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Covid-19 Payroll FAQ

5 November 2020 By Gill

Coronavirus Job Retention Scheme

STOP PRESS!!

Job Support Scheme has been cancelled before it started; CJRS aka “the furlough scheme” – has now been extended to the end of March 2021. Fact sheet (PDF). Full guidance and examples to be published by HMRC on 10 Nov.

Employers receive the money within 6 working days of making a claim.

It’s back to 80% support from government – same as August.
As in August 2020, employers cannot claim the employer’s National Insurance or pension contributions where applicable.

From January 2021, employers may be required to contribute more. It’s a wait and see.
Claims must be made by day 14 of the following month! This is frankly insane and we hope that HMRC will see sense.

Job Retention Bonus (JRB) scheme has been abandoned and will not be paid in February 2021 as previously announced.

 

Coronavirus Job Retention Scheme (JRS)

  • This is the 80% grant that everyone is asking about. Staff must have been employed under PAYE and paid and reported to HMRC by 30 Oct 2020 to qualify.
  • Understand what furloughing means. It’s all about keeping people in a job.
    If you have good staff that you want to keep, furloughing is the way to go.

    • You must tell your staff that you are furloughing them – here’s a template letter or go to ACAS.
      Fully-furloughed staff must not provide services or generate revenue for the employer.
      Staff can work part-time and be part-furloughed.
    • You can furlough some or all of your workers.
    • You must pay your employee the lower of 80% of their regular wage or £2,500 per month. You can choose to top up an employee’s salary beyond this but that is voluntary and the top-up won’t be reimbursed.
    • Staff retain all their normal employment rights including holiday pay, which will continue to accrue during the period of furlough. Equality laws still apply and employers must take care not to discriminate when selecting staff for furloughing or returning to work.
  • For full and part time salaried employees, the grant paid under JRS will be 80%* of the actual salary before tax. Previously furloughed staff continue to have their pay and usual hours calculated in the same way; new employees’ furlough will be based on the last pay on or before 30 Oct.
    *This grant may reduce from January onwards.
    Sammy normally earns £1000 per month before tax (gross)
    Employer’s National Insurance Contribution is £39
    Employer’s pension contribution is £15
    Sammy must get £800 gross if fully-furloughed.

    The employer must still pay the NI and pension contributions.
    In this case, the employer can claim £800.00 per month (80% of £1000).
    Sammy’s actual take-home (net) pay will depend on their tax code.
  • For new employees whose pay varies, including those on zero hours contracts, the 80% is based on their average hours from date of employment up until the day before they were furloughed.
  • You should continue to pay your staff. Otherwise you’ll be in breach of contract. So you may have to pay first and then claim it back.
  • The November extension is on the same terms as August, i.e. employers only have to pay NI and pension where applicable. The government will cover the full 80% of wages.

graph showing government support and employer contribution

  • Limited company directors, who are employees of their own companies, are eligible. Whilst fully furloughed, directors must only carry out statutory duties like accounts and payroll – any commercial or revenue-generating activities will fail the JRS requirements. This includes marketing, and hiring and managing subcontractors so don’t do it!
    Either you are shutdown, or you are providing services and receiving income. There’s no in-between. If the income isn’t enough, that’s a cashflow problem and you should look at CBILS or BBL.

    We expect stringent anti-fraud measures and we warn all business owners that if they abuse the system, they should expect public naming and shaming for what is, after all, illegal profiteering from a national crisis.
    HMRC has put in place an online portal for employees and the public to report suspected fraud.
    Prosecution and heavy penalties will follow for those who try to rip off the government in this way.
  • Employee rights – ACAS
  • Employment Law FAQs
  • Gov.uk Coronavirus guidance for employees
  • Gov.uk Coronavirus JRS claims – guidance for employers
  • HMRC YouTube channel –Coronavirus support

 

 


Frequently Asked Questions

 

How do I get the money to pay my staff?

You must pay your staff upfront and then get reimbursed. HMRC will pay direct into your business bank account.

Will J&K claim for me?

No. We have neither the capacity nor the authority with HMRC to do so for all our clients.

For most of our clients, we provide a filing-only service. This means we can file your normal payroll returns to HMRC, but we don’t have the power to do anything else.

We will of course give you the info needed to make your claim.

