PIXIE PAYROLL Blog

The Budget 2021

As I begin writing this, the Chancellor of the Exchequer Rishi Sunak has just taken his seat again after delivering his budget statement. Although he has looked forward to a time when coronavirus restrictions will be lifted, he is also clearly planning for a few more months of disruption caused by the pandemic.

Extension of the furlough scheme

Perhaps the most important announcement from a work and payroll point of view is the extension of the Coronavirus Job Retention Scheme, otherwise known as the furlough scheme. The scheme was due to come to an end at the end of April 2021, but it will now run until the end of September 2021.

Employees will still receive 80% of their salary for the hours they can’t work due to the pandemic but in July, employers will be asked to contribute 10% and in August and September they will be asked for 20%.

More grants for the self-employed

The Self-Employed Income Support Scheme will also be extended until September with two further grants confirmed. Newly self-employed who submitted a tax return for the 2019/2020 year will now be able to apply for a grant. The 4th grant covers the period of February to April and will pay 80% of average profits but the 5th grant will depend on how much income has been lost. If it is more than 30% of profits, then 80% can be claimed but if less than 30% has been lost then only 30% of average profits will be paid.

National Living Wage

As we have previously mentioned, the Chancellor confirmed the National Living Wage will increase from April 2021 and because the age threshold is lowering, more people will qualify for the higher rate of £8.91p.h.

Other business support

The Chancellor also announced a number of other initiatives to support business and jobs as companies reopen and the economy begins to recover.

Restart Grants will be available from April with non-essential retail businesses able to apply for up to £6,000 and hospitality and leisure businesses who will be reopening later will receive up to £18,000. Additional recovery loans will also be available.

The Business Rate holiday is extended until the end of June when a 2/3 discount will be applied until the end of the year.

The reduced VAT rate of 5% for hospitality businesses will remain in place until the end of September and will then increase to 12.5% for six months; not returning to the full 20% rate until April 2022.

Income tax

Although there won’t be an increase in tax and NI rates, the Chancellor did announce that both the personal allowance and higher rate threshold will be frozen from next year until 2026. This does mean that people will pay more tax in future years that they would have done if the allowances were allowed to increase.

If you need any help with any of the budget announcements – especially around how the extension of the furlough scheme will affect your payroll or if you think the time has come to ask someone to look after your payroll for you – then just get in touch and we can help.

Moving out of lockdown

As I write this, there is a definite feel of spring in the air, with the sun shining and daffodils popping up everywhere. That would normally be enough for me to feel a bit more optimistic about the months ahead but this year, there are even more reasons to feel hopeful for the future.

The Covid-19 vaccination programme is going so well (thank you all you wonderful NHS people!) that the government has announced a new target of all over 50s being offered their first jab by the 15th April and the whole adult population having at least their first dose by the end of July.

And the Prime Minister has now announced his 4 step plan for lifting lockdown restrictions in England, re-opening businesses and bringing employees back to work.

For employers and employees, there’s no real change to the current situation until 12th April when non-essential shops, hairdressers, pub beer gardens, theme parks and zoos, gyms and self-catering holiday accommodation can reopen. Slightly larger weddings will be allowed from this date too, although the numbers are still restricted to 15 people. This is exciting news for many businesses including many of my clients, as it means the summer season can get underway although the date does fall a week after the Easter weekend which will disappoint some in the tourism industry here in Cornwall.

The next key date is 17th May when hotels, pubs, cinemas and theatres can reopen. Sporting events can go ahead, with up to 10,000 people allowed in large sporting arenas such as football stadiums. Groups of up to 30 people will be able to mix outdoors and the limit for funerals, weddings, wedding receptions and wakes will also increase to 30.

The final step is on 21st June when all remaining sectors of the economy can reopen and number limits on social gatherings of all types will be lifted. With a few exceptions, this will be us almost getting back to normal.

Employers should prepare early

Whilst it is possible these dates will change if the data isn’t going in the right direction, it is still a good idea for employers to prepare early for reopening, especially if they have staff on furlough.

For those who will be able to reopen in April and May, think about when you might bring furloughed staff back to work and also identify if you have any gaps in your staffing and advertise early to be sure of filling the vacancies. We can help manage the transition from furlough to work and also add new employees to your payroll, so everything is ready for opening day.

There were no announcements today about extending government support beyond the current end date of the furlough scheme of April 2021 so we will keep an eye on any news from the Chancellor.

Almost a year since we first went into lockdown, and assuming the data is reporting good news, it really does look like we can begin to be optimistic about returning to normal, seeing family & friends and getting back to work.

Happy New Year

This is our first blog post of 2021 so first of all, we’d like to wish everyone a happy new year. It’s been a tricky start to the year with us all going into lockdown again, many businesses being forced to close and children back to being home-schooled. Let’s hope the vaccine roll-out means better times are ahead.

There haven’t been any major Coronavirus-related government announcements so far this month, so we thought we’d have a look at some other employment-related updates this time, although inevitably some pandemic updates will feature too.

