Apologies for posting once again but we are fighting an uphill battle to keep abreast of updates to the Job Retention Scheme. Now if that has just turned you off because you are lucky enough to not need the scheme please scroll down to Working from home tax break and pass on to your employees. If you are one of our clients that is neither furloughing nor working from home – wow – lucky you! Stop scrolling and have a good day.
CJRS 3 – what we now know
Right – quick history lesson;
CJRS 1 – 1st March 30th to June
- Available for any employees for whom no work is available and on payroll at 19th March;
- Grant covers 80% of pay (based on pay reference period ending on or before 19th March) and associated employer national insurance and pension costs;
- Cap set at £2,500 per employee per month;
- Have to be furloughed for at least 3 full weeks at a time, and
- No one can be furloughed for the first time any later than 10th June.
CJRS 2 – 1st July to 31st October
- Introduces the notion of flexi-furlough where an employee can work and be furloughed with complete flexibility with no minimum working/furlough requirement;
- Only available to employees who were furloughed under CJRS 1;
- Claims must now be submitted no later than one month in arrears;
- Reducing scale of claimable amounts (NI and pension fall away after July) September and October recoverable percentages drops to 70% and then 60%, and
- Cap remains as above but drops with percentages (£2,187.50 then £1,875).
CJRS 3 – 1st November to 31st March 2021
- Flexi- and/or full furlough continues but with percentage of grant now back at 80% so cap back to £2,500 per employee per month;
- No reinstatement of support for national insurance and pension;
- Available to all employees who were eligible under CJRS 1 AND new employees as long as they were on payroll by 23rd September (must have been submitted to HMRC);
- For employees eligible under CJRS 1, base period for calculations of usual pay and hours remains pay period ending on or before 19th March;
- For new employees base period for calculating usual pay and hours is the pay reference period ending on or before 30th October;
- For variable pay employees eligible under CJRS 1 – no change to the basis. For new employees calculate the average pay from later of start date and April 6 to the day before first furlough begins;
- Claims must be submitted by 14 of month following;
- HMRC have issued added guidance re statutory pay and furlough pay. You cannot simply put an employee on furlough purely whilst they are on annual leave or short-term (non-COVID) sick. Further guidance is available for interaction with SSP;
- All LTD and LLP employers who have used either CJRS 1, 2 or 3 will be published by HMRC somewhere for employees (and the world!) to see, and
- All to be reviewed in January.
So in summary then – it is basically back to August rules in term of calculations (usual hours, furlough pay etc.) but you can now add in new employees up to 23rd September. For most new monthly paid employees the base month will be October.
The tight claiming deadline imposed for no obvious reason is a real sucker punch to the industry (ours) that has worked so hard to deliver furlough grants effectively and accurately to employers and onward to the employees. Yes, we are fuming.
Publishing names of those employers who have used the scheme seems fair enough but note it does not include employers who are sole traders or partnerships. One assumes this is a data protection issue protecting individuals but not body corporates.
Do not expect the 80% grant to be maintained to the end of March. We fully expect this will run off again as it did towards the end of CJRS 2.
Advance warning – the detailed guidance warns of a change to the current practice of furloughing during notice period. ‘The government is reviewing whether employers should be eligible to claim for employees serving contractual or statutory notice periods and will change the approach for claim periods starting on or after 1st December 2020, with further guidance to be published in late November.’
Remember we deal with the PAYE bit, not the HR bit. Don’t forget to agree and document changed pay arrangements with employees as required by the legislation. We are starting to see HMRC enquiries opening now. We have robust records of your payroll and claim calculations but the HR bits will be up to you.
Just to be clear, for now at least Job Support Scheme is dead, Job Retention Bonus is dead. Roll on Easter and remember we are in the office – here when you need us.
Want to help your staff reduce their tax burden this year? Read on…
On 1st October, HMRC launched an online portal to process tax relief on additional expenses for employed workers who have been told to work from home by their employer.
Employees who have not received any tax-free allowance from their employer for working from home can claim a flat-rate deduction of £6 a week from their taxable earnings.
Eligible taxpayers can claim tax relief based on the rate at which they pay tax. For example, if an employed worker pays the 20% basic rate of tax and claims tax relief on £6 a week, they would receive £1.20 a week in tax relief (20% of £6 a week) whilst higher rate taxpayers will receive £2.40 a week (40% of £6 a week). Over the course of the year, this could mean taxpayers can reduce the tax they pay by £62.40 or £124.80 respectively.
Once the application has been approved, the online portal will adjust an individual’s tax code for the 2020 to 2021 tax year. The employee will receive the tax relief directly through their salary and will continue to receive the adjustment until March 2021. Employees could alternatively receive the tax relief as a lump sum payment if they wait and apply once the 2020 to 2021 tax year has ended.
Here are the steps to do it
- Log in to your PTA and select PAYE, and
- Select the option to claim the tax allowance for working from home.
You are then asked the following questions:
- Is it just this allowance you want to claim? YES;
- Do you complete a self-assessment tax return? NO, and
- Has your employer already paid expenses for working from home? NO.
You are then taken to the claim portal itself and it asks the following:
- Were you required to work from home due to COVID-19? YES, and
- What date did you begin working from home? DATE.
Click confirm and submit and the claim is complete! WE will be notified of the tax code change within a couple of days.