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Bob L

Furloughed Workers

25.3.2020

Coronavirus Job Retention Scheme (Furloughed Workers)

We are getting a number of enquiries about this at the moment, and there are a lot of details we just don’t know.  There also seems to be some conflict between some of the announcements and Government’s official guidance.  Here are some key points:

  1. This scheme is not for employees working from home
  2. This scheme is not to replace SSP
  3. All UK employers are eligible for this scheme
  4. This is where the current coronavirus pandemic would otherwise mean a worker could be laid off and issued a P45 eg bar staff or a gym instructor.
  5. If a worker would be laid off and issued a P45 then they could be classified as a Furloughed Worker instead.
  6. There will be a mechanism for employers to claim back costs against the gross pay of furloughed workers
  7. There will be a portal for employers to report furloughed workers earnings
  8. The full details of when, how and for how long are not available

We do not know if an employer should determine an amount to be 80% of the wages and then be able to claim back that full amount up to a £2500 cap, or the employer will pay a furlough wage and then be able to claim back 80% of that amount up to the £2500 cap.

The basic principle is to support employers to keep people employed but at home where they would otherwise lose their job.  At the moment current advice suggests:

  1. Pay the furloughed worker
  2. Record the furloughed workers and the amounts paid
  3. Claim when you are able via the Government Portal

 

What we need for payroll:

Furloughed workers costs are not reclaimed via payroll; there is no flag in the RTI to mark an employee as furloughed with HMRC.  We suggest the following for our clients:

  1. Give us the details of the furloughed worker and to stop all other payments
  2. Give us the amount of furlough pay
  3. We will pay these amounts on a new pay component line using Furlough in the description.
  4. We can put these workers in a new cost centre FURL if you wish.
  5. Your payroll reports will then contain the details and amounts for the Furloughed Workers

Please see the Governments website for further details of the support available for employees in the current crisis:

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

 

Update 1.4.2020

The Government have been updating their website, so please have another look if you are planning to furlough workers: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

A few more details have been clarified:

  1. Employees who are shielding in line with public health guidance can be placed on furlough.
  2. “You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.”

    So you can claim the 80% wages + Employers NI + Employers AE Pension up to 3%
    (The 3% pension appears to be limited to 3% on the amount above the lower limit of qualifying earnings so above £520 from 6th April)

  3. There is guidance on what to do if an employee’s pay varies
  4. “Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.”
  5. And the portal for making claims will be available towards the end of April, this has been moved up the page so clearly HMRC are getting a lot of enquiries about when it will be ready.

Coronovirus Covid 19 Updates

Coronavirus Updates

As the pace of change has been so quick, moving forwards we will bring service updates together onto this page.

1.4.2020

We shall be closed tomorrow and Friday and will re-open on Monday 6th April.  The last few payrolls of this tax year will be completed shortly.  There are more updates becoming available regard the Coronavirus Job Retention Scheme and furloughed workers, and we have some updates here.

27.3.2020

We are monitoring the BACS submissions this morning, but HMRC have sent further details regarding furloughed workers: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

You will need to read through yourself but a few key points:

  1. You pay the employee the 80% or £2500 cap, and claim this from the government.
  2. You can choose to top this up if you wish
  3. Vulnerable workers that have to self isolate can be classed as furloughed workers
  4. The scheme should be up and running by the end of April

26.3.2020

There is now an FAQ available answering a few questions regarding the funding available for business – https://www.businesssupport.gov.uk/faqs/

We shall be closing shortly and we shall be available again on Monday 30th March.

25.3.2020

We have published a few notes on Furloughed Workers as there seems a lot of confusion with the limited amount of information available.  Please see here

24.3.2020

We are in the office and are very busy finishing payrolls, but we need to look at reducing our contact hours, and increasing our staff’s ability to stay at home. We are going to close for the day on Friday 27th March.

For the weeks commencing 30th March and 6th April we shall be open and operating as normal Monday to Wednesday but closing for Thursday and Friday. We will return to full open hours on Tuesday 14th April following Easter. This is the plan for the three weeks of the increased lock down, but we may need to extend or amend our hours.

If we make BACS payments on your behalf these will continue as normal, but you will need to make sure you still have staff that can monitor and interact with your company’s BACS portal.

We also continue to request that payroll information comes to us early, and changes are kept to a minimum. Our turnaround time is likely to be slower than usual.

23.3.2020

“HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.”

We are getting a lot of enquiries already this morning, but we do not have any details either.  It appears this will be claimed separately to PAYE via an online application, probably in a similar or the same portal as SSP.

Small and medium sized businesses will be able to reclaim SSP for sickness absence due to COVID-19.  There are some more details coming through on the eligibility but still no details of the claims process.  We will be able to pay SSP and determine an employee has earned above the lower earnings limit, but we currently have no way of differentiating when the SSP was coronavirus related.  Employers need to make sure they maintain good records as the claims process is unlikely to involve PAYE.

