received by Lucas's employer, his employer will keep £1,078.04 of it, to reimburse him for having continued to pay Lucas during the period 23 March 2020 to 19 April 2020 himself (that is 4 weeks x £269.51).
Lucas is paid on Fridays. On the 24 April, Lucas will be paid £336.89 via the payroll as normal (which is £269.51 from the grant together with £66.78 from the employer to top it up to the £336.89) and on the 1st May, the same will happen again.
For employer guidance on how to report Job Retention Scheme payments for RTI purposes, please see GOV.UK.
If Lucas is still furloughed come the week of 4 May 2020, Lucas's employer can put in another claim. At the moment is it unclear whether Lucas's employer can make claims every week to match his payroll processes or whether there is a minimum number of weeks he must make claims for. We have sought clarification from HMRC on this point (and others) and we will post any updates to our website.
Contact: Meredith McCammond (click here to Contact Us)