How and when to report payments to HMRC made to employees under the Coronavirus Job Retention Scheme
23 April 2020
HMRC has published guidance which explains how and when to report payments for employees under the Coronavirus Job Retention Scheme (CJRS) to HMRC using the PAYE Real Time Information system.
Employers using the grant to pay employees
There is a reminder to employers that any grant that is paid out to them under the CJRS must be used to pay wages to furloughed employees and that this pay should be treated in line with any other wage payments in terms of payroll deductions, such as Income Tax and National Insurance (NI).
Employees should be paid on their contractual pay date to ensure that there are no implications for employees who receive Universal Credit.
Grants should be reported to HMRC via Real Time Information (RTI) through payroll software, on or before the date that it is paid to employees, in alignment with the process for a standard payday,
Employers using the grant to reimburse wages they have already paid out to employees
If employers are using the grant to reimburse wages that they have already paid out to employees, there is no requirement to send another Full Payment Submission (FPS) for this amount. The grant is reimbursing wages already paid out and reported via payroll so there is no need for a further FPS to be sent.
Employers making no wage payments in a tax month
If an employer has not paid employees any wage payments in a tax month, then they must submit an Employer Payment Submission (EPS) to confirm this fact. The EPS needs to be sent no later than 19tbh of the following tax month if possible.
Employers paying employees 20% of wage until they receive the grant
For employers who have only paid employees 20% of their normal wage until they receive the grant then they must operate PAYE and deduct any tax and NI contributions due on the reduced payment amounts, and report them to HMRC by FPS on or before the payment date.
An FPS must not be submitted reporting the full payments that an employer expects to make but have not yet made.
When the employer receives the grant payment and pays employees their wages, they must send the FPS showing the payment that was made.
Employers who reported wages to HMRC in March 2020 that were not paid out to employees
An FPS must only include wages that have actually been paid to employees.
Employers who have reported wages to HMRC in March 2020 that were not paid out to employees will need to submit an Earlier Year Update (EYU) or a closed year FPS to reflect what was paid in wages. When they receive the grant, they should pay employees on the contractual payment date for the current tax month. A 2020-21 FPS should be submitted on or before the date that payments are made to employees.
Employers who pay the full amount of an employee’s normal wage but only reclaim 80%
Employers who opt to top-up employee wages above the 80% scheme cannot claim the topped-up amounts back from HMRC. Tax and NI must be deducted on the full amount paid, and the payment must be reported via FPS on or before the pay date.
When the grant is paid by HMRC it will reimburse wages already paid, but employers do not need to make another FPS for this amount.
Employers who have not paid anything to employees for March or April
If employers are making a payment for both March and April in employee wages for April, they must deduct tax and NI on that full amount. Payments must not be backdated to March as if they were paid in March.
Employers who have paid employees and submitted information via RTI early
Employers should continue to pay their employees on their contractual payment date and submit the FPS on or before the date that they make the payment, to avoid affecting employees who receive Universal Credit.
The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.