What if I can’t afford to pay my staff?

You should seek financial support from your bank e.g. BBL or CBILS.

When do I pay my staff?

Furloughed staff should get their wages on their normal payday. Any changes without their agreement would be a breach of their contract of employment.

Do I have to furlough everyone?

You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake ANY work for you.
If you have some work available, you may choose to furlough part of your workforce while others carry on.
The point of the scheme is to keep people in jobs who would otherwise be made redundant due to the Covid-19 crisis.

How much do I pay?

You must pay employees the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.

How does flexible furloughing work?

Staff must be paid normal wages for the hours worked – National Minimum Wage applies as normal – and can be furloughed for the rest of the week/month.

Can my staff work elsewhere?

Yes they can.

If they already have another job, they can be furloughed from each job.

A furloughed employee can take part in volunteer work, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.

What about holiday pay?

Furloughed staff continue to accrue holiday. If employees take holiday whilst furloughed, this must be paid at their FULL rate, i.e. topped up by the employer to 100% of their normal wage. This includes Bank Holidays.

My husband/wife is on my payroll. Can I furlough them?

Certain companies have added a partner/spouse to their payroll solely in order to benefit from claiming the Employment Allowance. HMRC has shown great interest in businesses where one spouse is considerably less active within the business than the other.

For CJRS we take the view that if the active partner is working, so is the spouse.
If your company was audited by HMRC, you would have to demonstrate that the spouse is a genuine employee, on a commercial wage, playing a part in the day-to-day running of the business.

We have clients – from pubs to beauty salons – that have genuinely lost all their income overnight.

Anyone wanting to take advantage of this national emergency needs to take a good hard look in the mirror.


Together we face an unprecedented situation, one in which 90% of us will do the right things:

 

  • Don’t stockpile loo roll or anything else.
  • Check on your vulnerable neighbours.
  • Practise social distancing.
  • Wash your hands.
  • Wear a mask.
  • Be kind.

heart

Filed Under: business, employment, wages Tagged With: CJRS, coronavirus

Furlough FAQ

5 November 2020 By Gill

All change

The furlough scheme (CJRS) has been extended so see our main Covid page for details.

Job Retention Bonus (JRB) scheme has been abandoned. It will not be paid in February 2021 as previously announced.

The Job Support Scheme (JSS) was due to replace furlough so has been postponed, possibly indefinitely.

 


Together we face an unprecedented situation, one in which 90% of us will do the right things:

 

  • Don’t stockpile loo roll or anything else.
  • Check on your vulnerable neighbours.
  • Practise social distancing.
  • Wash your hands.
  • Be kind.

heart

Filed Under: business, wages Tagged With: CJRS, coronavirus, Covid-19

What Is The Employment Allowance and How Do I Get It?

8 June 2020 By Gill

As an employer, you may have heard something about the Employment Allowance, but what’s it for and how do you get it?

First, a bit of background: the PAYE you must pay to HMRC has three components: the income tax and the National Insurance Contribution (NIC) that you deduct from each employee’s gross pay, plus a NIC that comes from the employer.

PAYE pie chart

The Employment Allowance was introduced to help toward the latter – the green piece of pie.

It effectively allows you to underpay the employer’s NIC by up to £4000 in a tax year.

Many small businesses no longer pay any National Insurance at all. Yay!

Eligibility

  • Director-only companies don’t qualify.
  • You won’t qualify if most of your work fulfils public sector functions – e.g. rubbish collection, NHS services.
  • You won’t qualify if you employ someone for personal or household work – e.g. gardener,  nanny – unless they’re a care or support worker.

How to Claim

If you use a payroll agent they should take care of this. Otherwise you’ll need to use your own payroll software or HMRC’s Basic PAYE Tools to file an Employer Payment Summary (EPS) every tax year, telling HMRC you are using the Allowance to cut your payments.

A couple of examples:

Medium Size Co Ltd pays employer NICs of £2000 each month.

In April the Employment Allowance will knock £2000 off their PAYE bill.
In May they’ll save another £2000.

That’s the whole £4000 Allowance used up, so from June they’ll pay the full £2000 again.

On the other hand Teeny Co Ltd’s employer NICs are only £50 per month so their total claim for the year will be just £600.

