PIXIE PAYROLL Blog

As we come to the end of another month dealing with all the ramifications of Covid-19 – both personal and business – we have some more updates for you about the various arrangement the government has put in place to help businesses cope.

Furlough – Coronavirus Job Retention Scheme

The Flexible Furlough scheme is being introduced from 1^st July 2020, which means employers can start bringing their employees back part time. The hours or days that the employees work is for the employer and employee to decide and employees can stay completely on furlough if required. The business should pay the employee for the hours worked and then apply to the scheme for the hours on furlough.

This adds a bit more complexity for employers so even if you have been managing your payroll yourself up to now but find you need a bit of extra help now, just get in touch.

Statutory Sick Pay Rebate scheme

This scheme allows small to medium size businesses claim back the costs of SSP and is now open for claims. We have been handling the rebates for our clients but this page of the government website has useful information and you can find out if you are eligible to make a claim. 

Employee benefits

Because people have either been on furlough or working from home, some aspects of taxation have needed some new arrangements although you may not have seen them discussed at the daily Downing Street briefing.

When employees receive benefits from their employer such as meals, company cars or travel costs, they are all considered as part of that employee’s overall taxation. Since employees have either been on furlough or working from home – so there’s a company car on the drive not being used for business purposes for example – HMRC has published new guidance on what to do in these circumstances.

The guidance can be found here.

Calculating maternity and parental pay

The amount of maternity and parental pay is calculated based on the Average Weekly Earnings (AWE) in the 8 weeks prior to the leave starting. Due to furlough, these amounts may have been reduced for some and so new rules have been introduced to ensure no one loses out due to the pandemic.

So, if an employee was on furlough for part or all of the relevant 8 week period and their period of family-related pay starts on or after 25^th April 2020, these are the new rules for calculating AWE:

The earnings used to calculate AWE for that period will be the higher of:

1. What they actually receive from their employer;

or b) What they would have received from their employer had they not been on furlough

As with other payroll matters, if you are at all unsure about calculating family-related pay for your employees, please just ask.

Covid-19 Scams

HMRC are reporting that criminals and scammers are taking advantage of the current situation and so are asking everyone to be on alert. The scammers text, email or phone businesses offering spurious financial support or tax refunds. They try to get financial and personal information or attempt to infiltrate computer systems to steal data or demand ransom. HMRC has detected more than 95 Covid-related financial scams since March, most by text message.

HMRC’s advice to businesses is:

Stop: If you receive a request to make an urgent payment, change supplier bank details, or provide financial information, take a moment to stop and think.

Challenge: Could it be fake? Verify all payments and supplier details directly with the company on a known phone number or in person first.

Check GOV.UK for information on how to recognise genuine HMRC contact and how to avoid and report scams. If you think you have received an HMRC-related phishing/bogus email or text message, you can check it against examples published here.

These are still uncertain times and whilst there are signs that lockdown is easing, we know many businesses still have staff on furlough and are unsure about what the future holds. If you need any help or advice regarding payroll, bringing staff back to work or taking on new employees, just get in touch.

Protect: Contact your business’ bank immediately if you think you’ve been defrauded and report it to Action Fraud. Use the latest software, apps and operating systems on your phone, tablet or laptop. Update these regularly or set your devices to automatically update. Forward suspicious emails claiming to be from HMRC to phishing@hmrc.gov.uk and texts to 60599.

The last few months have been so confusing & unsettling and with so much news coming at us all the time, sometimes it can be hard to remember where we are. So for this month’s blog, we thought a summary of the current situation with regard to Coronavirus support schemes would be useful.

Job Retention Scheme (Furlough)

This is now up and running and as many as 8.4 million employees have had 80% of their salary (up to £2,500) paid by the government. Although the scheme will run until October, it is expected that some employees will be able to start returning to work as businesses reopen in the coming weeks and The Chancellor has indicated that, from August, he would like businesses to start paying more of their employees’ salaries and the scheme will soon close for new applications.

Self-employed Income Support Scheme

This is now open for the self-employed to claim 80% of their average monthly profits over the last 3 years and 2.3 million people have claimed so far. To be eligible, a tax return for 2018/9 has to have been submitted and the majority of income must have been derived from self-employed work. The grant is paid in a lump sum and although there has been some discussion about the scheme being extended, there is no firm information yet.

Business support

There are 3 key schemes currently in operation to support businesses of all sizes through the crisis.

Two grant schemes are administered by local authorities and are aimed at small to medium sized businesses. The Business Grant is for businesses that pay Business Rates and here in Cornwall, the Council has written to all businesses who are eligible and invited them to apply. The Small Business Support Grant is for businesses that haven’t already received support but still need help. This page on the Cornwall Council website has some useful information and link on these schemes.

Larger businesses can apply for a Large Business Interruption Loan through their bank or other approved lender. Very large businesses – those turning over more than £250 million -can apply for up to £200 million. Those turning over more than £45 million but less that £250 million can apply for up to £25 million. These are clearly huge sums, are loans rather than grants, and are a specialist support vehicle for large businesses and employers. More information on the loan scheme can be found here.

