Coronavirus Job Retention Scheme Update

On the 29th May 2020 the Chancellor provided us with an update to the Coronavirus Job Retention Scheme (CJRS) that outlines the contributions that both employers and the Government will make to the scheme costs as it draws to an end on October 31st 2020.

Here are the key points:

 

Flexible Furlough Pay

From 1st July 2020 the CJRS will allow employees to return to work on a part time basis whilst remaining in the scheme.  So you can bring your employee back to work for part of their contracted hours and they can remain furloughed for the part of their contracted hours they don’t work.

This means if you have a full-time employee you could bring them back for three days per week and keep them furloughed for two days per week.  You would pay their wages for the 3 days (full pay) and the government would continue to pay the furlough costs for the remaining two days.

The aim of this is to allow businesses and employees to gradually return back to normal.

 

Increased Furlough Cost Contributions for Employers

Throughout June and July the scheme will remain the same.  The Government will pay 80% of furloughed employees wages and the associated employer national insurance and pension contributions.

From 1st August 2020 employers will be required to contribute to the costs of furloughed employees.  The employers will need to pay the employer national insurance and pension contributions.

From 1st September 2020 the government will pay 70% of the furloughed employees wages and the employer will pay the remaining 10% and associated national insurance and pension contributions.

From 1st October 2020 the government will reduce the amount of furloughed wages they pay to 60% before the scheme closes on 31st October 2020.

 

No New Entrants to CJRS After 30th June 2020

After the 30th June 2020 the CJRS will close to new entrants.  The employee will need to have been furloughed for a minimum of three weeks before this date.  This means if an employee is not furloughed before the 10th June 2020 they cannot be furloughed at all.

Claims that relate to any period before 30th June 2020 must be submitted before 31st July 2020.

Help and Support for Business’ and the Self-Employed During the Coronavirus Crisis

The government has announced a range of support for business to help them overcome the coronavirus crisis.  There will also be support for the self-employed and freelancers announced soon.  It is expected that the support for self-employed and freelancers will be announced on Friday.

Here is an outline of what has been announced and what is expected:

 

Rate-relief & Grants

If your business was in receipt of rate relief, or had a rateable value of less than £15,000 on the 11th March 2020 you will receive a cash grant from the government of £10,000.

This is being distributed by local councils, so if you are eligible check their website to see how they are distributing grants.  If you have had to close your business it may be worth putting a mail redirect from your business premises to your home address as it is likely many will send a letter.

If your business is in the hospitality, leisure and retail sector and your rateable value was more than £15,000 and less than £51,000 on 11th March 2020 then you will receive a grant of £25,000.

Businesses in the hospitality, leisure and retail sector now eligible for 100% rate relief.

 

Employers

Employers are required to pay sick pay for any employee that is self-isolating from day one of absence.  The government will repay the first two weeks of this sick pay.  It is still unclear how the sick pay will be refunded, and as far as I am aware your payroll software won’t have the capability to do this for you because it is so new.  If you are using a software you will have to manually override the sick pay so that the waiting days are paid.  Check with your software provider for advice on how to do this.

Keep a record of the dates of isolation, the employee name and the amount of sick pay paid to them.  I expect this will be reclaimed in a similar way to SMP, but again HMRC have not announced how this will be done yet.

You can now furlough employees and reclaim 80% of wages from HMRC.  Again, how this will be reclaimed is still unclear.  If you have made redundancies, this scheme is available from the 1st March, so you may be able to reconsider this, you will need to check with HR as to how this will work.  This scheme is set to run for three months from 1st March 2020, however it will be extended if necessary.

 

VAT

If your VAT falls due between 20th March 2020 and 30th June 2020 you can defer this, it must be paid before 31st March 20201.

If you have a direct debit set up to pay your VAT, then you will need to cancel this in order to defer your payment.  If you don’t then you just don’t pay.  VAT returns do still need to be filed.

 

Self-Employed

Self-employed people will receive 80% of their average income up to £2550 per month.

You are eligible if:
You have profit of less than £50,000.
The majority of your income is through self-employment.
You completed a 18/19 tax return.

