Weekly update - 14 November 2020
15/11/2020

Hello

 

Holiday Pay

 

The recent extension of the CJRS now takes the scheme over the Christmas and New Year holiday period.

 

Whilst on furlough team members have been accruing holiday entitlement at the same rate as if they had been working. An employee is entitled to a minimum of 5.6 weeks statutory leave over a holiday year although many employers allow more than this in their contracts.

 

Holiday taken while furloughed must be paid at the employee’s contractual rate, ie the normal rate of pay. Where pay varies the ‘normal pay’ is calculated as the average pay looking back over 52 working weeks. However, this calculation should exclude any holiday pay and any furlough pay which was paid during that 52-week period. The holiday pay due may thus be higher than the furlough pay (80% of reference pay), and employers will have to make up the difference.

 

Many contracts of employment state that holiday pay cannot be carried forward or the carry forward is restricted. The Government has enacted legislation to ensure that businesses have the flexibility to allow employees to carry forward holiday for the following 2 holiday years as long as this is agreed between the employer and the employee.

 

As this is an amendment to the existing contract of employment any agreement to vary it should be in writing. An e-mail exchange should be sufficient as evidence (check with your legal advisors to confirm) for this and any other amendments to the contracts.

 

Don’t forget that employers can require workers to take holiday (notice to be given at twice the holiday length beforehand) or cancel a worker’s holiday (notice to be given at least the length of the holiday beforehand).

 

Full details on holidays and entitlements can be found on the Gov.uk web site.

 

If your employees will be taking holidays in the next month or two please make sure we are aware if we prepare your payrolls so that the appropriate adjustments to salaries can be made.

 

Please access our Covid 19 resource centre for draft documents that can help you navigate through the various items of paperwork you need to maintain through the current pandemic.

 

CJRS

 

The CJRS will be extended until the end of March 2021 for all parts of the UK. For claim periods running to 31 January 2021, the UK Government will pay 80% of employees’ usual wages for hours not worked, up to a cap of £2,500 per month. The UK Government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more. Employers will still be liable for any Employers’ National Insurance and pension scheme payments due on the amount of the grant. This takes us back to the situation we had in August 2020.

 

It was also confirmed that the Job Retention Bonus will no longer be paid in February 2021, as CJRS will be available at that time. An alternative retention incentive will be put in place at the appropriate time.

 

Although the eligibility criteria are still to be formally confirmed it is expected that as long as an employee was in an RTI submission between 18 March 2020 and 31 October 2020 they will be eligible for the extended CJRS.

 

Also, employees on the payroll on 23 September 2020 can be included in a claim, even if they were made redundant after that date and reinstated.

 

The new reference period brings into range those employees/directors who have previously been paid on an annual basis and have been unable to claim under the CJRS as their annual payments were returned to HMRC after 17 March 2020. For payrolls that have previously made payments annually it is not efficient to make claims in just one month and it would be a good idea to make payments monthly now, rather than annually. I have e-mailed separately to all clients I believe are affected by this but if in order to take advantage of the CJRS you will need to get in touch.

 

SEISS Grant

 

Support for millions more workers through the Self-Employment Income Support Scheme (SEISS) will be increased, with the third grant covering November to January calculated at 80% of average trading profits, up to a maximum of £7,500.

 

It is anticipated that claims for SEISS 3 will be able to be made from 30 November 2020

 

 

Other support already announced

 

Already announced earlier are:

 

  • Grants of up to £3,000 per month for businesses which are closed worth more than £1 billion every month

 

  • £1.1 billion is being given to Local Authorities, distributed on the basis of £20 per head, for one-off payments to enable them to support businesses more broadly

 

  • Plans to extend existing government-backed loan schemes and the Future Fund to the end of January, and an ability to top-up Bounce Back Loans

 

  • An extension to the mortgage payment holiday for homeowners

 

  • Up to £500 million of funding for councils to support the local public health response.

