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IRIS. Look forward
IRIS PAYE-Master
Covid-19 and Furloughed Employee
Payroll Processing Changes
April 2020
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IRIS. Look forward
Contents
Furlough Payments ........................................................................................................................ 3
Salaried Employees ................................................................................................................................. 3
Hourly Paid employees .......................................................................................................................... 4
Original Payslip .................................................................................................................................................... 6
Furloughed Payslip .............................................................................................................................................. 6
Employer Pension Contributions .................................................................................................. 7
How much money do I claim? ....................................................................................................... 7
Reports to show the values I can claim ................................................................................................ 7
Pensions ................................................................................................................................................... 7
Employee is furloughed for part of a pay period ........................................................................ 8
Proportion to claim back ........................................................................................................................ 8
Paying Employees 100% of Pay ..................................................................................................... 9
Example .................................................................................................................................................... 9
Employment Allowance ................................................................................................................. 9
What information do I need to make a claim?.......................................................................... 10
Temporarily Stop Direct Earnings Attachments (DEA) ............................................................. 11
To do this in IRIS PAYE-Master ............................................................................................................ 11
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IRIS. Look forward
Furlough Payments
This document aims to give you guidance on processing Furlough Payments in PAYE-Master,
making it easier to calculate what you can claim back from the government using the
Coronavirus Job Retention Scheme.
Salaried Employees
For salaried employees we recommend you create a new payment with a name that is easily
identifiable e.g. Furlough Pay or Furlough Pay 80%.
To do this:
1. From the Company menu, select Additions/Deductions
2. Click the next available ‘unused’ row in the grid
3. As the payment is subject to tax and NI, tick the Tax and NI columns
4. Also tick the Pen and QE columns in respect of Pensionable and Qualifying Earnings
5. Click Save
Once saved, you can use the
new payment in Pay
Variations to pay your
employees 80% of their usual
pay. To process this as a one-
off payment, enter the value
of the payment in the Temp
Amount field. To retain the
value for future periods, enter the value of the payment into the Std Amount field.
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IRIS. Look forward
Things to consider
▪ You will have to alter the normal payment (e.g. salary) each time you process payroll.
Alternatively, you could temporarily set the salary to zero in the employee’s record. If you
want to continue paying your furloughed employee 100% of their pay, for the time being
you could set the Basic Pay amount to be 20% of its original value
▪ If you have both salaried and hourly paid employees, you will need to create a separate
addition for each, ensuring you name them something easily recognisable, such as
Furlough Sal and Furlough Hrly
Hourly Paid employees
For hourly paid employees, we recommend you create a new pay rate with a name that is easily
identifiable e.g. Furlough Pay or Furlough Pay 80%.
To do this:
1. From the Company menu, choose Additions/Deductions
2. Select the next available ‘unused’ row in the grid
3. As the payment is subject to tax and NI, tick the Tax and NI columns
4. Also tick the Pen and QE columns in respect of Pensionable and Qualifying Earnings
5. Enter 0.80 in the Multiple column. This ensures that any hours entered using this
addition in Pay Variations will be calculated at 80% of their normal hourly rate
6. Click Save
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IRIS. Look forward
This new payment is now available to select in Pay Variations. To process this as a one-off
payment, enter the normal number or hours in the Temp Amount field and tick the Hours box.
To retain the value for future pay periods, enter the number of hours into the Std Amount field,
again ticking the Hours box. On this basis, payroll will calculate 80% of the employee’s normal
working hours by the rate of pay.
Things to consider
▪ As an alternative to creating an addition with a multiple of 0.80 to cater for the 80%
Furlough Pay, you could create an addition where the multiple is 1 and adjust the
employee’s rate of pay instead. For example, if your employee’s normal pay is 40 hours
at £10 per hour, set the employee’s rate to £8 per hour in Employee Details | Pay
Rates. Use the Furlough Pay addition and enter 40 Hours in Pay Variations.
