By now, you will be aware of the Coronavirus Job Retention Scheme which offers grant funding to support employers whose operations have been severely affected by coronavirus (COVID-19). It was initially opened for three months from 1 March but has been extended for a second time, and now runs until the end of October when it has been confirmed that the scheme will end. Changes are being made to the scheme in July, such as allowing part-time furlough.
Firstly, if you run an NHS or mixed practice, by default you do not qualify for this funding. The NHS funding you will continue to receive is designed to be used to pay your staff at their previous levels in order to retain them for working in your practice or in other NHS settings.
Mixed practices can furlough a proportion of their staff.
Further information for NHS and mixed practices can be found here.
For private dental practices, the detailed guidance provides some clarity – here are the key points (last updated 13 May 2020):
- The scheme is open to all employers with a PAYE scheme on 28 February 2020;
- It will cover 80% of a furloughed employee’s wage up to £2,500 per month. It also covers the employer national insurance and the minimum employer pension contributions on that wage;
- To qualify the employee must have been on your PAYE payroll on 19 March 2020 (new employees who started before this date do not qualify);
- Any employee can be furloughed but it should be noted that an employee cannot undertake work for or on behalf of the employer during their furlough period. Therefore, it’s unlikely that a director of a company can be furloughed unless there is another director who can run the company in their absence;
- If you have employees that continue to work (even on reduced hours), they will not qualify for funding;
- Employees currently self-isolating or on sick leave should receive statutory sick pay but can be furloughed after their sick leave period. Similarly, those employees on maternity / paternity leave can be furloughed once they are due to return to work;
- Employees that were made redundant or placed on unpaid leave / laid-off after 28 February can be re-engaged and placed on furloughed leave and their wage costs claimed back under this scheme;
- The amount you can claim (up to £2,500 per month) is calculated as follows:
- For those in receipt of a set salary, you can claim 80% of their usual salary before tax (ignoring any commission or bonus payments);
- For those employees who are paid for the hours that they work, you can claim 80% of the higher of:
- The same month’s earnings from the previous year;
- The average monthly earnings from the 2019/20 tax year (or from when they started their employment).
Using this wage cost you can then add on the employer national insurance and minimum employer pension contribution. Therefore, the most you can claim per employee is £2,805 per month (£2,803 per month from April 2020).
- Provided you have written consent from the employee, you can pay them 80% of their wages. However, if you choose to top-up this to their usual salary amount, no funding is available for this extra 20%.
- Claims for the funding can be made at least every 3 weeks and will need to be submitted online through a portal, separately to your normal payroll submissions.
- To claim you will need your PAYE reference number, the number of furloughed employees, the dates of your claim, the amount of the claim, your bank details and your contact details;
HMRC reserve the right to retrospectively audit any such claims;
- Deductions for PAYE tax, employee national insurance and employee pension contributions will still be due on the employee’s earnings;
- Any funding received will be treated as taxable income within your year-end accounts.
As you may appreciate this is a rapidly changing situation as the Government are announcing measures to help support the economy on a daily basis. Further information will be added above as and when it becomes available.
Details of additional support available can be found here.
If you have any further questions regarding paying your employees during these uncertain times, please do get in touch.