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17th April 2020

Caroline CastleCaroline Castle

Caroline Castle - Corporate Financial Adviser

“Finding a way though” seems to be a common theme in every aspect of our lives during the Corona epidemic. As our monarch affirmed on Palm Sunday, "those that come after us will say the Britons of this generation were as strong as any".

The introduction of the “Furlough” scheme on 26th March 2020 for all those employers impacted by the enforcements of the Coronavirus epidemic who would otherwise have had to lay off their employees, demonstrated that her Government has faith in our generation, to weather the storm and come out of the crisis.

This scheme will allow businesses to retain their employees and thus be in a strong position to get off the starting blocks as quickly as possible, once normality can resume.

The Corporate Team at Ascot Lloyd have been receiving regular enquiries about the key issues that employers are facing…

  • What salary should be used when an employee is furloughed?
  • How will our employees’ pensions be impacted?
  • How can we ensure our death in service remains in force during a period of closure when we are not “actively at work.”?

Whilst we have some guidance on these topics, in other areas we are still waiting for clarity from the Government and the Pensions Regulator and in the meantime are offering our advice accordingly.

Employee pensions

Certain areas have been clarified:

  • What level of earnings should be used for determining pension contributions?
    These should be based on the reduced earnings claimed by the employer, but whether it is basic pay or total earnings should the same as used hitherto. Likewise, contribution percentage should remain as used to date.However, reimbursement for the employer will only be at the rate of auto enrolment minimums regardless of the normal basis used for running the scheme. This means that no contributions will be received in the furlough payment for the first £511 of every employees’ reduced income. Employers should still honour their commitment to continue to pay contributions on their full basic pay if this is the profile for their own scheme.
  • How does deducting my employees share of the contribution though salary sacrifice, impact the process?
    Employees basic pay will be determined by their gross pay as at 28th February, following the deduction of the salary sacrifice value. This lower amount will generate the base value from which the 80% employee grant will be assessed.Whilst this might not seem reasonable, both employers and employees have benefited on a saving in national insurance on this contribution value, hence the reason for adopting the process in the first instance. As a result, in a time when this “pay back” has been devised, it could be considered that the principle follows through with this contribution value not being covered by the amount paid through government support.

Group Life Assurance and Income Protection schemes

Many employers also provide schemes which would pay out a lump sum death benefit should one of their employees die or fall ill whilst working for them. It is particularly important during the current crisis that these remain in force.

The good news is that these schemes will continue to run and operate for their employees even if they are on Furlough. This is because the income is paid to employers and then distributed to employees using the normal payroll route allowing them to remain on the books, even though their wage is being re-funded by the Government.

Actively at work

For group risk schemes the renewal date is key. Employers are required to confirm that all their employees are actively at work and disclose those that are not. How can this declaration reflect the fact that employees are “working from home” or being paid through the Furlough scheme?

Fortunately, insurers have been able to advise that an employer can comply with this declaration even in these circumstances, and the declaration can include any employee who is “self -isolating” or remaining at home due to “shielding” guidance. Only those that are off sick for any other reason or showing Corona virus symptoms themselves need to be listed as absent.

Government loans for small businesses

In addition to the support with income for employees a number of smaller employers will need financial support to keep their businesses afloat. Once again support is being offered to provide a grant of between £10,000 and £25,000 depending on the turnover of the business. The reassuring value of these loans is they will not require personal guarantees so that they can be fast tracked so that they can be released more quickly. As a result, they can potentially be used to pay off any loans that have been taken out previously and where a guarantee applies. A real advantage for business owners who fear that their businesses might not survive.

This epidemic has introduced untold challenges to our normal way of living and working in the UK. The Corporate Team at Ascot Lloyd is well placed to focus on issues such as these for your business in these tumultuous times and can address your specific queries and concerns.

Further support can be found through contacting This email address is being protected from spambots. You need JavaScript enabled to view it. and speaking to one of the corporate advisers. We are here and happy to help.

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Important Information

Past performance is not a guide to future performance and may not be repeated.  Investment involves risk. The value of investments and the income from them may go down as well as up and investors may not get back any of the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is for information purposes only. Nothing in this communication constitutes financial, professional or investment advice or a personal recommendation. This communication should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments in any jurisdiction. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the document. Any opinions expressed in this document are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or companies within the same group as Ascot Lloyd as a result of using different assumptions and criteria.