The are further details on the provisions the Chancellor has announced available here:  https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

19.3.2020

All services and deadlines are operating as normal.  Some contingencies have been activated to cover staff absence due to self-isolation, but there is still adequate staff levels.  We have asked all our clients to send payroll information to us as soon as possible and avoid late changes.  We are concerned with what is approaching over the coming few weeks.

 

Payroll Planning advice

The global coronavirus pandemic has produced a novel and unprecedented challenge.  We are in a strong position with two separate sites, and the ability to work on all payrolls from either without interruption.  With the uncertainty that exists with external factors, and the possibility we may all have reduced available staff, we have the following additional notes:

  1. Make sure we know your contacts that may be sending us payroll information
  2. Make sure your contacts know what is required, such as your payroll reference and the information that is sent for payroll each period
  3. Send final instructions as early as you can, and avoid subsequent changes as much as possible
  4. Send all your instructions together, use your payroll reference, and avoid multiple emails and subject lines such as “this month’s payroll”.
  5. If your payroll is very stable and you want us to process several weeks or months together then please let us know.
  6. We will send emails, use Twitter and update this page if there are any changes to our service
  7. The following changes may be introduced:
    1. Earlier hard deadlines: We may enforce an earlier deadline to send us the payroll information prior to pay day.  In this situation we may have a three-day turnaround, which may mean you miss pay day if you submit late.
    2. If you want to make changes these may have to wait until the following pay period, you should be prepared to make an approximate net payment yourself and report it to us for the following pay day
    3. We may move to a shift pattern, with reduced hours at each office. This may mean it would be less easy for you to speak to the team processing your payroll
  8. The following worst-case scenarios have been considered:
    1. If you have no one able to send us a payroll instruction you have the following options:
      1. Make net payments yourself based on the previous pay period. Report these to us with the gross pays when you are able.  You could make these payments multiple times if necessary, and we can catch up at a later date.  We would expect HMRC to be understanding in these circumstances and it is likely they will have offered guidance.
      2. If we make BACS payments on your behalf you could instruct us to repeat the prior month. This situation is less ideal as we would be creating a payroll and making RTI submissions which would need correcting at a later date.
    2. If the country is on compulsory home isolation, and we are unable to access either of our offices, we will not be able to process payrolls. In this situation you would need to make approximate payments to your employees and then report these to us together with payroll information.  If we make payments via BACS it would be possible to send us a file for us to make BACS payments, and again we would be able to report to HMRC at a later date.  You would be able to use the data in your payroll csv and a simple header file we would provide if this became necessary.  You should also make sure you are familiar with your banks bulk payment facility as this may be simpler.
    3. We cannot process payrolls and produce BACS files if we cannot get into an office, we can remotely send BACS payments if necessary. Email support will also be maintained remotely, as well as providing service updates.
  9. If you have no one able to provide us any information or access your prior payrolls, and we are unable to access the office, you will need to do whatever you have prepared for in that situation. As a rough guide if you know the gross amount and deduct a third that is a reasonable approximation of the net to pay the employee.  We have occasionally reported multiple tax periods for clients before, so this is perfectly possible.  If a large proportion of our clients are affected however, it would take a while to bring everyone up to date.  We would expect HMRC to be understanding in these circumstances, and they would probably have already offered guidance for this situation anyway.

 

Coronavirus Update 16.3.2020

Last week the Government raised the UK risk status to high and moved from the containment phase to delay.  The peak of the outbreak has been predicted to be next week.  At the moment we are still operating as normal, still have spare capacity, and are in as good a position as we can be.  Given the speed of change however we urge as many companies as possible to send their payroll information in now, so we can have a maximum number of payrolls completed by the end of this week.

Over the following two weeks we may be operating as usual.  We are anticipating the possibility of reduced hours however, hence trying to complete as much work prior to this period of high risk as possible.  The end of the tax year does add complexity, and we will let you know if this is going to be affected by the coronavirus outbreak at the end of March.

SSP is payable from day one where employees self-isolate because of Corvid-19 symptoms, and this is also going to be claimable from the Government.  There are no details yet, but we suggest everyone records the SSP taken as well as reporting to us, as there are no changes within payroll software or RTI submissions yet.

We will keep you updated as the position changes.

National Minimum Wage April 2020

The National Minimum Wage April 2020

Although there is a chance there will be some changes announced on March 11th the National Minimum Wage rates have already been confirmed.  These rates apply to work after the 6th April and are an increase on the previous year of around 6%, although some age ranges are a little above and below this.

