The introduction of off-payroll rules to the private sector will go ahead as planned next April after an attempt to delay them failed in the House of Commons.

The reforms of the off-payroll rules to the private sector, which are known as IR35 and have applied to the public sector since 2017, was reviewed earlier this year.

They will shift the responsibility for assessing employment status to the organisations employing individuals.

The rules would have applied to contractors working for medium and large organisations in the private sector and were due to come into effect on 6 April this year. Due to the disruption caused by the outbreak of the coronavirus, the decision was taken in March to delay the introduction until 6 April 2021.

An amendment to the Finance Bill, brought by a cross-party group of MPs, was designed to delay the IR35 changes until 2023, but was defeated by 317 votes to 254.

The move to introduce new IR35 rules to the private sector has proved highly controversial, amid claims that the regulations are too complex and that HMRC’s online tool Check Employment Status for Tax (CEST), used to determine whether they apply, is flawed.

Internet link: Parliament website.

The Federation of Small Businesses (FSB) has found that the UK’s late payment crisis has worsened during the coronavirus (COVID-19) lockdown.

62% of small businesses have been subject to late or frozen payments during the COVID-19 pandemic, according to research carried out by the FSB. Just 10% of small firms have agreed changes to payment terms with their clients. In addition, 65% of small businesses that supply goods or services to other businesses have experienced being paid late or having payments frozen.

The FSB has called on policymakers to give the Small Business Commissioner additional powers to investigate and fine repeat late payment offenders.

Mike Cherry, National Chairman of the FSB, said:

‘Before the COVID-19 outbreak struck, many small firms were already under immense financial pressure because of late payments.

‘Cash is still very much king for small firms, and withholding it has pushed many to the brink at a time when they’re at their most vulnerable. Our endemic culture of treating small businesses as free credit lines against their will must be brought to an end.’

Internet link: FSB press release.

On 8 July, Chancellor Rishi Sunak announced a three-point plan to support jobs in the wake of the COVID-19 pandemic when he delivered a Summer Economic Update to Parliament.

Mr Sunak confirmed the Coronavirus Job Retention Scheme (CJRS) will end as planned this October. The Chancellor said furloughing had been the right measure to protect jobs through the first phase of the crisis. The second phase will see a three-point plan to create jobs, support people to find jobs and to protect jobs.

The CJRS will be followed by a Job Retention Bonus, which will be introduced to help firms keep furloughed workers in employment. This will see UK employers will receive a one-off payment of £1,000 for each furloughed employee who is still employed as of 31 January 2021. To qualify for the payment, employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021.

The Chancellor also launched a £2 billion Kickstart Scheme that will aim to create subsidised six-month work placements for young people aged 16-24 who are claiming Universal Credit. Funding available for each placement will cover 100% of the National Minimum Wage for 25 hours a week, plus the associated employer national insurance contributions (NICs) and employer minimum automatic enrolment contributions. Employers will be able to top this wage up.

In order to support the UK’s tourism and hospitality industry, the Chancellor announced a cut in the rate of VAT from 20% to 5% for the sector. This applies to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, as well as supplies of accommodation and admission to attractions, including theme parks and zoos, across the UK.

Additionally, the Eat Out to Help Out scheme will entitle every diner to a 50% discount of up to £10 per head on their meal at any participating, eligible food service establishment from Monday to Wednesday. Participating establishments will be fully reimbursed for the 50% discount.

Mr Sunak said: ‘Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire. To create jobs in every part of our country. To give young people a better start. To give people everywhere the opportunity of a fresh start.’

Internet link: GOV.UK publications

Today is another step towards reopening our office in Vermont House. Below are the McGinty Demack Office Details related to this reopening.
Since around the 9th March, some of our staff started to relocate and work from home. This ensured we were ready by the time the Government instituted lockdown measures on 23rd March.

Opening Times

Today, Monday 22nd June we are beginning a gradual return back to the office. This will be phased. So, initially we will open all day on Monday, Wednesday and Friday each week. There will be limited staff on site which will increase the times when books and records can be collected and dropped off. The majority of staff will remain working remotely in line with Governments advice.

Access

McGinty Demack Office Details also include making the office Covid-19 secure following our full risk assessment. To do this we have installed a door entry system to manage access into the building. Inside there is hand sanitising equipment and disinfectant wipes which are available to prevent the virus spread. If our initial steps remain successful and in line with the Government and industry guidance we will extend to include full weekly opening with more staff beginning to return to the office.

