Calculating Furlough Amount - Is employer pension contribution included

Grumpy_chap

Hello,
I have a own Ltd company and have had to furlough myself.  I currently pay as follows:

1. basic salary PAYE
2. employer pension contributions
3. dividends

I understand the dividend is not considered in calculating the furlough amount.  80% of the basic salary is allowed.  Is it also permitted to claim the 80% of the pension contributions as furlough amount?  The HMRC guidance seems unclear.

It is my own small company, so the mandatory auto-enrolment does not apply, as the company is too small for this threshold.

I am not sure whether the employer pension contributions can be treated as salary sacrifice and therefore claimed at 80% or not?  If this were to apply, would there have to hve been something in the past to establish that it is salary sacrifice and would it have an impact after all this COVID-19 is passed and we are back to normal?

Is there anyone who can advise on this please?
With thanks in advance,
Grumpy chap.

Jeremy535897

The threshold for auto enrolment depends on the salary of the employee rather than the size of the employer. I assume you are below the limit?
I don't think you can treat an employer's contribution to a pension scheme as a salary sacrifice. The Treasury Directive is the legislation underpinning the guidance, and pension contributions are covered in paragraphs 8.8 to 8.12:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879484/200414_CJRS_DIRECTION_-_33_FINAL_Signed.pdf

Grumpy_chap

Thank you Jeremy,
My exclusion from auto-enrolment is not salary related (I do draw over the £10k threshold) but because it is sole director company with no other staff, as per the article under moneysavingexpert - banking - savings - what is pension auto-enrolment (sorry - I cannot post a link) it is the exclusion under the question "Who is entitled to a workplace pension".

Jeremy535897

Thanks for explaining. It was the "size of the company" bit that confused me. If your pension scheme is a pension scheme for the purposes of Part 4 of FA 2004 as required by paragraph 8.12 of the Treasury Directive, presumably paragraph 8.9 applies?

Grumpy_chap

Thanks Jeremy, 
As always, not written in totally plain English, but I think I can claim (salary less £520) x 3% as the pension contribution...
If I interpret that correctly.

Jeremy535897

I confess I find it all very difficult stuff. This might help (no guarantee):
https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme

sliphi

From the above link (my highlighting):

You can claim for 80% of your employee’s wages (even for employee’s on National Minimum Wage) - up to a maximum of £2,500 per month.

You’ll still need to pay employer National Insurance and pension contributions on behalf of your furloughed employees, and you can claim for these too.

You cannot claim for:

• additional National Insurance or pension contributions you make because you choose to top up your employee’s wages
• any pension contributions you make that are above the mandatory employer contribution

and

You cannot include the following when calculating wages:

• payments made at the discretion of the employer or a client - where the employer or client was under no contractual obligation to pay, including:
  • tips
  • discretionary bonuses
  • discretionary commission payments
• non-cash payments
• non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay

HTH

Grumpy_chap

@sliphi
Thanks, but also in the same guidance (and this is what makes it extra confusing) it says...
Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.
So, why would I not swap the pensions contribution for April from salary sacrifice and then swap back when this is all over?  Or, is that not what it means?

Jeremy535897

Is there any written evidence in the form of a contract of employment between you and your company pre-dating 20 March 2020 that describes the employer's contribution as a salary sacrifice scheme?
I would be cautious of trying to be too clever. HMRC can always fall back on paragraph 2.5 of the directive (see my earlier link to this document).

Grumpy_chap

Well, no.
I think it is best to just claim furlough for the salary under PAYE.
That is still quite generous, all things considered

Robcharnwood

Should a cash car allowance be included in the calculation of my 80% payment can anyone tell me definitively?