Things to watch out for

  • If your company belongs to a group of companies, only one can claim the allowance.
  • If a company has control of another company, or both companies are under the control of the same person or persons, these companies are connected.
  • You can only claim the Employment Allowance against one PAYE scheme – even if your business runs multiple schemes.

Further information

Gov.uk overview and detailed guidance – the rules and regs

Article updated Jun-20 – Allowance increased from £3000 to £4000.

Filed Under: employment Tagged With: employment allowance, National Insurance, NIC

Covid-19 Other help

28 May 2020 By Gill

For payroll specifics see this page

Other help

This includes a business rates holiday for retail, hospitality and leisure businesses; deferring VAT payments (but VAT returns must still be filed); small business grant scheme etc. Commercial tenants who cannot pay their rent because of COVID-19 are protected from eviction.

  • Simple questionnaire to signpost you to the help that you qualify for https://www.gov.uk/business-coronavirus-support-finder
    • Personal finances – MoneySavingExpert
    • If you owe personal or business taxes, ask HMRC for a “Time to Pay” arrangement.

 

covid19 help


 

Bounce Back Loan (BBL) and Coronavirus Business Interruption Loan Scheme (CBILS)

  • You may have cashflow problems. Speak to your bank. As well as their normal overdrafts and loans, they will be offering Coronavirus Bounce Back Loans (BBL) and the Coronavirus Business Interruption Loan Scheme (CBILS) – a loan that is interest-free for 12 months.
    “To qualify for either type of loan, your business must have a business plan and a borrowing proposal that the lender would accept if it were not for the Covid-19 pandemic. In other words, your business must be viable in normal trading circumstances” [-FreeAgent].

Filed Under: business Tagged With: coronavirus

Workplace Pensions And You

11 August 2019 By Gill

Whether you employ 1 person or 100s – all employers now have workplace pension duties.  Even if you think you won’t need to put your staff into a pension scheme, your responsibilities begin on the day your first member of staff starts work.

There are 3 tasks you must carry out to meet your legal duties.

1. Assess your staff

If your staff meet the criteria below, you must put them into a pension scheme and pay into it.

  • Aged 22 or over (up to state pension age)
  • Earn at least £10,000 a year

2. Inform your staff

You must write to all your staff within 6 weeks of your duties start date. This tells them how automatic enrolment applies to them – regardless of whether or not they are put into the pension scheme.

3. Declare your compliance

Within 5 months of your duties start date, you must complete an online declaration of compliance. This tells The Pensions Regulator how you’ve met your legal duties.

Then every 3 years, you must re-enrol anyone who opted out and re-declare your compliance.

Workie

Workplace pensions are not a one-off effort.

  • Employers (or their payroll agents) must continuously assess the workforce.
  • Exchanging information with the pension provider every pay period.
  • Reconciling and paying contributions.

These tasks will increase the cost of running your payroll.

Filed Under: compliance Tagged With: pensions, workplace pension

Fake tax refunds and other email scams

15 January 2019 By Gill

Only 30% of small businesses surveyed would think twice about clicking on a link directing them to HMRC


You should think twice.

Scammers regularly send fake emails that look like they are from HMRC, or from banks and other organisations like eBay, PayPal, Facebook and even Royal Mail. They aim to trick you into revealing personal information which they’ll use for fraud and identity theft. It’s known as phishing.

fish and hook

Don’t take the bait

 

Tax rebate

The Self-Assessment deadline is looming so this particular dodgy email is common around this time of year. It says you’ve got a refund of £x due to you, and offers a link to “get your rebate now”.

phishing email

The link takes you to a site that looks convincing to a casual observer – but it’s not the real deal.

Often these messages end up in your Spam folder and you never see them. If they do get to your Inbox, remember HMRC’s golden rule:

HMRC will never send notifications of a tax rebate, or ask you to disclose personal or payment information by email.
If you have any doubt that an email you receive from HMRC is genuine, please do not follow any links, disclose any personal details or respond to it. Please forward it to HMRC at phishing@hmrc.gsi.gov.uk then delete it.

How to spot a phishing email

A 2013 poll found that 60% of UK workers will fall for a phishing scam unless they’ve been trained to spot one.