▪ If you have both salaried and hourly paid employees on the payroll, you will need to
create a separate addition for each. Be sure to name them something that is easy to
recognise to avoid mixing them up, e.g Furlough Sal, Furlough Hrly
▪ You will need to manually alter the employee’s Basic Pay value each pay period, either by
placing Basic Pay on hold in variations, or if you want to continue paying the employee
100% of their normal pay, enter in the Temp Amount the value that is 20% of their
normal pay
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IRIS. Look forward
Original Payslip
Furloughed Payslip
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IRIS. Look forward
Employer Pension Contributions
HMRC state that you cannot claim any automatic enrolment contributions above the minimum
mandatory employer contribution of 3% of income (above the lower limit of qualifying earnings
which is £512 per month until 5th April and £520 per month from 6th April 2020 onwards).
If you provide more than 3% in employer’s pension contributions and do not want to be out of
pocket for furloughed employees, you must reduce the employer contribution.
How much money do I claim?
You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or
£2,500 per month, plus the associated Employer National Insurance contributions and minimum
automatic enrolment employer pension contributions on that subsidised wage.
Reports to show the values I can claim
You can print the Company Totals report. This report shows the total amount you have paid for
the period using the Furlough Pay addition. If you created more than one payment for Furlough
(e.g. for salaried/hourly paid employees) you will need to add the two values together.
To view the Furlough Pay value for individual employees, use the Pay Elements Analysis report.
Pensions
HMRC state that you cannot claim any automatic enrolment contributions above the minimum
mandatory employer contribution of 3% of income (above the lower limit of qualifying earnings,
which is £512 per month until 5th April and will be £520 per month from 6th April 2020
onwards).
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IRIS. Look forward
Employee is furloughed for part of a pay period
If an employee is furloughed part way through a pay period, only a portion of the employer’s NI
and employer’s pension will apply to the furlough payment.
Assuming a monthly paid employee with annual salary of £24,000 is being paid in April
2020/2021. The employee is paid from April 1 to April 30, works Monday to Friday and is
furloughed from Monday 13th. The employee worked 8 days and was furloughed for 14.
Company uses the 260 days per year method. The employee in this example is on NI Letter A
and has contributed 3% to an Automatic Enrolment scheme on earnings above £520.
Normal pay 24,000 / 260 * 8 738.46
Furlough pay (24,000 / 260 * 14) * 80% 1033.85
Total Pay for month 1 1772.31
Employer’s NI on Gross of 1772.31 143.56
Employer’s Pension on Gross of 1772.31 37.57
Proportion to claim back
You can claim back the proportion of the NI and pension associated with the furlough payment.
Employer’s NI = £1033.85 - £732 * 13.8% = £41.66
Employer’s Pension = £1033.85 - £520 * 3% = £15.42
Note: The Payroll software will not calculate this for you.
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IRIS. Look forward
Paying Employees 100% of Pay
If you are paying employees 100% of pay while furloughed, you will have to work out how much
employer’s NI and employer’s pension you can claim back?
You could run the payroll with an 80% payment or maximum of £2500 per month, print the
payroll summary and pension report and then run the payroll with 100% payment. The reports
printed originally will show how much you can reclaim.
You could run the payroll with 100% payment and later check what the NI would have been on a
payment of 80%/£2500 maximum payment using the Quick Calculator.
A manual calculation will be necessary to determine how much employer’s pension you can
claim.
Example
I pay employee £3500 (which is 100% pay). NI Letter A. Pension is 3% above £520
Employer’s NI is £381.98
Employer’s Pension is £89.40
Furlough Reclaim is:
Employer’s NI: £2500 - £732 * 13.8% = £243.98
Employer’s Pension: £2500 – £520 * 3% = £59.40
Employee Payment: £2500.00
Therefore, I can only reclaim: £2500.00 + £243.98 + £59.40 = £2803.38
Employment Allowance
Note: If you are claiming Employment Allowance, you must not claim Employer’s NIC until you
have met your threshold. For instance, if you are claiming £4,000 Employment Allowance and
the Employer’s NIC due is less than £4,000, your Employer’s NIC claim will be nil.
