5. Multiply by £960 / £1,200 (this is the furlough pay received for the furlough period divided by the total pay received for the furlough period) - this equals £92.07
A Ltd can claim £92.07 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.
Claims where no employer NI contributions are due
If no employer NI contributions are due, then the amount of the grant towards employer NI contributions will be zero. This will be true where:
• •
Apprentices are under 25 (category H) Employees are under 21 (category M)
• Employees are under 21 and can defer NI because they’re already paying it in another job (category Z) • Employers whose employer National Insurance contributions bill is reduced to £0 by the Employment Allowance
Calculating employer’s pension contributions to claim
Pension contributions will still need to be paid on behalf of employees, and these can be reclaimed up to the level of the mandatory employer contribution, even if it isn’t for an auto-enrolment pension.
Claims cannot be made for any pension contributions if there are no contributions made or due to be made for an employee or for pension contributions made that are above the mandatory employer contribution.
To calculate how much can be claimed for employer’s pension contributions:
1. Start with the amount being claimed for the employee’s wages 2. Deduct the minimum amount the employee would have to earn in the claim period to qualify for employer pension contributions – this is £512 a month for periods before 5 April 2020, and £520 a month for periods after 6 April 2020. 3. Multiply by 3%.
Grants for pension contributions can be claimed up to this cap on the proviso that the employer pays the whole amount claimed to a pension scheme for the employee as an employer contribution.
Calculating employer pension contributions if an employee is furloughed for a whole pay period, and their pay is not topped up
The following example is provided:
A Ltd pays employees on a monthly basis. An employee was furloughed on 1 April 2020 and is paid £1,500 of furlough pay on 30 April 2020. A Ltd did not top up the employee’s pay. A Ltd pays employer pension contributions into the employee’s pension.
1. Start with £1,500 (this is the gross pay grant) 2. Deduct £520 (this is the Lower Level of Qualifying Earnings) 3. Multiply by 3% = £29.40
A Ltd can claim £29.40 towards employer contributions it makes into the employee’s pension.
Calculating employer pension contributions where the employer makes contributions above the minimum level of contributions for an auto-enrolment pension
The following example is provided:
A salaried employee of A Ltd earns £2,125 per month, and is furloughed from 1 May 2020 to 31 May 2020. A Ltd has agreed to top up the employee’s salary to its usual amount, including making employer pension contributions which are usually 3% of the employee’s entire salary. The amount of gross pay grant is 80% of £2,125, which is £1,700.
The grant that can be claimed towards the employer pension contributions is the lower of the minimum level of contributions for an auto-enrolment pension, based on the furlough payment, and the amount actually paid by A Ltd.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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