Further details on the Coronavirus Job Retention Scheme
Set out below are the rules as they are currently understood (summarised from notes provided by ICAEW), however it must be stressed that further guidance is awaited and therefore the following comments are provisional and may change.
For sole director/shareholder owner-managed limited companies
Not treated as self-employed & therefore not eligible for the ‘self-employed income support scheme’.
You can however consider a claim under the ‘Job retention scheme’ but only in respect of salary not dividends.
To be eligible
To be eligible employees must be ‘furloughed’ and stop working completely in the business, although directors can continue to deal with statutory duties but no services or revenue-generating work.
What can be claimed?
For those furloughed, up to 80% of ‘regular wage’ or £2,500 (whichever is lower). This claim can be backdated to 1 March 2020. The scheme will last for at least three months.
The claim also includes the Employers NIC and minimum workplace employers pension contributions.
Employers/employees who can claim
Only employers who had set up their PAYE scheme on or before the 28th February 2020, with a bank account in the UK.
Claims can only be made for employees who were on the payroll at 28th February 2020.
Claims can be made for both full-time and part-time workers
Calculation of ʻregular wage’
The regular wage is the higher of the same month’s earnings from the previous year or the average monthly earnings from the 2019-20 tax year.
How to claim
The employer should write a letter advising the employee that they have been ‘furloughed’ and a copy of this should be kept on the file to support any claim.
Wages must continue to be paid (along with tax and NI) to furloughed employees.
How is the grant accounted for in the company’s books
As income subject to corporation tax.