2019-20 2020-21
£166 per week, £719 per month or £8,632 per year £169 per week, £732 per month or £8,788 per year
The following example is provided:
A Ltd pays employees on a calendar monthly basis. An employee was furloughed on 1 April 2020 is paid £1,500 of furlough pay on 30 April 2020. A Ltd did not top up the employee’s pay.
1. Start with £1,500 (the grant you’re claiming for employee’s wages) 2. Minus £732 (the relevant secondary National Insurance contributions threshold) 3. Multiply this amount by 13.8% - this is £105.98 4. The total amount of the grant that can be claimed for employer NI contributions is £105.98 for this employee. The company should adjust the amount for any Employment Allowance it might claim, if applicable.
Calculating employer NI contributions if an employee is not furloughed for the whole pay period or if their pay is topped up
Where a pay period covers both furloughed and working periods, or if an employee has their pay topped up over the amounts covered by the grant, the following steps will help to calculate the employer NI contributions that can be claimed for each employee. 1. The amount of pay minus the relevant National Insurance contributions secondary threshold 2. To calculate the employer National Insurance contributions due on an employee’s total pay for the pay period, the result of Step 1 is multiplied by 13.8%. 3. Divide the amount of employer National Insurance contributions due for the pay period by the number of days in the pay period. 4. The grant is capped at the total amount of employers’ National Insurance contributions due to be paid in respect of an employee. Multiply the result of Step 3 by the number of qualifying furlough days in the pay period. 5. Multiply the result of Step 4 by the proportion of pay received in respect of the qualifying furlough days that is funded by the grant.
The example provided for pay periods covering both furloughed and working periods is as follows:
An employee who is paid a fixed amount monthly agrees to be furloughed by A Ltd on 16 April 2020. The employee’s gross pay at the end of the month is £2,160. This is made up of £1,200 of wages funded by A Ltd, in respect of 1 to 15 April (15 days), and £960 of pay wholly funded by a grant in respect of 16 to 30 April (15 days). The total employer NI contributions due for the pay period is apportioned on a daily basis to determine how much can be covered by a grant for employer NI contributions. 1. £2,160 minus £732 (the amount of pay minus the relevant National Insurance contributions secondary threshold) 2. Multiply by 13.8% (this gives you the amount of employer National Insurance contributions due on an employee’s total pay for the pay period) 3. Divide by 30 (the number of days in the pay period) 4. Multiply by 15 (the number of furlough days in the pay period) 5. Multiply by 100% (because the employee’s wage is not being topped up) - this is £98.53 A Ltd can claim £98.53 in respect of the employer NI contributions due on the employee’s March pay. The total grant for employer NI contributions cannot exceed the total amount of employer NI contributions due to be paid. The example provided for employees who have their pay topped-up is as follows: If A Ltd chooses to top up the same employee’s pay to 100% during the period of furlough, the employer NI contributions must be apportioned between the pay funded by the grant and the pay funded by the employer. The employee’s total pay in this example is £1,200 in respect of 1 to 15 April and £1,200 (made up of £960 grant-funded pay and £240 employer-funded pay) in respect of 16 to 30 April, totalling £2,400. 1. £2,400 minus £732 (the amount of pay minus the relevant NI contributions secondary threshold) 2. Multiply by 13.8% (this gives you the amount of employer NI contributions due on an employee’s total pay for the pay period) 3. Divide by 30 (the number of days in the pay period) 4. Multiply by 15 (the number of furlough days in the pay period) Step
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
Page 192 of 590
Made with FlippingBook - Online magazine maker