To access The Coronavirus Job Retention Scheme, you’ll need to declare your and/or your employees as furloughed. The process is straightforward.
Furloughing yourself is relatively straightforward, but if you’re looking to put employees on furlough, the first thing you’ll need to do is get agreement from them. Discuss your intentions with your employees, explain what you’re doing and why. Once agreed, you can designate them as furloughed. This means changing their employment status – if you use an HR support service (often provided as part of professional subscriptions or chamber memberships), you may wish to discuss the legal matters with them first.
Next, you’ll need to calculate the allowable salary and decide how much you’ll pay yourself/your employees. HMRC will refund you 80% of the allowable salary, but you can top this up if you wish. If you’re furloughing employees, you must pay them at least the 80% you receive from HMRC. Here’s how to calculate the allowable salary:
- If you pay yourself/your employees a regular salary each month, use the salary as at 28th February 2020.
- If your/your employees’ pay varies it will be the higher of either the same month’s income from the previous year, or the averaged monthly earnings for the 2019/20 tax year.
Next you need to write to your employee confirming that they have been furloughed (you can use this handy template from Peninsula, a HR company) and keep a record of this communication on file. If you’re furloughing yourself, you’ll need to write yourself a letter too!
You will then need to submit information to HMRC about workers who have been furloughed, and their earnings, via an online portal. If you’re an inniAccounts client, we will handle this for you.
Finally, remember that furloughed employees cannot work whilst furloughed – but they can take part in training. Company directors can undertake statutory duties, such as bookkeeping, record keeping and taking part in board meetings.