Self-assessment tax returns

The deadline for self-assessment tax returns is this Sunday – 31st January – so there’s not much time left to get things sorted. However, HMRC has just announced that providing tax returns are filed by the end of February, they won’t apply penalties. They are still expecting any tax to be paid by 31st January and they will be applying interest to late payments so if you can, it’s still worth getting it all done by Sunday.

HMRC have encouraged people to file their returns even if they can’t pay the tax they owe as they have set up some instalment schemes to help.

Minimum wage rates increase this April

Some good news is that, as with most years, the National Living Wage (NLW) and National Minimum Wage (NMW) rates are increasing this April. In addition, the NLW threshold will be lowered so that everyone aged 23 years and over will receive this rate (currently it is 25 years and over).

The new NLW rate will be £8.91, an increase of only 19p from the current rates. Percentage increases in NMW rates are smaller still.

We will automatically apply the new rates to all applicable employees in payroll schemes that we manage but if you need help working out what your new wage bill will be after April 2021, just get in touch.

Coronavirus Job Retention Scheme

As we have previously mentioned, the CJRS or furlough scheme has been extended until the end of April 2021 with the government paying 80% of employees’ wages. Staff can be placed on furlough at any time and it can be a useful tool for employers to help employees with childcare responsibilities now the schools are closed again. Those who are shielding can also be put on furlough.

The government are also starting to take steps to prevent fraudulent claims under the scheme; from next month, details of businesses which have claimed under the scheme will be published and individuals will be able to check whether a claim has been made on their behalf.

The extension of the CJRS has meant both the Job Retention Bonus and Job Support Scheme have been postponed for now with further updates expected soon.

Statutory sick pay for those asked to self-isolate

Don’t forget that you should pay SSP to those who can’t work due to them being asked to self-isolate, if they are eligible. This is true even if they are asked to self-isolate multiple times and small & medium sized employers can reclaim up to two weeks of SSP paid per employee for absences related to COVID-19.

There has been some talk in the press over recent days about a plan to pay everyone who has tested positive and so has to self-isolate a lump sum of £500 but that doesn’t seem likely. Currently anyone on a low income who has to self-isolate due to a positive test result does receive the lump sum payment.

If you have any questions about SSP and whether you should be paying it to your employees, just get in touch.

In fact, and as always, if you have any questions at all about your payroll scheme or if one of your new year resolutions has been to find someone to help you manage yours, just get in touch. There will be a few more difficult months ahead yet and we can help by taking one headache off your hands.

Looking back on 2020

Every year, our December blog is a look back on the year but for 2020, it’s hard to know where to start. We don’t think we’ll ever forget this one.

The year started off quite normally really, but it wasn’t long before news stories about the virus started to become more prominent and that it was starting to spread around the world. I don’t think any of us still had any idea about what was in store until, of course, we all went into lockdown in March.

There is no doubt the year has been challenging for us as we have helped our clients deal with all the changes and navigate their way through the government schemes. The complexity of the situation has meant we have actually taken on quite a few new clients and we’re grateful to those who have turned to us for help this year.

Some of our clients have continued without interruption throughout the year and so we have been running their payroll as normal. But even ‘normal’ means dealing with the challenges of having employees working from home or helping those who have had to self-isolate.

Many of our clients have had some or all of their employees on furlough and this has been especially tricky to deal with. We have worked so hard to help them manage the scheme and keep up with the changes, some with very short notice such as the extension of the scheme and increased wage rates at the end of October. We have made sure we’ve been available to answer any questions employers or employees might have had and there’s no doubt that our Chartered Institute of Payroll Professionals membership has been invaluable this year and it has meant we’ve always had an accurate and timely source of information and analysis as government announcements have been made.

This week, the BBC reported ONS figures that showed that UK-wide, there were 370,000 redundancies in the three months to October – a record number and with sadly the hospitality sector being the hardest hit. Even though we are Tier 1 and so hospitality venues can remain open, there’s no doubt the closures earlier in the year have had an impact and it has been a distressing part of our job this year to have to help employers manage the effects of redundancy through their payroll. We’ve also been managing Statutory Sick Pay for those employees who did contract the virus or who have had to self-isolate.

So, what do we think 2021 will look like? It’s definitely exciting that the vaccine is here and is starting to be administered but as the NHS will give priority to older people, it will be a while before younger, working age people are vaccinated. Which means the virus will continue to have an impact on us all for a bit longer, as demonstrated by the fact that Chancellor has just extended the furlough scheme for another month until April 2021 and the new Tier 4 level and Christmas restrictions that were announced on Saturday. And we will be social distancing, wearing masks and washing our hands for a good while yet.

For Pixie Payroll, it means that, at least for the first few months, we’ll continue to support all our clients through these difficult times and take some of the stress away by managing all aspects of their payroll efficiently and accurately. But hopefully by the time Christmas 2021 comes around, things will feel a little more like normal.

But in the meantime, we’d like to wish you all a very Merry Christmas and a hopeful and happy New Year.

About Me

My name is Kellie Burslem T/A Pixie Payroll Services, I am a local Payroll Bureau based near Helston, Cornwall. I provide a reliable, professional service at a competitive price.

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