Rishi Sunak has scrapped his November budget because in his
own words “now is not the right time to outline long term plans” and “what people
want to see is focused on the here and now”. Instead he has today
announced details of his ‘Winter Economy Plan’.
In his statement today, 24 September 2020, the Chancellor
announced a support package to save jobs and help prevent the economy
worsening.
Wage subsidies for part-time workers
The Furlough scheme will not be extended past 31 October 2020. It will instead, be replaced by the Jobs Support Scheme, modelled on one in Germany, in which taxpayers subsidise the wages of workers returning to work part time after being furloughed. The Chancellor said that employees will have to work for at least a third of their normal hours to quality for the new scheme, which begins on 1 November 2020.
VAT cut extension for hospitality and tourism
As widely predicted, the VAT cut for the hard hit hospitality and tourism sectors has now been extended to 31 March 2021 and the rate will remain at the reduced rate of 5% until that date.
Pay as you grow
The repayment terms on Coronavirus loan schemes for hard-hit
businesses have increased from 6 to 10 years to reduce monthly repayments.
Commenting on the Chancellor’s speech Danny Houghton, Business Development Partner at MHA Moore and Smalley said “Today’s announcements will be welcome news to employers and workers alike, however, there was no mention of when the delayed Budget might occur, so we are yet to find out about longer term spending and borrowing plans. This delay will give business a little extra time to plan ahead of any future tax reforms.”
Contact Us
For further information please get in touch with your MHA Moore and Smalley contact or, alternatively contact us here.
Funding for employers and new jobs for young people
The Department of Work and Pensions (DWP) has launched the £2 billion Kickstart Scheme, designed to create fully subsidised new job placements lasting 6 months for young people across the country who are currently on Universal Credit and at risk of long-term unemployment.
The placements are open to those aged 16-24. They will be available across a range of different sectors in England, Scotland and Wales. The first placements are likely to be available from November.
Employers will receive funding for 100% of the relevant National Minimum Wage for 25 hours a week, plus associated employer National Insurance contributions and employer minimum auto-enrolment pension contributions.
There will also be extra funding to support young people to build their experience and help them move into sustained employment after they have completed their Kickstart funded job.
How to apply:
If you are an employer looking to create jobs placements for young people, you can apply here for funding as part of the scheme.
You can submit your application online. If you are applying for 30 or more job placements, you can apply directly.
If you are applying for less than 30 job placements, you must apply through a representative of a group of employers. They can submit an application on your behalf, using other employers to create 30 or more job placements in one application.
Supporting information to show that the job placements are new jobs and meet the Kickstart Scheme criteria
Information about the support the organisation can give to develop employability skills of young people
What happens next:
Once your application has been submitted, it will be reviewed to check it meets the requirements of the Kickstart Scheme. It will then go to a panel for consideration. This is not a competitive process, but Kickstart will only provide funding when the job placements meet the criteria.
DWP aims to respond to applications within one month.
What happens if your application is accepted:
If your application meets the requirements of the scheme, you will receive a letter with a grant agreement. This agreement will include what your company has agreed to provide, and how much funding you will receive from the Kickstart Scheme.
Employers can make claims through the Coronavirus Statutory Sick Pay Rebate Scheme via an online service launched on the 26 May.
The online service is for small and medium-sized employers to recover Statutory Sick Pay (SSP) payments they have made to their employees.
Eligibility
Employers are eligible if they have a
PAYE payroll scheme that was created and started before 28 February
2020 and they had fewer than 250 employees before the
same date.
The repayment will cover up to 2
weeks of SSP and is payable if an employee is unable to work because they:
have
Coronavirus; or
are
self-isolating and unable to work from home; or
are
shielding because they have been advised that they are at high risk of
severe illness from Coronavirus
Employers will be able to make their
claims through the online service.
This means they will receive
repayments at the relevant rate of SSP that they have paid to current or former
employees for eligible periods of sickness starting on or after 13 March 2020.
To prepare to make their claim,
employers should keep records of all the SSP payments that they wish to claim
from HMRC.
Further information
The current rate of SSP is £95.85 per
week (before 5 April the rate was £94.25). Employers can choose to go further
and pay more than the statutory minimum. This is known as occupational or
contractual sick pay.
Where an employer pays more than the
current rate of SSP in sick pay, they will only be able to reclaim the SSP
rate.
The scheme covers all types of
employment contracts, including:
full-time
employees
part-time
employees
employees
on agency contracts
employees
on flexible or zero-hour contracts
Note: Other SSP eligibility criteria
apply.
