As we move into the busiest time of May here is your round up of changes and helpful guidance/links to help you understand your payroll obligations as an employer.

Chancellor Extends Job Retention Scheme Until October

The biggest news in the past fortnight has brought relief to thousands as the Chancellor has extended the Job Retention Scheme. The Scheme will continue in it's current guise through to the end of July, at which point we expect a change to the process whereby employers will be expected to make up more of the furloughed workers' pay and some part time working will be allowed. We await full details, but you can find out what is currently known on this link:

https://www.gov.uk/government/news/chancellor-extends-furlough-scheme-until-october

Furloughing employees on SMP/SPP/ShPP/SAP

If you have employees on one of the above statutory parental leaves, you will be aware that you can already reclaim 92% (or 103% if you are a small employer) of the statutory amount paid to your employee.

If you pay enhanced pay i.e. top up pay besides the statutory amounts, you can furlough staff and reclaim the top up pay through the Job Retention Scheme.

If you do this you must:

  • have all of the usual furlough agreement documentation in place
  • the top up pay cannot exceed 80% of earnings or £2500
  • you can only claim the ERNICs and ER Pension that relates to the top up pay per the usual calculation guidelines

Calculating your furlough amounts for part periods

This is a big change to that which was advised in April and applies to anyone that has a part period furlough to calculate.

In April, HMRC were happy to accept that they only issued the calculation guidance past the point that most payrolls had been completed, and therefore using your normal/standard calculation method was acceptable - for example for all full time staff we would normally calculate an employee's daily rate by dividing the annual salary by 260 working days and the calculate a part month by multiplying by working days since the change.

For example, say someone was furloughed on the 13th of April and earned £18,000 per year, we would have calculated the furlough pay as:

18000 / 260 x 14 x 80% = £775.38

However, the actual calculation guidelines ask that you take the monthly salary, divide by the calendar days in the month, then multiply by the calendar days since the furlough date.

This would change the calculation to the following:

1500 / 30 x 18 x 80% = £720.00

Whilst HMRC accepted different calculation methods for April, we have been informed that the guidance MUST be adhered to in May.

You can find HMRC's full guidance and their own calculator on the link below:

https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme

Employees whose pay varies and were employed from 6 April 2019

Just a reminder for this month, if the employee has been employed continuously from the start of the 2019 to 2020 tax year, you can claim the highest of either:

  • 80% of the same month’s wages from the previous year (up to a maximum of £2,500 a month)
  • 80% of the average monthly wages for the 2019 to 2020 tax year (up to a maximum of £2,500 a month)

So for May you need to be comparing the average for the 19/20 tax year against the corresponding May 2019 pay period.

Again, full guidance and examples can be found here:

https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme

CJRS online portal updated so that claimants can now save a claim and return to it later

Following user feedback in relation to the Coronavirus Job Retention Scheme (CJRS) online claim portal, HMRC has updated the service so that individuals making a claim can save it, and return to it at a later time or date.

Initially, the service timed out after 15 minutes of inactivity, with no option to save the claim, which meant that many users found that it disappeared before they had the opportunity to complete it in full. This feedback was particularly widespread amongst employers or agents who had to claim manually through the portal, where they had less than 100 furloughed members of staff, each of whom would have to be entered manually on screen. It was less of an issue for claimants with 100 or more furloughed staff, who could import the information using a file upload.

HMRC has confirmed that it is reviewing 100 as the minimum threshold before which claimants can submit claims via upload, as it recognises how time consuming the process can be. If there are any further updates, we will notify members via News Online.

https://www.cipp.org.uk/resources/news/cjrs-online-portal-updated.html

Home Working Expenses

If you cover the cost of additional household expenses for an employee who works from home, you do not have to report or pay anything if all the following apply:

  • they need to work from home, either because equipment they need is not available at your workplace, or their work means they have to live too far away from your workplace to travel there every day
  • the amount you give them is not more than their additional household expenses
  • the amount you give them is not more than the current weekly limit

Weekly tax limits

Tax years Weekly limit
2020 to 2021 onwards £6.00 (or £26 a month for employees paid monthly)
2012 to 2013 — 2019 to 2020 £4.00 (or £18 a month for employees paid monthly)

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HMRC have released special guidance confirming the tax treatment for specific additional expenses your employees may be claiming due to working remotely:

https://www.gov.uk/guidance/check-which-expenses-are-taxable-if-your-employee-works-from-home-due-to-coronavirus-covid-19

In addition to support employees who are working from home and need to purchase home office equipment as a result of the coronavirus outbreak, a temporary tax exemption and National Insurance disregard will come into effect to ensure that the expense will not attract tax and NICs liabilities where reimbursed by the employer. The expenditure must meet the following two conditions to be eligible for relief:

  1. That equipment is obtained for the sole purpose of enabling the employee to work from home as a result of the coronavirus outbreak, and
  2. The provision of the equipment would have been exempt from income tax if it had been provided directly to the employee by or on behalf of the employer (under section 316 of ITEPA).

The exemption is a temporary measure and will have effect from the day after the regulations come into force until the end of the tax year 2020/21.

https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2020-05-13/HCWS237/

Employment Allowance and Job Retention Scheme Claims

A reminder that if you have claimed the employment allowance you need to offset that claim against your ERNIC calculation before you claim through the Job Retention Scheme - you cannot claim both at the same time!

Bounce Back Loans

The Chancellor announced another scheme to support businesses that had been struggling to be accepted for a CBILS.

The Bounce Back Loans enable smaller businesses to access finance more quickly - many applicants have had their loans approved and in their accounts within a few days or even hours! The scheme provides access to loans from £2,000 to £50,000 - check with your business bank to see if you can apply.

https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan

Pension Contributions for Furlough Staff

A reminder that if you have a pension scheme where contributions are higher than the minimums, you cannot change your scheme calculations to match what you can claim back for the Job Retention Scheme.

Some employers calculate their pension contributions on a different basis and do not use banded qualifying earnings. This may be because they have chosen to certify under set 1, 2 or 3 and pension contributions are calculated from the first penny of earnings.

Where this is the case you will calculate and pay across your pension contribution as normal. However, you will also need to calculate 3% of the qualifying earnings of your furloughed staff as part of the process for making the claim for the total grant under the Coronavirus Job Retention Scheme. This is in addition to your existing pension contribution calculation in payroll not instead of it.

https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/automatic-enrolment-and-pension-contributions-covid-19-guidance-for-employers

Government issues guidance to help employers, employees and the self employed work safely during the pandemic

The government, in consultation with industry, has produced guidance to help ensure workplaces are as safe as possible.

These 8 guides cover a range of different types of work. Many businesses operate more than one type of workplace, such as an office, factory and fleet of vehicles. You may need to use more than one of these guides as you think through what you need to do to keep people safe.

https://www.gov.uk/guidance/working-safely-during-coronavirus-covid-19

In response to this we are hosting a special extra webinar next Friday 22nd May at 10am with Croner HR - they will go through the guidance with a live Q&A to help you and your employees get back to work safely!

Click here to register: Webinar Registration

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