What part of the salary is claimable?

You can claim for 80% of your employee’s wages (even for employee’s on National Minimum Wage) – up to a maximum of £2,500 per month.

You’ll still need to pay employer National Insurance and pension contributions on behalf of your furloughed employees, and you can claim for these too.

What part of the salary can you not claim for?

  • additional National Insurance or pension contributions you make because you choose to top up your employee’s wages
  • any pension contributions you make that are above the mandatory employer contribution

What do I include when calculating the “salary”?

The amount you should use when calculating 80% of your employees’ wages is regular payments you are obliged to make, including:

  • regular wages you pay to employees
  • non-discretionary overtime
  • non-discretionary fees
  • non-discretionary commission payments
  • piece rate payments#

What do I not include when calculating the “salary”?

  • payments made at the discretion of the employer or a client – where the employer or client was under no contractual obligation to pay, including:
    • tips
    • discretionary bonuses
    • discretionary commission payments
  • non-cash payments
  • non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay

What do I do if an employee receives benefits?

The entirety of the grant received to cover an employee’s subsidised furlough payment must be paid to them in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.

Where the employer provides benefits to furloughed employees, including through a salary sacrifice scheme, these benefits should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.

The 80% takes my employee under National Minimum Wage is this okay?

Individuals are only entitled to the National Living Wage, National Minimum Wage or Apprentices Minimum Wage for the hours they are working or treated as working under minimum wage rules.

This means that furloughed workers who are not working can be paid the lower of 80% of their wages or £2,500 even if, based on their usual working hours, this would be below their appropriate minimum wage.

However, if you have requested your employee does training while on furlough then for they must be paid at the appropriate minimum wage, taking into account the increase in minimum wage rates from 1 April 2020. As such, employers will need to ensure that the furlough payment provides sufficient monies to cover these training hours. Where the furlough payment is less than the appropriate minimum wage entitlement for the training hours, the employer will need to pay the additional wages to ensure at least the appropriate minimum wage is paid for 100% of the training time.

How do I work out the maximum wage amount I can claim?

The maximum wage amount you can claim is:

  • £2,500 a month
  • £576.92 a week

Plus the relevant NI and Pension contributions

If the employee was furloughed mid week the Daily maximum amount

  • March 2020     £80.65 per day
  • April 2020        £83.34 per day
  • May 2020        £80.65 per day

PLEASE NOTE THERE WILL BE A CALCULATOR FROM THE 20TH APRIL TO HELP YOU WITH YOUR CLAIM!!

If you are a client of TI Accountancy we will do the calculations for you, however, if you are doing your own there are lots of examples on how to do your calculations at the bottom of this page on the HMRC Website to help you