Who is affected

You could be affected if any of your employees are working from home due to coronavirus (COVID-19), either because:

• your workplace has closed
• they are following advice to self-isolate

Who is not affected

Furloughed workers who are eligible for the Coronavirus Job Retention Scheme.

Type of equipment, service or supply

Mobile phones and SIM cards (no restriction on private use)

If you provide a mobile phone and SIM card without a restriction on private use, limited to one per employee, this is non-taxable.

Broadband

If your employee already pays for broadband, then no additional expenses can be claimed.

If a broadband internet connection is needed to work from home and one was not already available, then the broadband fee can be reimbursed by you and is non-taxable.

In this case, the broadband is provided for business and any private use must be limited.

Laptops, tablets, computers, and office supplies

If these are mainly used for business purposes and not significant private use, these are non-taxable.

Reimbursing expenses for office equipment your employee has bought

If your employee needs to buy home office equipment to allow them to work from home, they will need to discuss this with you in advance.

If you reimburse your employee the actual costs of the purchase, then this is non-taxable provided there is no significant private use.

If you do not reimburse your employee, then they can claim tax relief for these purchases on their tax return or P87 as long as the amount claimed is incurred wholly, exclusively and necessarily in the performance of their duties of employment. The occasions on which an employee would qualify to claim tax relief will be rare, as there are strict conditions to be met and eligibility will depend on the facts at the time.

Your employees will need to keep records of their purchase and claim for the exact amount. For more information on the strict tests that need to be passed in order to qualify for tax relief see the guidance on Employment Income.

Additional expenses like electricity, heating or broadband

Payment or reimbursement to your employees of up to £4 a week (£6 a week from 6 April 2020) is non-taxable for the additional household expenses incurred when your employee is working from home.

If the claim is above this amount, then your employee will need to:

• check with you beforehand to see if you will make these payments
• keep receipts

Employer provided loans

A salary advance or loan to help your employee at a time of hardship counts as an employment-related loan.

Loans provided with a value less than £10,000 in a tax year are non-taxable.

Further information on loans.

Temporary accommodation

If your employee needs to self-isolate but cannot do so in their own home, you can reimburse hotel expenses and subsistence costs, these are taxable.

Further information on accommodation expenses.

Employees using their own vehicle for business

You can pay approved mileage allowance payments of 45p per mile up to 10,000 miles (25p per mile thereafter) free of tax and National Insurance contributions.

If you do not pay mileage allowance, your employee can claim tax relief through their Personal Tax Account.

Further information on approved mileage allowance payments.

Significant private use

For items which are taxable, exemptions for work related benefits must show that there is no significant private use.

HMRC accepts that where:

• your policy about private use is clearly stated to your employee and sets out the circumstances in which private use may be made (this may include making the conditions clear in employment contracts or asking employees to sign a statement acknowledging company policy on what use is allowed and any disciplinary consequences if the policy is not followed)
• any decision of the employer not to recover the costs of private use is a commercial decision, rather than rewarding your employee

Significant private use should not be based on the time spent on different uses. It should be based on your employee’s duties and the need for them to have the equipment or services provided so they can do their job.

Record keeping

You do not have to keep detailed records of every instance of private use to prove a claim for exemption.

How to report to HMRC

Taxable expenses or benefits

Any expenses or benefits which are related to coronavirus can be reported on your PAYE Settlement Agreement.

This means you can settle tax and National Insurance contributions on any expenses or benefits, even though the responsibility would usually be on your employee, or on both you and your employee.

This applies to coronavirus related items only, for example, a new desk can go onto the PAYE Settlement Agreement, but a new sofa cannot.

If you are currently payrolling benefits in kind, you may continue to report expenses and benefits through your payroll. You may also continue to report expenses and benefits through P11D returns.

Non-taxable expenses or benefits

Do not report to HMRC.

Further information on non-taxable expenses or benefits for employees.

Taxable benefit charge - returning office equipment

Equipment provided by employer

You may have supplied employees with office equipment so they could work from home. There’s no tax charge when they return the equipment to you, so long as there’s no transfer of ownership.

If you do transfer ownership of the equipment to an employee, at any time, this will become an employee benefit. The charge will be on the market value of the equipment at the time of the transfer, minus any amount the employee may have paid towards the equipment.

Equipment reimbursed by employer

Your employee may have agreed to buy their own home office equipment for use whilst working at home and you have reimbursed the exact expense. Unless you have specified that they must transfer ownership to you, the equipment is owned by your employee.

