Expenses, tax returns, Allowable expenses for small businesses
Furlough - what it means, who it affects and how to claim. Your questions answered here. 
 

Furlough – what it means and what you do with relation to Coronavirus (updated 9/4/20): 

What does it mean? 
On 20th March the Prime Minister announced an alternative to laying off and making staff redundant. The alternative is known as “Furlough” 
 
How does it work? 
If you have any employees or workers on your payroll (PAYE) that you were going to lay off / make redundant due to the current Coronavirus pandemic, then you can keep them employed and class them as furloughed instead. 
 
What does it mean? 
It means that your employees and workers are not dismissed from their employment with you. So, when things have settled down and its business as usual, you still have the employees you need to carry out your normal work. 
You are also able to claim back 80% of their wages (up to a maximum of £2,500 per month) from HMRC. 
 
What about the other 20%? 
If you are in a position to, you can top up your employee’s wages and pay the 20% yourself. However, if this is not something that is possible, then you do not legally have to do this. 
 
How do I become eligible? 
The government has confirmed periods of Furlough need to be at least 3 weeks, and employees need to have been employed on 28th February to qualify. Payments can be backdated to 1st March. Employers need to have created and placed the affected employee on a PAYE scheme by 28th February. 
You cannot be furloughed whilst off sick or self-isolating. Once the employee has returned from sickness they will be eligible for furlough. 
 
How do I furlough an employee? 
Employers must inform staff in writing that they are furloughed and an adjustment made to their contract. This can all be done in a letter. Employers need to keep evidence of the communications with staff. 
 
How will employees earnings be calculated? 
It will either be the amount earned in the same month last year or be calculated based on average earnings over the last year, whichever is higher. If the employee has been employed for less than a year it will be calculated on average earnings over that period. 
National Insurance, Tax and pension contributions will still be payable if the amount is above the thresholds. 
This will be based on basic salary not on commission or bonuses. 
 
How do I claim to 80% of wages from HMRC? 
To claim you will need: 
• PAYE reference number 
• Start period of furlough 
• Who is be furloughed 
• Bank sort code and account number 
• Company contact details 
• Amount to claim – you need to calculate this. 
NOTE: HMRC could audit any aspects of your claim at a later date. 
HMRC are creating an online service to submit this information, which they have stated will be ready by the end of April. Claims can only be submitted every 3 weeks and should be based on actual amounts being run through payroll. Employees must receive the full amount paid by HMRC. 
 
Do I have to include the grant as income on future tax returns? 
Yes, they will be treated as part of taxable profits so should be included on a self-assessment or corporation tax return which ever is relevant for the employer. 
 
What can a furloughed employee do? 
Employees cannot do any work which makes money or provides services for their employer whilst they are furloughed, but they can do training. They can however, work for a different company in a second job. 
 
What if I am a director? Can I be furloughed? 
Yes, a director has two roles within a company: director duties and employee duties. A director can continue to ‘run’ the business (and complete their director duties) providing they are not making revenue or providing a service over the period where they are furloughed. 
 
When can I claim? 
HMRC say the portal will be released on 20th April. Claims will need to be made through the PAYE part of the government gateway. Agents can submit for clients as long as they have been granted agent authorisation. Employers will need to have activated the PAYE part of their portal in order to submit themselves.  
 
Are employees who are sheilding eligible? 
Yes, employees who have been advised to stay away from others or who need to stay at home with someone who is shielding can be furloughed. People who are carers (including parents of children not in school) can also be furloughed. 
 
What if someone has more than one job? 
Employees can be furloughed from each job.They can also continue to work for one employer whilst being furloughed for another.  

Further Help and Advice 

Contact an HR specialist or email gemma@jigsawhrs.co.uk if you need help to decide whether to furlough or make staff redundant or need any advice about how to support staff. 
 
.gov.uk webpage for Employees 
 
.gov.uk website for Employers  
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On 31st March 2020 at 12:11, Kirsty wrote:
What a great clear article. The best I have seen throughout this. Thank you
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