Getting back to normal

Whilst getting completely back to normal may take some time, if ever, there are signs that something like normal life might be returning. In England, we can now travel further for exercise and we can meet up with people outside our household in the open air. It is expected that there will be a further relaxation of these rules soon. Some schools will be reopening for some year groups from 1^st June and that day will also see open air markets and car showrooms reopen. All other non-essential retailers can reopen from 15^th June providing social distancing measures are in place.

All of this means people will be returning to work which will impact on the management of the businesses’ payroll scheme so if you are an employer who is planning to reopen, get in touch and we can help you through the process.

Sadly, it might be the case that not all businesses are able to reopen and not employees will have kept their jobs. We can also help businesses manage the redundancy process in the most efficient way possible to minimise the stress for all concerned.

The last few weeks have seen us having to adjust to new ways of living and working that we’re still getting used to. We know from speaking to our clients that managing a team of employees who are either working from home or who have had to go on furlough can be really tough.

So for our blog this month, we thought we’d look at the different ways you can keep in touch with your employees and the rules around furloughed staff.

Not many of us had heard of Zoom before the lockdown started but now it seems like everyone’s using it; it was even used in Parliament this week for Prime Minister’s Questions. If you have employees who are still working but who are working from home, holding regular remote meetings are really important. They can obviously help with the day to day running of the business but they’re also good for supporting peoples’ mental health

Keeping in touch with your employees who are working from home is really important and video conferencing a really good tool for holding remote meetings for both small and large teams. Staying in touch is obviously really important to keep the business running but it can also be vital for peoples’ mental health – staying in touch, keeping the office banter going and talking about each other’s lockdown experience is beneficial to all.

Zoom isn’t the only tool that’s good for this; you can try Skype, Group Facetime or WhatsApp or Google Meet.

In between the conference calls, you can have more ad hoc contact by setting up a WhatsApp group chat or Facebook Messenger chat or even a closed group on Facebook.

If you have put your employees into the Coronavirus Job Retention Scheme, i.e. furlough then the rules say they can’t do any work for you at all. But that doesn’t mean you can’t keep in touch with them and in fact, regularly checking in with them is really important.

Each person will react differently to being furloughed. Some will see it as a great opportunity to spend more time with the family and get those jobs done around the house. Others will become incredibly anxious about the future and may even believe furlough is the first step to redundancy.

Staff in the first group may not need that much contact; perhaps just a weekly email to let them know how things are going and the plans that you’re putting in place for reopening the business. Staff in the second group will need more; at the very least a weekly phone call or video call and it would be worth being on the look-out for clues that they need more mental health support.

These are unprecedented times but it looks like we have a way to go yet until life can get back to normal. In fact, it might change the way we work for good, so getting to grips with virtual working tools now will stand your business in good stead for the future.

A new tax year has begun.

In amongst all the chaos and uncertainty of coronavirus, we’ve moved into a new tax year almost unnoticed. So here’s a quick summary of the new minimum wage rates that now apply.

Personal allowances and thresholds haven’t changed this year so the starting point for taxation remains at £12,500 and the higher rate threshold is still £50,000. Bear in mind these are the current rates for England & Wales, there is a slightly different taxation regime in Scotland which we covered in our September blog here.

The National Living Wage for everyone over 25 years has increased to £8.72 per hour. This means that someone working 40 hours per week will see an increase of just over £1,000 per year in their wages.

The National Minimum wage applies to everyone under 25 and the rates are:

Year	21 to 24	18 to 20	Under 18	Apprentice
Rate applicable for 2020/21 tax year	£8.20	£6.45	£4.55	£4.15

Get in touch if you need any help with the new rates or support in running your payroll during these difficult times.

As I write this, the Chancellor Rishi Sunak is still speaking so we think some of the details will need to be clarified but he has just announced the long-awaited details of his support for the self-employed during this coronavirus crisis.

Anyone who submitted a self-employed tax return for the 2018/2019 tax year and whose trading profits were less than £50,000 will be able to claim a taxable grant of 80% of their average monthly profits over the last three years up to a maximum of £2,500. They must have made a majority of their income from self-employment and following a question from the press, if someone hasn’t been self-employed for that long, the figure will be calculated based on profits for however long they have been trading.

Anyone who has become self-employed recently so didn’t submit a 2018/2019 tax return aren’t going to be included in the scheme and so will have to reply on the measures around Universal Credit as previously announced. Anyone who should have submitted a return before the deadline in January now have four weeks to get their return in to be included in the scheme.

Self- employed people are allowed to continue doing business as well as being able to claim. HMRC will be getting in touch will all those who are eligible, and payments are anticipated in June, backdated to now, so they will get a lump sum payment in a few months time.

As always, please get in touch if you have any questions but do bear with us as we are dealing with lots of queries from employers putting employees on furlough as well as individuals not sure what to do in the current situation.