There is no benefit charge on the reimbursement. There is also no benefit charge if you let your employee keep the equipment as it is something that they already own.

Contact HMRC

Contact HMRC if you’re an employer and need help and support on paying tax due to coronavirus.

Get help online

Use HMRC’s digital assistant to find more information about the coronavirus support schemes.

To use the scheme, the steps you’ll need to take are:

1. Check if you can claim

2. Check which employees you can put on furlough

3. Steps to take before calculating your claim

4. Calculate how much you should claim

5. Claim for your employees’ wages online

6. Report a payment in PAYE Real Time Information

If you cannot maintain your workforce because your operations have been affected by coronavirus (COVID-19), you can furlough employees and apply for a grant to cover a portion of their usual monthly wage costs where you record them as being on furlough.

Employers can bring furloughed employees back to work for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked. Only employees that you have successfully claimed a previous grant for will be eligible for more grants under the scheme.

From 1 August 2020, you will be asked to contribute towards the cost of your furloughed employees’ wages. Find out more information on how the Coronavirus Job Retention Scheme is changing.

You can read previous versions of this guidance on The National Archives.

Please use the online support and do not contact HMRC unless it is absolutely necessary - any questions should be directed at your agent, representative, or our web chat service.

HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. You can report suspected fraud in the Coronavirus Job Retention scheme.

Coronavirus Job Retention Scheme grants are not classed as state aid.

Who can claim

You can now only claim if you have previously furloughed your employee before 30 June 2020 and you have submitted a claim for this by 31 July 2020. This may differ if you have an employee returning from statutory parental leave.

Maximum number of employees you can claim for

The amount you can claim for in any single claim period starting from 1 July 2020 cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June 2020.

For example, an employer had previously submitted 3 separate claims between 1 March 2020 and 30 June 2020, one for 30 employees, one for 20 employees and one for 50 employees. Then the maximum number of employees that employer could furlough in any single claim starting on or after 1 July 2020 would be 50.

In another example, an employer has 100 employees and previously submitted claims between 1 March 2020 and 30 June for all of these employees but not all at the same time. Instead of putting all 100 employees on furlough, this employer put 50 employees on furlough and rotated them every three weeks, with a maximum of 50 employees on furlough at any one time. The maximum number of employees that this employer could furlough in any single claim starting on or after 1 July 2020 would be 50, although all 100 employees are eligible for furlough.

There are some exceptions explained in this guidance for employees returning from parental leave and military reservists, where this cap may not apply.

If you receive public funding

If you have staff costs that are publicly funded (even if you’re not in the public sector), you should use that money to continue paying your staff, and not furlough your staff.

Organisations can use the scheme if they are not fully funded by public grants and they should contact their sponsor department or respective administration for further guidance.

If you’re an administrator

Where a company is being taken under the management of an administrator, the administrator can furlough and claim for employees who have been furloughed for at least 3 consecutive weeks taking place any time between 1 March 2020 and 30 June 2020 by their previous employer.

Administrators should only use the scheme if there is a reasonable likelihood of rehiring the workers. For example, this could be as a result of an administration and pursuit of a sale of the business.

Employees you can claim for

Find out which employees you can put on furlough and claim for.

Agreeing to furlough employees

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

To be eligible for the grant, employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed. You must:

• make sure that the agreement is consistent with employment, equality and discrimination laws
• keep a written record of the agreement for 5 years
• keep records of how many hours your employees work and the number of hours they are furloughed (i.e. not working)

The employee does not have to provide a written response and you do not need to place all your employees on furlough.

From 1 July 2020, you will:

• only be able to claim for employees who have previously been furloughed for at least 3 consecutive weeks taking place any time between 1 March 2020 and 30 June 2020
• be able to flexibly furlough employees – this means you can bring your employees back to work for any amount of time, and any work pattern
• still be able to claim the furlough grant for the hours your flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period.

If you flexibly furlough employees, you’ll need to agree this with the employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement. You’ll need to:

• make sure that the agreement is consistent with employment, equality and discrimination laws
• keep a written record of the agreement for 5 years
• keep records of how many hours your employees work and the number of hours they are furloughed (i.e. not working).

You do not need to place all your employees on furlough and you can continue to fully furlough employees if you wish. Employees cannot undertake any work for you during time that you record them as being on furlough.

Flexible furlough agreements

There is no minimum furlough period, agreed flexible furlough agreements can last any amount of time. Employees can enter into a flexible furlough agreement more than once.

Although flexible furlough agreements can last any amount of time, unless otherwise specified the period that you claim for must be for a minimum claim period of 7 calendar days.