 

 

More information from the Government on the announcement can be seen here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/932977/ECONOMIC_SUPPORT_FACTSHEET_5_November.pdf

 

 

BREXIT

 

Brexit has not gone away and is rapidly approaching.

 

If you trade with Europe then you must be aware that the rules are changing from 1 January 2021.

 

Our October Brexit Newsletter highlights what you need to know. Additional information is available if you need to know more.

 

 

Job Retention Bonus (JRB)

 

As noted above this will no longer be paid in February 2021 but an alternative will be put in place at the appropriate time.

 

Working from home expenses

 

From 6 April 2020, employers have been able to pay employees up to £6 a week tax-free to cover additional costs if they have had to work from home. Prior to 6 April 2020 the amount was £4 per week.  Employees who have not received the working from home expenses payment direct from their employer can apply to receive the tax relief from HMRC.

 

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) while higher rate taxpayers would the 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.

 

Employees do not need to provide evidence to show their bills have increased unless they are applying for tax relief on costs above the £6 per week flat rate, in which evidence of the increased costs may be required.

 

HMRC is encouraging individuals claiming tax relief for working from home to apply directly via the portal. Agents will not be able to use the new service to apply for the relief on a client’s behalf, which HMRC says is to ensure individuals receive 100% of the tax relief that is due.

 

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.

 

HMRC is also reminding employed workers, for example healthcare workers and care home staff, that they can also claim tax relief on work-related expenses, including cleaning their work uniforms.

 

Employees who clean, replace or repair uniform or tools, or pay fees and subscriptions for their work can apply online directly to HMRC and see instantly if they are eligible for tax relief on work expenses.

 

Please advise all of your staff working from home of this opportunity. Directors can also make the claim. Taxpayers may have to set up a Government Gateway account to make the claim online.

 

HMRC working from home claim portal.

 

Office equipment

 

Employees working from home due to Covid-19 may need to purchase their own home-office equipment, The government has made it easier for employers to reimburse the expense by creating a temporary income tax and national insurance contributions (NIC) exemption for employer-reimbursed expenses that cover the cost of relevant home-office equipment, including a laptop, desk or necessary computer accessories.

 

For example, if an employee is forced to work at home during lockdown and their employer agrees to them purchasing a desk and printer that costs a total of £750.

 

The employee then reclaims this from the employer. But instead of the employee having to potentially pay income tax and NIC on the benefit of the £750 reimbursed, the exemption means no income tax and NIC is due. This will save £343.50 for a typical employee and for higher rate employees it will save £418.50.

 

Company cars

 

If an individual has a company car that they might not be able to use, for example because of local lockdowns or a second wave of Covid-19, they can leave it sitting on the driveway tax-free. Company cars are not subject to benefit in kind tax if they are handed back to the employer.

 

This can be done either physically or ‘virtually’ which means the employee returns keys and fobs to the employer but not the vehicle itself.

 

However, employees do need to ‘return’ the car for 30 consecutive days for the benefit in kind tax to be withdrawn. To do this they should agree in writing with their employer that the car is being returned and get their employer to acknowledge receipt of the keys and fobs.

 

If an employee still has access to the vehicle then the benefit in kind will remain.

 

 

 

Not subscribed?  Sign up for future updates.

 

 

Don’t forget to access our dedicated Covid 19 hub for all new announcements and far more detailed information.

 

 

CJRS – Paperwork

 

As previously advised all supporting paperwork relating to furlough must be kept at least 5 years from the last claim in case HMRC wishes to review it.

 

Bounce Back loans

 

A list of banks currently offering the BB loans is available on the British Business Bank web site.

 

The scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000. The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.

 

The scheme has been extended and is now open to applications until 31 January 2021.

 

 

 

CBILS

 

The scheme helps small and medium-sized businesses to access loans and other kinds of finance up to £5 million. The government guarantees 80% of the finance to the lender and pays interest and any fees for the first 12 months.