  • are you expecting the message?
  • is it from an expected source? E.g. if you don’t bank with Barclays, why would they email you about your account?
  • does it ask for passwords or other complete information?
  • hover your mouse pointer over the links – don’t click them! – to check the website that pops up
  • how good is the spelling and grammar? Bad English is a dead giveaway!
Engage your brain!

Imagine the email is someone standing at your front door asking the same questions.

Would you give them this information?

If the answer is ‘no’ then it’s probably a scam.

If you wouldn’t do it on the street, don’t do it online!

Beyond email

It’s not just email – scammers are also using fake text (SMS) messages to reel in unsuspecting victims.

Learn more

Get Safe Online: phishing video

Gov.uk: recognising and reporting phishing emails

Financial Fraud Action: invoice fraud

You might be streetwise, but are you cyber-streetwise?

Filed Under: business Tagged With: email, phishing, scam

6 Things Every Employer Should Know About National Minimum Wage

2 April 2017 By Gill

This article updated Nov 2018.

1. Key facts about NMW

  • It’s a criminal offence to not pay someone the National Minimum Wage
  • It applies to most workers over school leaving age including casuals, part-timers and agency workers
  • All businesses must comply – regardless of size

2. Who’s not entitled to NMW?

Those not entitled include:

  • self-employed people
  • company directors
  • volunteers

3. Why it matters to employers

If your company has underpaid its workers, the consequences could be severe:

Arrears

You must pay arrears to the worker immediately and you may end up paying more than you would have if you had paid the correct amount to start with. In one instance, a national retailer was forced to make back payments of £193,000 for almost 3,500 workers after it required them to be at work before and after opening hours without pay.

Naming and shaming

HMRC will now publicly name any employer, big or small, who breaks minimum wage law.

Penalties and prosecution

On top of the arrears, employers risk financial penalties of up to £20,000.

Criminal prosecution is rare but the most serious cases can be heard in a Crown Court, meaning that there’s a potential for an unlimited fine.

microscope

Would your business stand up to scrutiny?

4. How is NMW enforced?

HMRC have the power to check your wages at any time – it’s your responsibility as an employer to keep records proving compliance with NMW and you have to keep these for 3 years.  You could be randomly targeted or a worker’s complaint could trigger an investigation.

Out of the blue, our biggest client received a random minimum wage inspection. The HMRC inspectors spent a full day digging into the payroll and payment records.

We dealt with the entire assessment on behalf of our client and were happy to host the compliance team at our premises, where they delved into the current year’s files as well as the previous 3 years, picking staff at random and tracing their wages from timesheet to bank account.

We spent the day making them tea and being quizzed in depth, using paper and electronic records to prove compliance. With a good understanding of the business, we could answer HMRC’s questions with confidence.

The client passed the inspection with flying colours.

5. What is the current NMW?

The rates change in April each year. Rates for previous years can be found at gov.uk.

Age 25 and over 21 to 24 18 to 20 Under 18 Apprentice*
Rate from
1 Apr 2018
£7.83 £7.38 £5.90 £4.20 £3.70
Rate from
1 Apr 2019
£8.21 £7.70 £6.15 £4.35 £3.90

*This rate applies to apprentices under 19 or those in their first year. If the apprentice is 19 or over and past their first year they must receive the rate that applies to their age group.

6. Where can I get more help?

A good payroll provider will watch out for NMW compliance issues as part of the service.

  • ACAS 0300 123 1100 (Mon to Fri 8am-8pm, Sat 9am-1pm)

ACAS gives free impartial advice to employers and workers.

  • Pay and Work Rights at Gov.UK

Follow this link to report NMW breaches.

This article updated Nov 2018.

Image credit: University of Liverpool Faculty of Health (CC BY 2.0)

Filed Under: compliance, employment Tagged With: HMRC, HMRC inspection, min wage, NMW

Why we don’t trust HMRC’s systems

10 August 2016 By Gill

We know from experience that the taxman’s figures can be a work of fiction. But even by HMRC standards, this is extreme.

A Bristol man got a letter to say he owed over £14 TRILLION in tax!

Imagine getting home from the pub and opening that brown envelope.

jawdrop

https://metro.co.uk/2016/08/10/rail-worker-gets-tax-bill-for-14301369864489-6059075/

Filed Under: compliance, general musings Tagged With: HMRC

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  • Covid-19 Payroll FAQ
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  • What Is The Employment Allowance and How Do I Get It?

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