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Markel Tax

27 Apr 2020

Updated FAQs on CJRS

Q: Does the 80% furlough include Employers NI and Pension?

A: The Government will pay a grant (not a loan), to reimburse the employer for 80% of the gross costs of employing furloughed employees (including pension contributions and employer’s class 1 NIC). There is a cap of £2,500 on the pay element with NIC and pension calculated on that amount and added to the grant.

Q: What is the correct base period to use in calculating the amount of pay for furloughed employees?

A: Most employees who are on a fixed amount of pay claim for the 80% of the employee’s pay, as in their last pay period prior to 19 March 2020.  If, based on previous guidance, you have calculated your claim based on the employee’s salary as at 28 February 2020 (and this differs from their salary in their last pay period prior to 19 March 2020) you can choose to still use this calculation for your first claim.
For employees whose pay varies, the latest guidance (15 April 2020) states that if the employee has been employed for 12 months or more, you can claim the highest of either the:

  • same month’s earning from the previous year; or

  • average monthly earnings for the 2019-2020 tax year

If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work until the date they are furloughed.  If they have been employed for less than a month, work out a pro rata for their earnings so far, and claim for 80%.

Q: What do I include in the base pay when calculating the 80% furlough payment?

A: You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.
We have been asked if overtime has to be included.  We consider overtime as an amount that the employer is contractually obliged to pay if the worker has worked the overtime hours.  This may also mean that the wage will have varied and the amount due will be calculated on the average basis or the same pay period last year. 

Q: Can I claim the cost of Apprenticeship or CITB levy costs as part of the job retention grant if they are based upon my payroll costs?

A: Apprenticeship or CITB levy costs are not covered by the grant.  The latest guidance shows that apprenticeship levy would still be due.  We have seen guidance from the CITB to say their levy payments can be deferred for three months but do not have further details at the time of writing (16 April). 

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27 Apr 2020

R&D and the Construction Sector – Building a claim