PIXIE PAYROLL Blog
It’s hard to believe it’s the end of November already and that this difficult year is nearly coming to an end. Since we wrote our last blog, there have been more changes to the Coronavirus rules and regulations, with details on the new post-lockdown tier arrangements in England and Christmas restrictions having been announced only this week.
The most profound change was England going back into a lockdown situation on 5th November. We now know that this lockdown will be lifted on 2nd December but at the time it was introduced, it wasn’t at all clear that this would happen.
After the lockdown, Cornwall will be one of the few places in the UK to go into Tier 1 which allows us a bit more freedom in terms of meeting up with people in our homes (although the rule of 6 still applies) and pubs, bars & restaurants being able to open for table service, which we’re sure will be good news for our hospitality clients.
All tier restrictions will be relaxed for 5 days over Christmas with up to 3 households being allowed to gather to celebrate the holiday together.
Furlough and self-employed scheme extensions
Early in November, an extension to the furlough and self-employed scheme was announced but with the new lockdown a few days later, this was extended further. The Coronavirus Job Retention Scheme is now planned to run until the end of March 2021 (although it will be reviewed in January 2021) and will pay 80% of an employee’s salary, just like it did at the beginning of the first lockdown in March this year.
Similarly, the Self-Employed Income Support Scheme will run until March 2021 and will pay 80% of average profits.
These extensions are a significant change from what was originally planned for the current and following months; in fact it was only on 1st November that a one month extension was announced which was then superseded by the news a few days later. All of this means things have been changing really quickly and it can be hard for employers to keep up.
Tax relief for working from home
Employees who have been working from home since the start of the pandemic may have found that has generated additional costs. From extra tea, coffee and water to higher bills for heating and lighting, especially as we are coming into the colder and darker months, unexpected expenses can be tricky.
Employees are able to claim tax relief of £6 per week or £26 per month provided they haven’t already been reimbursed by their employer. Claims can be made via the government website here and the employee’s tax code is then amended so they will pay less tax on their earnings.
As well as having to deal with the pandemic, employers and businesses may also be planning for the current Brexit transition arrangements coming to an end on 1st January 2021. So if you employ people who are EU nationals or you send employees to work in the EU, it is important you make plans for the new rules.
All the current information can be found here but it is important to keep checking as things are still changing.
As we say every month, if you have any questions about your payroll or need help navigating the rules and regulations, just get in touch. If you’ve been persevering with managing your payroll yourself this year but now really think you could do with some help, speak to us. We manage all sizes of payroll and can help for as long or as short as you need us to.
We’ve reached the end of October and I think many of us were hoping things would be getting a bit more back to normal by now. But in fact, it feels like things are changing more quickly and dramatically than they did in the spring as the full impact of the pandemic is revealed.
New Job Support Scheme and Tier 2 grants
At the end of the summer, the Chancellor announced that the Coronavirus Job Retention Scheme would be replaced by the Job Support Scheme which was designed to work in an environment where businesses were reopening, restrictions lifting and things getting back to normal. However, as we have seen over the last few weeks, that is now not the case and some areas of the country are going back into tight restrictions to deal with rising infection rates.
So on Thursday, he announced some changes to the scheme, making it more generous for businesses in areas under the newly introduced Tier 2 and 3 restrictions.
Businesses in Tier 3 areas which are forced to close will now have 66.67% their employees’ pay covered and with no expectation that employers make any contribution.
For businesses in Tier 2 and Tier 1, an employee will only need to work 20% of their normal hours (and be paid for those hours in the normal way), the employer will cover a further 5% and the government will pay 61.67%.
In addition, hospitality and leisure businesses in Tier 2 – which will not be forced to close but which will be seeing reduced income – will be able to apply for grants of up to £2,100 which will be distributed by their local authority.
Job Retention Bonus
The Job Retention Bonus Scheme was first announced earlier in the summer and allows employers to claim £1,000 for every eligible employee who has been placed on furlough but who remains continuously employed until at least 31st January 2021. The grant is paid to the employer and there is no requirement for them to pass it on to their employee.
The qualifying earning period starts on 6th November so if you want to claim a grant, your employee must be back at work by then.
Self Employed Income Support Scheme
In the summer, the Chancellor also announced a further extension to the SEISS although only 20% of profits would be paid as a grant. This week, that has been increased to 40% so more generous and more in line with the Job Support Scheme. We are awaiting more details on the scheme and it is not yet open for applications.
Things are changing quite quickly at the moment, but our membership of the Chartered Institute of Payroll Professionals means we get notified quickly of any changes and updates to government financial support schemes and other support measures that might be available to businesses during the pandemic. Keep an eye on our Facebook page (we’d love it if you’d like us there too) for all the up to date info.
