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MikeConn
Level 2

Furloughed Employees and Employment Allowance

Hello,

 

Can anyone tell me what's the position with furloughed employees and whether, for the new tax year, the option for Employment Allowance should be enabled or not?

 

As I understand it, Employer's National Insurance, on the 80% of employee's salary that's being paid, will ultimately be refunded under the Coronavirus Job Retention Scheme. We probably don't want to let QuickBooks use those amounts as part of the Employment Allowance because then we lose out on the grant and don't get to use the Employment Allowance towards normal Employer's National Insurance once people are working again.

 

What I'm thinking is that the Employment Allowance is temporarily switched off, in QuickBooks, then enabled when things go back to normal, things should be ok and we don't lose out on potential credits.

 

I hope that makes sense. Is the option as I described feasible or even needed?

 

Thanks.

10 REPLIES 10
ShiellaGraceA
QuickBooks Team

Furloughed Employees and Employment Allowance

Hi @MikeConn,

 

Currently, the option to turn off the employment allowance is unavailable. Let me guide you on how to track COVID-19 SSP in standard payroll.

 

  1. Start your pay run, then Edit next to one employee.
  2. Choose Add/edit a Bonus or Other Payment.
  3. Hit the Plus icon, then select Other Earnings as the type. You can name the item something along the lines of ‘COVID-19 SSP.’
  4. Tick Save and View draft, and then submit your payroll to HMRC as normal.

Please see this article for details about: COVID-19 Statutory Sick Pay.

 

I'm also attaching this handy article for additional reference. Here's the link: COVID-19: Coronavirus Job Retention Scheme.

 

Please know that you're always welcome to come back anytime in this thread if you have other questions or concerns. The Community is here to help. Thanks for posting and be safe.

MikeConn
Level 2

Furloughed Employees and Employment Allowance

Hello,

 

Thanks for your reply. Can I please clarify. I appreciate that, right now, we can't change the state of Employment Allowance, since it's happened for this year, but I was sort of thinking we could switch it off, temporarily, for next year if it made accounting for government-based repayments easier in the first few months.

 

I do realise this may all not matter since we could get a refund from the government in addition to not paying the Employer's National Insurance contributions due to the Employment Allowance. Maybe it all balances out in the end? A little bit more guidance from the government, on the finer detail, probably wouldn't go amiss. I do realise it's not the fault of QuickBooks :-).

 

Thanks

 

 

htwydell
Level 2

Furloughed Employees and Employment Allowance

I would like to know this also. As 80% is coming back, do I enable the 2020-2021 Employment Allowance option from July (or whenever the grant scheme ends) as otherwise we will lose out on the £3k as it has been effectively already repaid via the 80%...unless I am missing this. I realise it is only £3k but it is £3k in NI contributions that we can ill afford to lose...

MikeConn
Level 2

Furloughed Employees and Employment Allowance

The government has recently issued more information about this, at https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job...

 

It would seem that the answer is that we should definitely have the Employment Allowance option enabled within quickbooks. That said, when I tried to enable it, I got a 'Something went wrong' error which was repeated every time I tried. The option seems to be enabled when I returned to the page.

 

By the way, some good news is that the Employment Allowance is £4000 this year.

 

I'll paste part of what they stated in case the link changes ...

"In calculating the total employer National Insurance contributions paid in any pay period, the employer should subtract any Employment Allowance used in that pay period. If you have not, or do not expect to pay any employer National Insurance contributions in a pay period as a result of the Employment Allowance, you should not claim any employer National Insurance contributions costs for furloughed employees in that pay period. If you expect to exhaust any Employment Allowance in a pay period then you should claim the lower of the employer National Insurance contributions grant calculation, and the employer National Insurance contributions costs that you paid, or expect to pay across your entire payroll."

htwydell
Level 2

Furloughed Employees and Employment Allowance

Hello, thanks for this. Was reading about it yesterday afternoon (that's how my Sundays roll these days!) and agree that it is stating that we must enable it and use the allowance to offset any NI ER contributions. So, if I understand this correctly, if we have £3k of NI ER contributions for April then they would be offset by the allowance which means that we cannot claim for them under CJRS. However, if we then have £3k in May then the remaining £1k allowance would offset this amount and leave us able to claim £2k of NI ER contributions under CJRS.

If I never have more than £4k in NI ER contributions during the furlough period then I would not be able to claim any back via CJRS as the Employment Allowance is already granting us relief.

Correct?

MikeConn
Level 2

Furloughed Employees and Employment Allowance

That's how I'm reading it as well. Of course, we're only talking about EER NI here, which we're not paying anyway due to the Employment Allowance, so CJRS is still helping a lot. Our accountants had initially told us to leave the Employment Allowance option disabled, until after CJRS, since it would have resulted in less NI being paid overall, but it would seem that HMRC have fully defined the rules on this now.

htwydell
Level 2

Furloughed Employees and Employment Allowance

Great, thanks. So all I think that I can claim this month is the 80% of base salary plus the employer's pension contributions as the employer's NI contributions are covered at present by the Employer's Allowance. Good to be able to run this by someone else so thank you...and good luck!

MikeConn
Level 2

Furloughed Employees and Employment Allowance

I was just getting the details together for the first claim and realised that, for us anyway, most of the first two weeks of CJRS are in the last tax year meaning  that the EER NI can be claimed for that period. I hope I'm not wrong but Employment Allowance effectively restarted on 06/04/2020 so I assume any EER NI before that can be claimed.

John C
QuickBooks Team

Furloughed Employees and Employment Allowance

Hi MikeConn

 

That is correct, you will be able to claim for any EENI for the last few weeks of the last tax year.

MikeConn
Level 2

Furloughed Employees and Employment Allowance

Thanks,  I like that reply :-)

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