Furlough scheme: has employers’ NI been overclaimed?
The Institute of Chartered Accountants in England and Wales (ICAEW) has issued new guidance that describes two scenarios where employers using the furlough scheme may have inadvertently reclaimed secondary Class 1 NI twice when the scheme was first introduced. What’s the full story?
The Coronavirus Job Retention Scheme (CJRS) is complex, but broadly employers pay a percentage of an employee's regular salary (at least 80% in 2020), subject to a cap, then reclaim the 80% element from HMRC. However, it also allows secondary Class 2 NI contributions to be reclaimed, as well as pension contributions under auto-enrolment. This has led to some scenarios where employers who claim the employment allowance (EA) of up to £4,000 per year inadvertently receiving furlough payments in respect of NI that is also relieved under the EA. The ICAEW has published detailed commentary on where this may have happened. In brief, an overclaim may occur where:
- EA claims were deferred until after the final claim month for the CJRS where the £4,000 was not absorbed in full during 2020/21; or
- EA claims were made at the beginning of the tax year where the full £4,000 was absorbed before July 2020.
Potentially affected business should carefully read the guidance and contact HMRC’s Employer Helpline on 0300 200 3200 if they think there is an issue.
Related Topics
-
Accelerate tax relief for the cost of equipment
You’re upgrading your company’s IT equipment as it’s now several years old. Naturally your company will get tax relief for the purchases but what’s the tax position if you sell or scrap the old equipment, and how might you improve it?
-
Opt out of winter fuel payments by 15 September
HMRC has issued new guidance on the winter fuel payments. What do you need to know?
-
Capital gains tax break for job-related accommodation
You’re in the process of selling a property that you bought as your home but because of your job have never lived in. You’ve been told that you’ll have to pay tax on any gain you make, but might a special relief get you off the hook?