You now have 4 weeks from today to submit a 18/19 tax return if you haven’t done so already.

HMRC are hoping to have this in place by start of June and you should receive a letter from them asking you to complete an online form if you are eligible.

I know for a lot of you that are just growing your businesses this support will not be enough.  Remember, if you are renting you can speak to your landlord, perhaps consider paying just half of your rent until we are all back on our feet.  If you have a mortgage consider taking a mortgage holiday.

You can also try to apply for universal credits to see if you can get additional support and speak to your local council and see if they can help in any way.

 

I know there are still several people that won’t get the support that they need.  We can only hope that more help will be announced in the coming days and weeks.

 

Stay safe!

20
Nov, 2019

Taking on your first employee

Taking on your first employee is both exciting and daunting!  You are excited because your business has grown enough for you to employ someone else, this means you are doing well!  But it is also daunting, the extra admin and making sure you are doing things correctly can be stressful.  But don’t panic, we are here to help!

 

Registering with HMRC as an employer

The first step you will need to take once you have recruited your employee is to register with HMRC as an employer.  You need to register at least one week before the first payday.  It usually takes up to 5 working days for your employers PAYE reference number to arrive and it makes it easier to run your first payroll if you have this number first.

You can register here: https://www.gov.uk/register-employer

 

Choosing a payroll software

There are a variety of software providers available for payroll with a variety of different prices!  You will need to work out which one works best for your business.

My personal favourite is Sage, it has some brilliant functionalities.  However some smaller businesses may find this a costly option and wont receive the full benefit of the functionalities until they are employing a larger amount of people.

HMRC offer a basic payroll software for free if you have fewer than 10 employees.  This is great for starting out, but it is what is says on the tin – basic.    There are a few other free payroll software providers, you can see a list here.

Other paid for providers worth mentioning are Quickbooks, Xero & Clear Books.  These are all great payroll providers with various functionalities to suit multiple businesses.  There is a full list of payroll providers on HMRC’s website, you can access this here.

It is important to find one that works for you and that you are comfortable with.

 

Collecting and Keeping Records

You need to keep records of:

  • Employee details, such as Name, address, NI no, DOB, right to work in the UK
  • What employees are paid and any deductions made within each pay period
  • Reports you send to HMRC and any payments you make to them
  • Employee leave and sickness
  • Tax code notices
  • Taxable expenses or benefits

 

Registering Employees

Employees are registered using FPS (full payment submission) that is sent to HMRC each pay period.  You will need to collect information from your employee to set them up correctly.  You need the information mentioned above, along with either the employees P45 from their previous role or you will need to ask the employee to complete HMRC’s starter checklist.  You can find this here.

Input the information you have collected into your payroll software and once you have processed the payment you can send the FPS to HMRC, this is how employees are registered.

 

Recording Pay

Your payroll software will record pay made to your employees.  You will need to keep copies of reports from each pay period.  You need to send the FPS to HMRC on or before each payday.  Keep records of your FPS submissions.  If you need to claim back any statutory payments or claim and small business relief you will need to send an EPS to HMRC before the 19th of each month.

 

Paying HMRC

You will have to pay tax and national insurance to HMRC.

You can log into your employers account on the 6th of each month and view the tax and NI due.  This must be paid by the 22nd of each month.

Your payroll software may have a report you can run to check the amount HMRC have requested against the figures within your payroll software.

 

Other Things to Consider

You will also need to consider your business insurance, you will need employers liability insurance.  You will also need an employee contract, it will be worth your while contacting a HR support company and having one created for you, professionals really are worth their weight in gold!

 

How We Can Help

Bright bookkeeping services offer a comprehensive payroll support package from just £25.00 per process date for the first 3 employees and then an additional £5 per process date for any additional employees.

Have a look at the payroll section on our website here: https://www.brightbookkeepingservices.com/services/payroll/  Or send an email to contact@brightbookkeepingservices.com

 

14
Mar, 2019

Workplace Pension Re-enrolment

Most businesses will be entering their first re-enrolment window soon, if not already. So what is workplace pension re-enrolment?

