How to Account for Furlough Receipts
We have been advised that organisations need to show furlough receipts as 'Other Income' when they prepare their annual accounts for the current year. These are classed as Government grants, rather than payments that are off-set against salaries and wages, and should not be included in operating income (turnover). Salaries and wages should be shown in full (paid out), as normal, in Expenditure.
Please make sure you discuss this with and get advice from your accountant, however, this information may help when you are making entries in your accounts now, so that you don't have to make too many adjustments at your year end.
Also, as the vast majority of organisations have financial accounting periods that ended on 31st March 2020, and the World Health Organisation declared the pandemic on 11th March 2020, the effects of COVID-19 will need to be shown within annual reports as an adjusting event.
Furlough Scheme Information
The Government's new Coronavirus Job Retention Scheme (furlough scheme) is available to all employers to help them retain, and pay their staff during the COVID-19 pandemic. Click here to claim.
Charities and social enterprise that run a PAYE scheme may be eligible. However, the NCVO (the National Council for Voluntary Organisations) states that you cannot apply to the scheme if your employees' salaries are already covered by grants and contracts that are still being paid to you.
In other words:
- if you have funding that covers staff wages for services that you're due to be delivering now (in which case you'll need to speak to your funder),
- or if you're providing services as part of the Covid19 response.
All employers who wish to apply need to have created and started a PAYE payroll scheme on or before 19 March 2020, and have a UK bank account.
Employers can claim for any employees, including those on flexible or zero hours contracts, as long as they were hired before 19th March 2020.
Employers cannot furlough employees who are sick or self-isolating, or who are on unpaid leave (unless they started this leave after 19th March 2020). Statutory Maternity Pay, and Shared Parental Pay, Paternity or Adoption Pay operates as normal.
If you need further help or advice please:
- Take a look at the Government Guidance or take a look at our information page for other sources of information and support.
- Chat to your accountant, lawyer or HR professional (if you have one)
- Please get in touch with us, and we'll see what we can do to help.
- Speak to our partners: WYCAS, 0113 270 6269, firstname.lastname@example.org and/or TSL Kirklees Member, Pay As You Feel Community Accountants, 01484 422384, email@example.com.