Forum

• # 118559
• Sat 18 Apr 2020 12:48 PM

I have watched the HMRC webinair and read all the HMRC publications however I can find nothing that tells me whether my clients are still to pay the PAYE deducted from the furlough staff's weekly wages to HMRC.

I know that the employers claim the 80% of gross pay from HMRC and will have to forward to their employees the difference between that amount and the amount they have already paid them and keep a record of this to show they have paid the full grant to them.

However in the meantime each week they will have processed the payroll, submitted the RTI and the pension contribution uploads to the pension provider, the direct debits for the pension contributions will be taken by the provided and the staff will have received their net wages.

HMRC will expect payment of the RTI submissions, however does anyone know if payment is to be made for the PAYE for both the furloughed employees and working employees or will there be some method of submitting something like an EPS showing the amount of the PAYE that was for the furloughed workers?

Currently it looks as though employers are going to be paying HMRC and pension providers for the deductions  and expenses and then the employees for the same amount.  Surely that can't be correct?

• Pamela Dillon FMAAT MICB

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• # 118560
• Sat 18 Apr 2020 03:50 PM

Hi Pam

The way I understand it is this... say the furloughed employee is normally paid £500 gross per week, you would process your payroll using £400 as the gross pay (the 80%, or more if the employer wants to top it up themselves) and you would do all the normal deductions, the rti, pensions etc. Then, when the portal is up and running, you would list that employee and say that their furlough pay was £400. The government will then repay you that £400. So paying the PAYE, pensions etc all happens as normal because the amounts come out of the employees gross pay. The company can also claim for the minimum pension amount that they have to pay on that £400 and any employer NI due on it so the claim to HMRC would be for the £400 plus the employer pension amount plus the employer NI amount (if they can't claim employment allowance). If the employer chooses to top up the pay then they would be liable for the employer NI and employer pension contribution on the top up amount. At the moment it means the employer is out of pocket as the portal isn't open yet to make a claim and receive the money back but in future it won't be so bad as they'll be able to claim as soon as the payroll is run. So PAYE etc payments to HMRC / Pension providers etc continue as normal.

I hope that helps ?

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• # 118563
• Sat 18 Apr 2020 08:03 PM

Julia F said:

“

Hi Pam

The way I understand it is this... say the furloughed employee is normally paid £500 gross per week, you would process your payroll using £400 as the gross pay (the 80%, or more if the employer wants to top it up themselves) and you would do all the normal deductions, the rti, pensions etc. Then, when the portal is up and running, you would list that employee and say that their furlough pay was £400. The government will then repay you that £400. So paying the PAYE, pensions etc all happens as normal because the amounts come out of the employees gross pay. The company can also claim for the minimum pension amount that they have to pay on that £400 and any employer NI due on it so the claim to HMRC would be for the £400 plus the employer pension amount plus the employer NI amount (if they can't claim employment allowance). If the employer chooses to top up the pay then they would be liable for the employer NI and employer pension contribution on the top up amount. At the moment it means the employer is out of pocket as the portal isn't open yet to make a claim and receive the money back but in future it won't be so bad as they'll be able to claim as soon as the payroll is run. So PAYE etc payments to HMRC / Pension providers etc continue as normal.

I hope that helps ?

”

 Not really as the employer gets back the £400 plus pension contributions and Employers NIC but must transfer that full amount to the employee, this means the company is out the deductions and the penson contributions.

See the question and answer below from the HMRC webinair.

Audience Question:

Q: is the £2500 on net pay or gross pay?

A: Yes. Employers must pay the employee all the grant they receive for their gross pay in the form of money. Furloughed employees must receive no less than 80% of their reference pay (up to the £2,500 cap). Employers cannot reduce wages below this amount, including administration charges, fees or other costs. No part of the grant should be netted off to pay for benefits or a salary sacrifice scheme.

• Pamela Dillon FMAAT MICB

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• # 118565
• Sun 19 Apr 2020 07:06 AM

I think you might be misunderstanding what HMRC mean when they say that the whole of the 80% must be paid to the employee. In my example of the £400 it means that the whole £400 must go on the payslip as GROSS pay so the employer can't deduct anything for admin costs or whatever. The normal PAYE deductions and employee NI deductions are then made and the employee gets his NET pay in the bank. In this way the employer is not out of pocket because PAYE and employee NI come out of the employees money just as they normally would.

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