Minimum Wage Rates from 6th April 2020

Employee Age Range

Rate

Aged 25 and over (National Living Wage) £8.72
Aged 21 – 24 £8.20
Aged 18 – 20 £6.45
Under 18 £4.55
Apprentice Rate £4.15

 

The minimum wage applies to workers in the UK, and takes into account the basic pay or salary as well as other payments or deductions.  Salaried staff are also considered for the minimum wage, it is not just hourly paid workers.

National Minimum Wage calculations are not always straightforward, and there are some further notes available here.

To find out more information see here

Coronavirus March 2020

Coronvirus (CoViD-19) Statement

Payroll Options has a coronavirus policy in the workplace focused on hygiene and disease prevention.  In the event of forced isolation of staff and only a limited workforce available then work could continue from a single office.  Communications would be sent to clients depending on how severe the staff shortage.

Payroll Options will follow guidance from the NHS and PHE as it becomes available and applicable, and we have not assessed the nature of our work, or location of our offices, to currently be at high risk.

The most likely scenario for us in this outbreak would be an increase in processing time, but still operating from two offices.  It is possible we will ask for less information; could the payroll be processed with salaries only and no amendments for instance?  We would have less capacity to deal with late payroll submissions, so if a payroll request was sent to us late it is likely it would also be returned late.

Payroll Options has multiple back-ups and disaster recovery procedures in place to ensure BACS payments can go through on time.  These payments do rely on a payroll to be processed however, so if a payroll were processed late the BACS payments would also be late.  In the event of BACS failure it is likely no payment transfers would be available, so clients own banks would also effectively cease to function as well.  If Payroll Options had an issue with BACS affected clients would be notified.

It is possible for you to pay your staff an estimated amount, then we could report it at a later date.  It is likely HMRC will be understanding where there are genuine reasons for a late submission, and this is already built into RTI.  We will offer guidance on what information is required on a case by case basis.

We have asked clients to also have plans in place in the event their own staff, responsible for payroll information, are not available.  We need to have authorisation in advance if a different member of the team may be sending instruction or receiving reports.

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19

5.3.2020

Employment Allowance April 2020

Employment Allowance April 2020

The Employment Allowance is £3000 that can be offset against an employer’s NICs (National Insurance Contributions).  There are changes arriving this April and there are a few more details now available.

Eligibility for Employment Allowance

Eligibility is now a little more involved to determine; there is a company size threshold then other questions that need to be answered each tax year.

  1. Some exclusions remain the same, such as single director companies and public bodies.
  2. The employer’s (secondary) Class 1 NICS liability in the previous tax year must be less than £100 000. If greater the employment allowance cannot be claimed.  This £100 000 threshold is also applied to groups and connected PAYE schemes, so the combined total needs to be measured.
  3. If you have workers within IR35 you cannot offset their NI liability against Employment Allowance, but equally you do not need to count their NI towards the £100 000 threshold.
  4. If there are connected PAYE schemes, but the combined total is less than £100 000, then the Employment Allowance can still only be used against a single PAYE reference. It is up to the connected PAYEs to nominate the particular scheme.
  5. De minimis State aid rules: these rules will apply if the organisation is engaged in economic activity, so providing goods or services to the market, and most companies will fall into this bracket. You cannot claim Employment Allowance if this would mean exceeding the De minimis State aid thresholds for a particular business sector.

Claim the Employment Allowance each Tax Year

The majority of small business should be able to continue to claim the allowance, but there is now more work to do at the beginning of the new tax year.

At the start of the tax year, as well as determining eligibility, if the business is claiming the employment allowance you will need to declare the business sector, choosing from one of the following options

  1. State Aid Rules do not apply
  2. Primary Production of Agriculture Products
  3. Fisheries and Aquaculture Sector
  4. Road Freight Transport Sector
  5. Other, Industrial

For further guidance see here

Within IR35 Contractors April 2020

What is ‘Within IR35 Contractors’ and the changes in April 2020?

The IR35 legislation is aimed at ensuring contractors pay the same tax and National Insurance as an employee in an equivalent position.  New rules come in from April 2020 that will affect private companies classed as medium sized or larger.  The new rules will not be applied retrospectively.

The IR35 legislation places responsibility on the employer, not the contractor, for the reporting, collection and payment of tax and National Insurance.  The employer is also responsible for determining if the contractor falls within the IR35 rules.

Who does it apply to?

Small employers are exempt.  Small employers should meet two of the following conditions:

  • Have less than 50 employees
  • A turnover of less than £10.2million
  • A balance sheet total of less than £5.1million

There are additional rules where companies fall under the group rules, and simplified rules for certain other companies with a turnover of greater than £10.2million.

For medium and large enterprises the new rules will be applied.  The employer not the contractor decides if the work falls within IR35 rules, and is then responsible for reporting and paying the tax and National Insurance.

What contractors fall within IR35?

Employers must take reasonable care when determining the status of a worker, and there is a tool available from HMRC to assist with the test – CEST (Check Employment Status for Tax).  Employers should record the results of the CEST assessment as HMRC have said they will not hold records.