Following on from the Prime Minister’s announcement earlier this week which tightened some of the restrictions we’ve all got to live under, the Chancellor Rishi Sunak yesterday announced a new range of support packages for businesses to try and keep people employed and to protect the economy.
The current Coronavirus Job Retention Scheme – which we all know as being on furlough – had always been due to come to an end at the end of October. When it was initially announced back in March, there was some hope and expectation that the virus would be under control by now and we would all be getting back to normal. But as we now know, that’s not the case at all and more support for businesses and employees is required.
Job Support Scheme
So yesterday, the Chancellor has announced the Job Support Scheme which replaces the CJRS and will start on the 1st November and run for six months. In order to qualify, the employee must be working at least a third of their normal hours and so be earning at least a third of their normal pay. The employer will then be expected to top up those earnings with a third of the lost pay and the government will support the employer by paying another third of the lost pay.
So as an example, if an employee normally earns £2,000 working full time but is currently only working for a third of those hours, they would be earning £666. That means they have lost £1,334 and so the government will pay a third of that – £444 and the employer would pay the same. So the employee earns £1,554 for working just a third of their normal hours.
Under this scheme, the employer would still be able to claim the Job Retention Bonus early next year and they would be prohibited from issuing any redundancy notices during the duration of the scheme. The scheme is also open to employers who didn’t claim under the Coronavirus Job Retention Scheme.
Self Employed scheme extended
The Self Employment Income Support Scheme will also be extended under similar terms to the Job Support Scheme to help the self-employed although it will only cover 20% of average earnings over the last 3 years. The Chancellor also announced time to pay income tax bills up to January 2022.
Pay As You Grow on Bounce Back Loans
Repayment terms on Bounce Back Loans have also been adjusted to help businesses survive. The time a business can take to repay their loans can be extended to 10 years, can be changed to interest-only and there is also the possibility of a repayment holiday if a business is really in trouble.
VAT was reduced to 5% in certain sectors over the summer and this has now been extended till 31st March 2021. We have already seen some businesses pass on that discount to customers and others retain the extra money to help their cashflow and we expect that to continue.
Whilst some of these measures are less generous than we saw at the beginning of the Coronavirus crisis in March, they have been designed to keep job losses down whilst recognising that some businesses have reopened and have been able to bring their employees back to work. But they also recognise that we are in no way back to normal and we have a tricky winter ahead of us.
The Job Support Scheme involves some difficult calculations so even if you have been managing your payroll yourself up to now, do get in touch if you need help.
As we reach the end of August, you can really feel the change in the season and the start of autumn. Normally, we’d be thinking about back to school and the start of ‘Strictly Come Dancing’ about now but as with a lot of things, it will be a bit different this year.
One thing that has been reassuringly familiar though is how busy Cornwall has been this month. Lots of holidaymakers have been enjoying a bit of a break and our tourism and hospitality clients have been busy looking after everyone, which in turn leads to a busy payroll for us!
So whilst the Coronavirus updates pace of change has slowed a little, there are still some news this month, so here’s our update:
As we mentioned in our blog last month, the flexible Job Retention Scheme has continued unchanged in August but modifications are due next week. From the 1st September, the scheme will only cover 70% of the wages of furloughed employees (down from 80%) as the support starts to taper off towards the end of the scheme. This means that employers will have to top up more of the employees’ wages or the employees will see a cut in the money they are paid.
Self Employment Income Support Scheme
The second phase of the SEISS opened for applications last week and self-employed people can now claim a second grant if their business was impacted by Coronavirus after 14th July 2020.
This time the grant will be calculated on 70% of average monthly profits over the last 3 years and will be paid in one lump sum to cover 3 months.
At the moment, there are no plans to extend the scheme further.
Most of the grant schemes funded by central government have now closed to new applications although you can use this support finder tool to see if you are eligible for anything.
The Cornwall Growth and Skills Hub has just announced that a new Kickstart Grant scheme launches on 2nd September which will pay up to £5,000 to help businesses which have been affected by the pandemic to start to recover. More information can be found here.
Job Retention Bonus
People are beginning to come off furlough and return to work although it is clear that pressure on businesses is not easing off. The Chancellor recently announced a one-off Job Retention Bonus which is a one-off payment of £1,000 for every employee who was on furlough but who is still employed by the employer on 31st January 2021.
The bonus will be paid through the PAYE scheme from February 2021 so we will be looking after this for our clients early next year. More guidance is due next month but this page introduces the scheme.
There are signs that things are returning to some sort of normal as the summer comes to an end but the pandemic isn’t over by any means. We are still subject to social restrictions and new challenges will come up as children go back to school. But as always, we are here to help with any of your payroll queries and can still take on the overall management of your payroll which will be one less thing for you to worry about.
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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