We have seen detailed guidance on the Coronavirus Job Retention Scheme – the 80% subsidy – published 26 March 2020, and broadly as expected.

Some extra clarification was added by Government on 4 April 2020, and this is reflected in this post around Company directors and Furlough.


Update 16 April 2020

  • The entry date is now extended to 19 March 2020 from 28 February 2020.  We haven’t amended the text below, but read accordingly.
  • The portal for claims is planned to open by HMRC on 20 April 2020

Update 17 April 2020

  • The scheme will now run to end of June 2020 – 4 months rather than 3

Update 18 April 2020

Details have now been released on the claim arrangements for the Coronavirus Job Retention Scheme grants.  Claims can be made from Monday 20 April 2020.  Government have published two documents:

Update 12 May 2020

Update 29 May 2020


Highlights of the Scheme


  • “designed to support employers whose operations have been severely affected by coronavirus (COVID-19)”
  • open to all UK employers a PAYE payroll scheme on 28 February 2020 – includes business, charities and recruitment agencies for agency workers
  • Employees must have been on payroll at 28 February 2020 and can be full time, part time, agency contract, flexible contracts, zero hours.  Hires after 28 February 2020 cannot be Furloughed
  • Anyone made redundant since 28 February 2020 can be re-hired and Furloughed
  • Do not have to Furlough all workers
  • Applies from 1 March retrospectively
  • Scheme runs for three months (March, April, May) but may be extended by Government



  • 80% of Furloughed employees wages up to £2,500/m.   That equates to £3,125/m gross or £37,500 pa.  Doesn’t seem to be a lower limit
  • Employer will also be reimbursed Employers NIC and Pension Contributions at Auto Enrolment rates
  • Must pass the 80% over but no compulsion to make up additional 20%  – however normal rules of Employment law apply, so you will need employees agreement to furlough and reduce pay unless you have a provision in the employment contract which allows it – this will need documenting
  • Pay based on salary at 28 February 2020.  Averaged across 2019-20 for anyone whose pay varies
  • If the 80% takes the employee below NMW/NLW then no requirement to make up to NMW/NLW levels
  • PAYE operates on amount paid to employee as usual
  • 80% from Government is taxable income for business (matching payroll expense which is deducted)



  • Normal rules of Employment law apply, so you will need employees agreement to furlough and reduce pay unless you have a provision in the employment contract which allows it
  • Employee cannot do any work for employer.  If they are still working but on reduced hours then not eligible for the scheme
  • An employee cannot be Furloughed if on unpaid leave, can be Furloughed if on SSP (when SSP finishes) or absent for shielding
  • If an employee has more than one job then they could be Furloughed from each job and the cap applies to each employment
  • Special rules (see guidance) if employee on Maternity Leave or similar



  • HMRC will be launching a portal around end April
  • Claims made through portal
  • Government say claims will require
    • your ePAYE reference number
    • the number of employees being furloughed
    • the claim period (start and end date)
    • amount claimed (per the minimum length of furloughing of 3 weeks)
    • your bank account number and sort code
    • your contact name
    • your phone number

Note, “Furlough” isn’t defined as such but the guidance refers to “employees on a leave of absence” – in practical terms, someone temporarily laid off.


Whitefield Comments & Advice to Clients

We’ve had a lot of enquiries about this scheme over recent days, and hopefully this answers some of them

Some questions we’ve had from our small company clients:

  • Do I have to show the furlough is linked to Covid-19? We believe so, as the the scheme is intended to compensate for Covid-19, and the guidance says that. However there is nothing in the claim requirements that says the claim must be evidenced, however there is a right of audit by HMRC. We would expect egregious claims to be picked up, but otherwise a light touch. Common sense is suggested when claiming.
  • Does this cover company directors?  Yes, its confirmed it does – but only for salary not dividend
  • Can I claim this as a director if I am still running the business?  No.  The only work you can do whilst Furloughed is statutory duties like accounts and administration, no substantive revenue earning work.
  • I’m a director / shareholder does this cover my dividends as well? No, if you are on a low salary / high dividend arrangement then only the salary element is covered
  • Can I increase my directors salary retrospectively to claim more? No, its based on the amount at 28 February 2020 – sorry
  • I am a contractor / freelancer working through a PSC – does this apply to me?  Generally Yes – the position for someone in a IR35 caught contract with a Public Sector Entity as deemed employer is more tenuous alas.
  • I am a contractor / freelancer working through a PSC – does this apply to my spouse who is on the payroll?  Yes, it does.

We’ll update this post with any new information coming out.




Image – One Click Group UK via Creative Commons on Flickr