When your employees are on furlough

During hours which you record your employee as being on furlough, you cannot ask them to do any work for you that:

• makes money for your organisation or any organisation linked or associated with your organisation
• provides services for your organisation or any organisation linked or associated with your organisation

Your employee can:

• take part in training
• volunteer for another employer or organisation
• work for another employer (if contractually allowed)

Paying employee taxes and pension contributions

Your employees will still pay the taxes they normally pay out of their wages.

You must deduct and pay to HMRC income tax and employee National Insurance contributions on the full amount that you pay the employee, including any scheme grant.

You must also pay to HMRC the employer National Insurance contributions on the full amount that you pay the employee, including any scheme grant.

You must report these payments via a Full Payment Submission to HMRC on or before the pay date.

Your employee will also still pay pension contributions (both employer and automatic contributions from the employee), unless the employee has opted out or stopped saving into their pension. Until 31 July 2020 you can continue to claim for these costs for the hours the employee is on furlough. From 1 August 2020 employers will not be able to claim for employer NICs and pension contributions.

Keeping employee rights

Employees still have the same rights at work, including:

• Statutory Sick Pay
• annual leave
• maternity and other parental rights
• rights against unfair dismissal
• redundancy payments

You can continue to claim for a furloughed employee who is serving a statutory notice period, however grants cannot be used to substitute redundancy payments. HMRC will continue to monitor businesses after the scheme has closed.

Holiday pay

Furloughed employees continue to accrue leave as per their employment contract.

The employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below.

Employees can take holiday whilst on furlough. If an employee is flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours.

Employees should not be placed on furlough for a period simply because they are on holiday for that period. Working Time Regulations require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the last 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations.

Employers will be obliged to pay employees who are on holiday additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need and the correct notice is given. This applies for both the furlough period and the recovery period.

If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their usual holiday pay, or give the employee a day of holiday in lieu.

Find out more information on holiday pay during furlough.

Employees working for a different employer

If contractually allowed, your employees are permitted to work for another employer whilst you have placed them on furlough.

For any employer that takes on a new employee, the new employer should ensure they complete the starter checklist form correctly. If the employee is furloughed from another employment, they should complete Statement C.

If your employee does volunteer work

A furloughed employee can take part in volunteer work during hours which you record your employee as being on furlough as long as it is for another employer or organisation.

If your employee does training

Furloughed employees can engage in training during hours which you record your employee as being on furlough, as long as in undertaking the training the employee does not provide services to, or generate revenue for, or on behalf of their organisation or a linked or associated organisation. Furloughed employees should be encouraged to undertake training.

Where training is undertaken by furloughed employees during hours which you record your employee as being on furlough, at the request of their employer, they are entitled to be paid at least their appropriate national minimum wage for this time. In most cases, the furlough payment of 80% of an employee’s regular wage, up to the value of £2,500, will provide sufficient monies to cover these training hours. However, where the time spent training attracts a minimum wage entitlement in excess of the furlough payment, employers will need to pay the additional wages (see National Minimum Wage Section for more details).

Furloughed employees working as union or non-union representatives or as pension trustees

During hours which you record your employee as being on furlough, employees who are union or non-union representatives may undertake duties and activities for the purpose of individual or collective representation of employees or other workers. However in doing this, they must not provide services to or generate revenue for, or on behalf of your organisation or a linked or associated organisation.

During hours which you record your employee as being on furlough, employees who are pension scheme trustees or trustee directors of a corporate trustee may undertake trustee duties in relation to the pension scheme. However, a professional, independent pension scheme trustee who has been furloughed by the independent trustee company cannot undertake trustee work that would provide services to or generate revenue for, or on behalf of, the independent trustee company or any organisation linked or associated with that independent trustee company during hours which you record them as being on furlough.

Before you claim

Employers should discuss with their staff and make any changes to the employment contract by agreement.

Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

HMRC cannot provide your employees with details of claims you make on their behalf. Please help us by keeping your employees informed, answering any questions that they might have. Please ask them not to contact HMRC.

Contacting HMRC

We are receiving very high numbers of calls. Contacting HMRC unnecessarily puts our essential public services at risk during these challenging times.

If you think that there have been mistakes or unreasonable delays caused by HMRC, you can use our complaints process.

Get help online

Use HMRC’s digital assistant to find more information about the coronavirus support schemes.

You can also contact HMRC if you cannot get the help you need online.

Other help and support

You can watch videos and register for free webinars to learn more about the support available to help you deal with the economic impacts of coronavirus.