Connected companies and charities can
also use the scheme if their total combined number of PAYE employees is fewer
than 250 on or before 28 February 2020. Employees do not have to provide a
doctor’s fit note for their employer to make a claim under the scheme.
Employers can furlough their
employees who have been advised to shield in line with public health guidance
and are unable to work from home, under the Coronavirus Job Retention Scheme. Once furloughed,
the employee should no longer receive SSP and would be classified as a
furloughed employee.
Where an employee has been notified
to shield and has not been furloughed, the rebate will compensate up to 2 weeks
of SSP from 16 April 2020.
For more information, or if you need
assistance with a claim, please get in touch with our payroll department
on 01772 821021.
The individual who normally processes
payroll is unavailable
Actions:
Document who currently has the capability to process payroll
Consider training additional staff in the payroll process
Document the current payroll process and outline actions for staff
to follow
Any software/IT that is required for
payroll is unable to be accessed remotely
Actions:
Review what access is required to run the payroll and test run
outside of the normal working environment
If measures to allow remote access are not available, could the
current payroll process be amended to remove the requirement for these
systems?
The individual who makes the final
payment is unavailable
Actions:
Document who is currently authorised and able to make payment
Consider granting access to additional staff to complete this
payment if required
The payment method is currently
inaccessible
Actions:
Review the access requirements to make payments to ensure that this
can be performed remotely if necessary
Ensure that a back-up payment method is identified and available if
required e.g. BACS/bank transfer
Unable to calculate correct payroll
amounts
Actions:
Ensure that the previous month’s payroll analysis and supporting
schedules are available to all who may need it
Ensure that current staff records including contracted hours and
salary are up to date and documented for all that may need it
Ensure that any additional rates including overtime, expenses,
commission rates and bonuses are all documented and available to those
that may need it
Payroll cannot be processed and tax
cannot be calculated or declared to HMRC
Actions:
Continue to pay staff directly. If the amount to pay staff cannot
be determined, consider alternative measures to calculate pay including:
1. Pay the same as last month
2. Pay staff’s basic salaries only (no overtime/bonus etc.)
3. Pay all staff a flat amount
Failure to declare and pay tax to HMRC may result in fines. If this
is the case then applications may be made to HMRC’s Time To Pay service to
appeal against late tax payments due to disruption caused by COVID-19
If you would like further information or advice on the topics covered in this blog then please contact Tracey Simpson, Payroll Services Director on 01772 821021 or email tracey.simpson@mooreandsmalley.co.uk.
In response to the coronavirus outbreak, new Regulations known as The Statutory Sick Pay (General) (Coronavirus Amendment) Regulations 2000 came into force on 13 March 2020. These will remain in force for a period of 8 months. The government will bring forward legislation to allow small and medium-sized businesses (SMEs) and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
This refund will cover up to two weeks’ SSP per eligible employee who has been off work because of COVID-19.
Employers with fewer than 250 employees will be eligible. The size of an employer will be determined by the number of people they employed as of 28 February 2020.
Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19.
Employers should maintain records of staff absences, but employees will not need to provide a GP fit note.
The eligible period for the scheme will commence the day after the regulations on the extension of Statutory Sick Pay to self-isolators comes into force.
The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible. Existing systems are not designed to facilitate employer refunds for SSP.
Please contact our payroll team for guidance on the above.
For more information on Covid-19 please make sure to check out our Covid-19 hub for coronavirus guidance and planning below:
Chief
Secretary to the Treasury, Steve Barclay, announced on 17 March 2020 that
the IR35 tax reforms will be deferred due to Coronavirus. The statement
came less than a week after the controversial measures were confirmed in the
Budget.
Mr
Barclay confirmed that the changes, which will clamp down on tax avoidance by
targeting contractors for companies who are, in practice, providing the same
service as employees, would not go ahead in April as previously expected.
Instead, the measures will come into effect on 6 April 2021.
This will be very good news for potentially affected businesses who have enough to focus on due to the impact of Coronavirus. However, it may be a blow to a lot of businesses who had been working very hard to prepare for the changes and have made adjustments to contracts, processes, procedures, policies and infrastructure to be ready for the previously confirmed start date just days away on 6 April 2020.
We are still here to assist those businesses who still want to
be proactive in their readiness for the (delayed) implementation of IR35 in the
private sector, but we imagine for most it will be a sigh of relief and some
welcome breathing space to look at this radical reform later this year after
the country has recovered.
