Government pledges to help businesses by paying up to 80% of employee wages
Government pledges to help businesses by paying up to 80% of employee wages
Chancellor Rishi Sunak has pledged that the Government will help businesses financially affected by the coronavirus by paying the wages and safeguarding millions of workers.
Mr Sunak explained that these “unprecedented measures for unprecedented times” would see HM Revenue and Customs (HMRC) reimburse 80% of workers wage costs, up to a cap of £2,500 per month, as many companies face collapse as a result of the COVID-19 outbreak.
He urged that employers do not lay off staff who were unable to carry out their jobs as the country is put on hold to tackle the spread of the pandemic. It is also understood that the wage subsidy will also apply to those companies who had already laid-off workers, as long as they were reinstated into their workforce and given a leave of absence instead.
All UK businesses are eligible to access the scheme and to do so they would need to:
- Designate affected employees as ‘furloughed’* workers and notify employees of this change.
- Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC are expected to provide further details of how this will work in due course.
The wage protection scheme will cover the cost of wages, which is related to gross pay, and be backdated to 1st March 2020 and will initially run for three months but will be extended by the Government if it considers this necessary.
The scheme is expected to make the first grants to businesses "within weeks", according to a Treasury spokeswoman.
Next Steps
Speak to your accountant to discuss the actions your should be taking to safeguard your workforce.
* 'Furloughed' is the Government’s term for those employees who are not able to work. We will provide further updates once it is clearer about who qualifies as furloughed e.g. on call staff, staff working in some capacity but on reduced productivity etc.
For our latest COVID-19 news and guidance for your business, visit our dedicated Coronavirus Hub.
We will be updating it regularly as we continue to monitor and digest all the latest information.
By Daren Moore FCCA
Last updated March 2020
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