 

Workplace pensions are mandatory for all businesses with eligible employees.  Employees can decide to opt out of making pension contributions, if they do you don’t make contributions on their behalf either.  Every three years you are required to re-enrol any eligible employees who have opted out or ceased making contributions.

 

Below are the steps you need to follow when re-enrolling your employees.

 

Step 1 – Choosing your re-enrolment date

You should receive a letter from The Pensions Regulator explaining when your re-enrolment window opens. Your re-enrolment window is a 6-month period.  This period will cover 3 months before the third anniversary of your staging date, and three months after.

 

You can choose any date within your re-enrolment window as your re-enrolment date.

 

Your re-enrolment is specific to your pension staging date, and not specific to when each employee opted out.

 

Step 2 – Ascertain which employees need to be re-enrolled

You need to assess each employee that has opted out or ceased making contributions to their workplace pension to see if they are still classed as an ‘eligible job holder’. This means they are over 22 and below state pension age, and meet the earning requirements of the workplace pension.

 

You do not need to re-enrol anyone who has not yet been enrolled into your pension scheme. For example if you have a new employee and have postponed their contributions so they will not have joined the scheme before your re-enrolment date they do not need to be assessed.

 

You may not have any employees that need to be enrolled, this is fine you can proceed to the final step!

 

Step 3 – Re-enrol your employees

After finding out who you need to re-enrol, the next step is to get your employees re-enrolled into your pension scheme. This will vary depending on how you process your pensions.

 

If you submit your pensions manually to your pension provider then on your re-enrolment date you will need to make a submission to them containing the details on the employees you need to re-enrol.

 

If you use payroll software to submit your pension data then you will probably use the same method to submit your re-enrolments. Please speak to your payroll software provider.

 

If you use a payroll company to process your pensions then they should have all the information they need, get in touch with them to make sure they have it in hand. It is your responsibility as the employer to ensure re-enrolment requirements are met.

 

Step 4 – Inform your employees they have been re-enrolled

Send your employees that have been re-enrolled a letter explaining that they have been put back into the workplace pension, and if they wish to opt out again they can. You should explain how they could opt out, and also the benefits a workplace pension offers. Your pension provider may have template letters on their website that you can use.

 

Step 5 – Make a declaration to the pension regulator

Once you have fulfilled all of your obligations as an employer you need to log into your account with the pensions regulator and make a declaration to inform them all eligible employees have been re-enrolled.

 

Then you are finished! If you have any questions or feel unsure then get in touch and we will see if we can help you.

12
Feb, 2019

April 2019 Changes to the Workplace Pension

 

Every employer in the UK should now be automatically providing a workplace pension for eligible employees.  The workplace pension provides every employee aged at least 22 but under state pension age, and that earns at least £10000 per year an opportunity to pay into a pension and to have their employer make contributions too.

 

Currently the contributions are 2% of qualifying earnings for employers, and 3% for employees.  Of the employees contributions 2.4% is taken from the wages and 0.6% is paid by the government in the form of tax relief.

 

For example for every £100 your employee earns you will give them £2 in contributions.  They will contribute £2.40 from their wages and receive £0.60 tax relief.

 

In April 2019 contributions are rising.  Employers will be required to make contributions of 3% and employees will be required to make contributions of 5%.  The employee contribution is made up of 4% from their wages and 1% in the form of tax relief.

 

For example for every £100 your employee earns you will give them £3 in contributions, and they will contribute £4 from their wages and receive £1 tax relief.

 

You will need to write to your employees to let them know about the changes to their pension scheme. Your pension provider should have a template you can customise to send out. Employees need to be made aware that their contributions will be increasing.

 

You will also need to ensure that the correct deductions are being made after April. Even if you are using a payroll software it is worth manually checking the contributions in the first week. The payroll software communicates with the pension providers’ software, and sometimes that communication needs to be refreshed when changes are applied.

 

 

Recap, what do I need to do?

 

You need to send a letter to all eligible employees explaining the rise in contributions.

 

Check with your payroll software provider, this should be updated automatically, however it is always worth double checking in the first pay period that includes the 6th April 2019.

 

If you process pensions manually make sure that contributions are updated in the first pay period that includes the 6th April 2019.