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IRIS. Look forward
What information do I need to make a claim?
To claim for furloughed individuals, you will need the following:
▪ Employer PAYE reference number
▪ The number of employees being furloughed
▪ National Insurance numbers for all employees you want to furlough
▪ Names of employees you want to furlough
▪ Payroll/works number for the employees you want to furlough
▪ Self-Assessment Unique Taxpayer Reference, Corporation Tax Unique Taxpayer
Reference or Company Registration Number
▪ The claim period (start and end date)
▪ The amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
▪ Employer’s bank account number and sort code
▪ Employer’s contact name and phone number
As advised in this document, you need to calculate the amount you are claiming. HMRC will
retain the right to retrospectively audit all aspects of your claim.
If you use an agent who is authorised to act for you for PAYE purposes, they will be able to make
a claim on your behalf. If you use a file only agent (who files your RTI return but doesn’t act for
you on any other matters) they won’t be authorised to make a claim for you and you will need to
make the claim yourself. Your file only agent can assist you in obtaining the information you
need to claim (which is listed above). HMRC are endeavouring to make the claim process as
straightforward as possible, for further information see: https://www.gov.uk/guidance/claim-
for-wage-costs-through-the-coronavirus-job-retention-scheme.
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IRIS. Look forward
Temporarily Stop Direct Earnings Attachments (DEA)
The Department of Work and Pensions (DWP) is writing to employers asking them to temporarily
stop benefit of debt repayments. You should not take any DEA deductions from your employees’
pay in April, May or June 2020. You’ll be told if this will be extended.
To do this in IRIS PAYE-Master
1. For any employee with a DEA attachment, select the Att’ments icon
2. Change the Status to ‘On-Hold Indefinitely’. This will prevent any further deductions from
being made
3. When advised to start taking the deductions again (currently planned for July 2020) change
the Status back to Active
4. Click Save
For more information see: https://www.gov.uk/government/publications/direct-earnings-
attachments-an-employers-guide
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IRIS. Look forward
Additional Software and Services Available
IRIS AE Suite™
The IRIS AE Suite™ works seamlessly with all IRIS payrolls to easily manage auto enrolment. It will assess employees as
part of your payroll run, deduct the necessary contributions, produce files in the right format for your pension provider*
and generate the necessary employee communications.
IRIS OpenPayslips
Instantly publish electronic payslips to a secure portal which employees can access from their mobile phone, tablet or
PC. IRIS OpenPayslips cuts payslip distribution time to zero and is included as standard with the IRIS AE Suite™.
IRIS Auto Enrolment Training Seminars
Choose from a range of IRIS training seminars to ensure you understand both auto enrolment legislation and how to
implement it within your IRIS software.
Useful numbers
HMRC online service helpdesk HMRC employer helpline
Tel: 0300 200 3600
Fax: 0844 366 7828
Email: [email protected]
Tel: 0300 200 3200
Tel: 0300 200 3211 (new business)
Contact Sales (including stationery sales)
For IRIS Payrolls For Earnie Payrolls
Tel: 0344 815 5656
Email: [email protected]
Tel: 0344 815 5676
Email: [email protected]
Contact Support
Your Product Phone E-mail
IRIS PAYE-Master 0344 815 5661 [email protected]
IRIS Payroll Business 0344 815 5661 [email protected]
IRIS Bureau Payroll 0344 815 5661 [email protected]
IRIS GP Payroll 0344 815 5681 [email protected]
IRIS GP Accounts 0344 815 5681 [email protected]
Earnie or Earnie IQ 0344 815 5671 [email protected]
IRIS HR is a trademark.
© IRIS Software Group Ltd 11/2019.
All rights reserved.