The CEST assessment is based upon a true agreement between parties, so if a contract or agreement is considered as contrived and not reflecting the true nature of work HMRC will disregard the CEST result.

Once a worker has been determined to be within IR35 they need to be reported via RTI.  This will mean through a payroll, but there is an important distinction between a PAYE employee and a contractor within IR35.

What do we need to do about contractors who fall within IR35?

How employers deal with IR35 will depend on individual circumstances.  For many a separate payroll with separate PAYE references will be simplest, but if there are only one or two temporary workers, including them within the normal payroll may be more straightforward.  Intermediary companies will also have to deal with IR35.

The RTI requirement is a reporting issue, as it is deemed employment that is reported and used for the tax and NI calculation.  This is unlikely to be the same as the invoiced amount from the contractor.  HMRC has guidance on how to calculate deemed earnings, but these are also changing in April.  Again it is important to understand the distinction between a contractor within IR35 and an employee, although both could potentially be reported through the same payroll.

There are some other differences between the contractor within IR35 and an employee on Pay as You Earn.  There are no student loan payments, holiday pay, statutory payments or auto-enrolment duties for instance.  Employment Allowance cannot be offset against NI from deemed employment, although Apprenticeship Levy is counted.  For these reasons a separate payroll to the PAYE payroll may be much easier to administer.

Further details will follow, but at the moment there is still a lot of uncertainty within companies of how exactly they will remain compliant with the new regulations.  There is further guidance available from here.

Second Site now Fully Operational

Business continuity is critical, never more so than in payroll

Disasters happen, and when they do they’re unplanned, unexpected and unpredictable.  For any size business it’s important to have a fail over process for all your business activities and none more important to your staff than making sure the payroll goes on time.

A fire, cyber attack or simply a downed internet connection at the wrong time could prove disastrous for any business so we’ve built in a second layer of disaster recovery establishing a second office at Kiln Farm, Milton Keynes.

This office offers full back-up and redundancy of service so a disaster at either site can be immediately mitigated and business can continue as usual.

There are few payroll providers that offer this level of service should the worst happen but our commitment to providing the highest levels of service dictated that we needed to invest.  We ran our first disaster recovery exercise in September when the entire team operated out of a single office, proving that providing our clients with a “business as usual service” in the event of a disaster was realistic and practical.

One thing you can help us with

While the test went extremely well and I’m sure none of you noticed we logged something you could help us with – eMail subjects lines.  We struggled to find some eMails as there was no payroll reference in the subject line.  Please can you all include your payroll reference into the subject line of your eMail and ideally your company name as well.  This will make sure that, in the event of a disaster, there are no barriers to Payroll Options delivering the service you expect.

Pension Data Exchange

Coming soon

We are currently conducting a live trial of our new pension company data exchange API. We’ve been working hard to ensure that this service will integrate with our existing systems and so provide a seamless transition for those clients wishing to join the scheme.  All tests have gone well and we’ve move to a live trial so, depending on what issues we find, we expect to be offering this service shortly.

With the API we will be able to transfer data to the pension provider, this will include new joiners and contribution details, and we will also be able to receive notices of employee opts outs back from the pension company.  There will be the opportunity for us to provide pension letters for distribution to the appropriate employees, but this will follow at a later date.

We will be supporting the following providers: NEST, Now, Peoples (B&CE), Smart & Aviva.

If you’d like to know more then please eMail your usual contact or Traci Glasgow.

 

Student Loan Notices

Student Loan Notices

HMRC has started issuing Generic Notification Service (GNS) messages when an employee still has student loan deductions taken despite a stop notice.  The GNS messages are a reminder to stop deductions for the next available pay day, and are available via online PAYE accounts.

There are eight possible GNS messages, although these can be considered as prompt 1 and prompt2, then student loan or post-graduate loan and borrower or non-borrower.  There is no practical difference with the messages, they all are a reminder to stop the appropriate loan deductions.

These GNS messages follow on from the earlier announcement by HMRC that they will be sharing information with the Student Loans Company (SLC) on a weekly basis.  This should mean a faster response once a student loan is paid off, or when an employee incorrectly completes a new starter form for instance.

However, these GNS messages are reminders so no action is required if the appropriate student loan has already been stopped.  So you should not need to contact HMRC if you have received the reminder despite stopping the loan deduction.

Student Loan thresholds

The thresholds are changing for student loans from April 2020:

Plan 1 £19 390  (currently £18935)
Plan 2 £26 575  (currently £25725)

The student loan deductions are at 9% above these thresholds.

The post-graduate loan threshold will remain the same from April at £21 000, with deductions at 6% above this.

Although there is a general election looming, we imagine the rates will go through as planned.  We will be monitoring announcements from HMRC as they come through however.

For more information about student loan deductions see here.