We
recommend that, as far as possible, businesses continue to plan for the
introduction as these rules are still coming however the government is rightly
recognising that business has enough to deal with in the current environment.
What now?
HMRC continue to view the introduction of IR35 as key to addressing a perceived mismatch between the tax paid by contractors compared to employees. They have not changed their view that the changes in their
current form will impact roughly 170,000 individuals working through their own
company, who would be employed if engaged directly, as well as up to 60,000
organisations that use workers employed by a personal service company (PSC),
and raise up to £1.3bn or more in extra tax and NIC, though this is likely to
be pushed out to 2021/22 – 2024/25.
There is more time to prepare for these changes to off-payroll
working rules, which now come in from April 2021, and will mean checking
whether contractors need to have income tax and national insurance
contributions deductions taken, shifting the responsibility for conducting such
checks from the contractor to the organisation using their services.
In addition, the jury is still out on the review of the Check
Employment Status Tool (CEST) which has been given a vote of ‘no confidence’ by
the profession. Nevertheless, it will be still an important tool for those
involved with IR35.
Organisations can’t take a blanket approach to deciding whether
a worker should be treated as an employee for tax purposes, as they need to
provide reasons for each determination.
Next steps for IR35 compliance
1. Check if you are caught under the definition of ‘Small’ or
not.
A ‘Small’ business is defined by reference to the Companies Act
as having two out of three of:
a. A turnover of less than £10.2m b. A balance sheet of less than £5.1m c. Less than 50 employees
The new legislation says that for an unincorporated body they
just need to have turnover that mirrors the requirement in the Companies Act,
currently less than £10.2m
2. Follow the process below
Full
details regarding the planned reforms are set out on our fact
sheet.
Contact us
If you have any questions regarding the IR35 reforms, please do not hesitate to get in touch.
For more information on Covid-19 please make sure to check out our Covid-19 Hub for coronavirus guidance and planning below:
On the 1st April 2020 the new rates of National
Minimum Wage and National Living wage (for over 25-year olds) will come into
effect.
Year
25 and over
21 to 24
18 to 20
Under 18
Apprentice
April 2019 (current rate)
£8.21
£7.70
£6.15
£4.35
£3.90
April 2020
£8.72
£8.20
£6.45
£4.55
£4.15
The higher rate starts to apply from the next ‘pay reference
period’ after the increase. This means someone’s pay might not go up straight
away. The ‘pay reference period’ is the period of time the pay covers. For
example:
if paid daily, the pay reference period is 1 day
if paid weekly, the pay reference period is 1
week
if paid monthly, the pay reference period is 1
month
The pay reference period cannot be longer than a month.
Apprentices
Apprentices are entitled to the apprentice rate if they’re
either aged under 19, or aged 19 or over and in the first year of their
apprenticeship.
Apprentices are entitled to the minimum wage for their age
if they are aged 19 or over and have completed the first year of their
apprenticeship.
It is a criminal offence to not pay an employee the
correct National Living wage or National Minimum wage. If an employer is found
to be in breach, then they will need to pay any arrears due to an employee
immediately. They will also be fined.
It is the employer’s responsibility to ensure that records are kept for 3 years that prove they are paying the correct National Minimum Wage and National Living Wage rates.
For any questions regarding the above, please do not hesitate to get in touch with Payroll Compliance Services Director, Tracey Simpson.
Congratulations to Tracey Simpson, Payroll Services Director
and the 20-strong payroll team at MHA Moore and Smalley on being shortlisted in
the IRIS Customer Awards 2020.
The team has been shortlisted for the ‘Best Payroll
Initiative of the Year’ due to the huge success of their environmentally
focussed project.
The aim of the initiative was simple – to go
paperless. Not such an easy task for a department which produces 18,000
payslips every month!
Tracey Simpson, who heads up the team said: “We set
ourselves the challenge to go green without compromising customer service
excellence. The first step was to encourage our 850 clients to move over
to our secure e-payslip and document exchange facility. We had such a
great reaction from our clients and our statistics make remarkable reading.
“In the first quarter of 2019 the team were printing over
46,000 pages, the equivalent of 5.5 trees and in the last quarter of the year
this dropped to under 1000 pages.
“I’m so proud of our team, we couldn’t have achieved this
without the full commitment of every single team member. We now have an
ongoing healthy competition to see who can print the least each month!”
The winners of the award will be announced at a black tie ceremony on 11th February 2020 at the International Convention Centre in Birmingham.