 

If you already have a BB loan and need more funds you can apply for a CBILS loan as long as the new loan is used, in part, to repay the BB loan.

 

Again, planning for the repayment for the loan is essential and we can help with preparing cashflows and budgets if needed.

 

The scheme has been extended and is open until 31 January 2021.

 

 

Accounting for grants and loans

 

If you need help with your bookkeeping for the various loans and grants please contact us for advice on how to record these.

 

 

Links

 

Here are a few links which may be of help:

 

Coronavirus support for business from outside government - List of public bodies, organisations and charities that have produced additional resources that may be useful to employers and employees.  

 

Stewart & Partners outgoings timeline spreadsheet – a spreadsheet to record upcoming payments

 

Government 10 guides to working safely during CV19

 

Stewart & Partners UK Covid 19 business guidance and resources - http://clientresources.co.uk/ - a 3rd party web site with good advice and resources that Stewart & Partners link to.

 

Hertfordshire Growth Hub - www.hertsgrowthhub.com – support for existing businesses.

 

Enterprise Nation - www.enterprisenation.com – Small business support, free to join.

 

HMRC Skills toolkit - theskillstoolkit.campaign.gov.uk/ - free online courses to learn new digital and numeracy skills.

 

CIPD – CV19 Returning to the workplace - https://www.cipd.co.uk/knowledge/fundamentals/emp-law/employees/workplace-guide-returning-after-coronavirus - How to plan a return to work.

 

CJRS: Step by step guide for employers

 

How to set up a direct debit for VAT returns - https://www.gov.uk/government/publications/vat-instruction-to-your-bank-or-building-society-to-pay-by-direct-debit-vatc9

 

Zoom tips for home working https://blog.zoom.us/working-from-home-tips-to-meet-like-a-pro/?utm_source=website&utm_medium=postattendee&utm_campaign=WFHQ1FY21&zcid=3710

 

How to change your zoom background -  https://www.loom.com/share/269c91301db747c18eed82cdc2f615bd

 

Online Client meeting

 

We continue to hold weekly online meetings that all clients are entitled to attend. The meetings are a drop in opportunity for clients to come online and ask any questions they may have. If there are any updates on the current situation these will also be discussed.

 

There is no obligation to attend but you may hear something you would otherwise have missed. You may also receive support or ideas from other clients.

 

The next meeting will be next Wednesday morning. Details as follows:

 

Date and Time:  Wednesday 18 November 2020, 11.00 am

 

Meeting URL: https://us02web.zoom.us/j/83879726978  

 

Meeting ID: 838 7972 6978

 

Invites will also be sent out separately.

 

 

Contact us

 

The best way to contact us is by e-mail but I am accepting calls on 07738 242299. The office phone is not being monitored so any messages left will not be dealt with.

 

Share this e-mail

 

This e-mail is written for clients but if you know of anyone who would benefit from receiving it then please pass it onto them with my compliments.

 

If you have received this update and are not already subscribed but want to receive further updates then please sign up for future editions.

 

Feedback

 

Feedback from clients is important. It would help me to know that this weekly e-mail is being appreciated.

 

Also if you have any queries join us for the meeting on Wednesday.

 

Referrals

 

We are still looking for referrals from you. If you know anyone requires support or help then please ask them to get in touch.

 

 

Don’t forget we put out at least one and on some days two articles on social media. Follow us on:

 

Twitter: @StewartPtnrs

Facebook: https://www.facebook.com/Stewart-Partners-780549322295593/ 

LinkedIn: linkedin.com/in/simonalever and also   www.linkedin.com/company/stewart-partners-chartered-accountants

 

 

This e-mail is written by Stewart & Partners for our clients and direct contacts but we are happy for you to pass it onto any of your contacts. The information is based upon our understanding of the current situation but we can accept no responsibility for any action or inaction in respect of the content.

 


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Contact Us: mail@stewartpartners.co.uk | Call: 07738 242299

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