The CJRS is open to all PAYE employees on the payroll on 28 February 2020 who have since been ‘furloughed’. This means that if you pay yourself through PAYE and you designate yourself as ‘furloughed’, you will likely be eligible for a grant covering 80 per cent of your usual salary plus Employers’ National Insurance Contributions (NICs) and minimum employers’ automatic enrolment pension contributions.
However, being ‘furloughed’ means that you cannot undertake any of your employment duties. Moreover, the scheme is not expected to begin paying out until late April.
It is important to remember the scheme will not cover any dividend income you would normally receive or any other performance-related pay you may receive.
The Coronavirus Jobs Retention Scheme and employers’ National Insurance and Pension contributions
Much of the coverage of the Coronavirus Jobs Retention Scheme (CJRS) has focused on the Government’s commitment to cover the cost of 80 per cent of the usual wages of ‘furloughed employees’ – those who remain on the payroll but are not working.
In fact, the CJRS will pay employers more than 80 per cent of an employee’s gross monthly salary while furloughed, because it will also meet the cost of Employers’ National Insurance Contributions (NICs) and the minimum automatic enrolment employers’ pension contributions that are attracted by the 80 per cent figure.
If you choose to top-up a ‘furloughed’ employee’s salary to 100 per cent, you will also need to meet the additional costs in terms of the NICs and pension contributions attracted by the additional 20 per cent payment. Employees will pay Income Tax and their own NICs from their gross salary as usual.
The Government has said that before the scheme goes live this month, it will issue guidance on calculating claims for Employers’ NICs and minimum automatic employment pension contributions.