Like everyone else, we are all hoping to be able to make changes to relax the controls in place, so that we can return to a normal working environment. As we do, we will continue to update you through website posts and on social media.
As always we will do the upmost to support our clients during this period. So if you need any help with the services we provide please do not hesitate to contact us.

Thank you for your cooperation.

Further to our recent Covid 19 support update we are issuing further Furlough Scheme New Rules information below:

On Friday evening six updated guidance notes were issued. For the new version of the Coronavirus Job Retention Scheme “CJRS” (Furloughed Workers). The Furlough Scheme New Rules are summarised below

Summary

• The first point to note is that any employee not furloughed for three weeks prior to the 1^st July will not be eligible for the new version of CJRS. The qualifying three weeks can be from any time between 1st March to 30th June
• We are used to claims being made up to 14 days in advance of pay day. Under the new CJRS the first claim for July can be made on 1^st July. This means you cannot make an advance claim in June for a July pay period. If you run a weekly or perhaps fortnightly pay period that falls in the first week of July, the business will need to cover the wage liability until the grant is received given the 6 day turnaround for payment.
• Under the Furlough Scheme New Rules, employees not previously furloughed cannot be placed on furlough leave and a claim made under the new CJRS, the cutoff date was 10^th The exception to this rule is employees coming back from parental leave, subject to them being on the company payroll at 19^thMarch 2020
• Claims from July are limited to a maximum number of employees per claim equal to the maximum employees submitted on a previous claim period.

This provision has come out of nowhere and no fuss has been made about it, but, is probably the most important.

• The final day for making a June CJRS claim is 31^st July 2020
• No NIC or pension can be claimed from August.
• The qualifying gross salary amount stays the same as we have previously been calculating, for most employees this will be based on their February 2020 payslip, average of 12 months’ pay or same period in 2019
• Claims from 1^st July will need to be made in the same monthly period. The claims should match with the payroll submission made to HMRC.

You can’t claim from 1^st July to 15^th August say, one claim up to 31^st July will need to be made and then 1^st August to 31^st August.

From the 1^st July the same rules still apply for employees not being able to carry out any work or promotion of the business whilst on furlough leave.

New Calculation – Flexi Furlough Gross Pay

From 1^st July employees can be bought back from furloughed leave for any number of hours. This can be in any working pattern to suit the business under the Furlough Scheme New Rules. For hours not worked, the employee can remain on furlough pay for those hours and the business can still make a CJRS claim.

Calculation of follows:

Gross monthly salary      £4,000, 80% or capped at £2,500

Normal weekly hours     37.5 (calculated on last pay period prior to 19^th March)

Monthly hours                  37.5 / 7 calendar days, multiply by calendar days in the month 31 = 166.07

Rounded up (always) 167 hours

Employee works 50% of normal hours – 83.5 paid at employee’s full pay = £4,000 x 50% = £2,000

Furlough pay = £2,500 x 83.5 then divided by total hours (167) = £1,250

Gross employee pay for the period = £3,250

Claim for CJRS = £1,250

New Calculation under the Furlough Scheme New Rules– Flexi Furlough Employer’s National Insurance

If the employment allowance of £4,000 has not yet been fully utiltised, this will need to be used up first before being able to claim any Employers NIC under the CJRS.

If the allowance has been utiltised, the following calculation applies:

NIC Monthly Threshold  £732

Total monthly hours       167 per gross pay workings

Furloughed hours            83.5 per gross pay workings

CJRS threshold                   £732 x 83.5 hours then divided by total hours (167) = £366

Furlough Gross Pay          £1,250

CJRS claim for NIC            £1,250 – £366 then multiplied by 13.8% = £121.99

New Calculation – Flexi Furlough Employer’s Pension

Under the Furlough Scheme New Rules ,we must use the lower level of qualifying earnings “LLQE” regardless of the pension scheme the business uses for their auto-enrolment scheme.

LLQE threshold                 £520

Total monthly hours       167 per gross pay workings

Furloughed hours            83.5 per gross pay workings

CJRS threshold                   £520 x 83.5 hours then divided by total hours (167) = £260

Furlough Gross Pay          £1,250

CJRS claim for NIC            £1,250 – £260 multiplied by 3% = £29.70

If you are on weekly pay, the above threshold amounts (£732 and £520) will need to divided first, by the calendar days in the month and then multiplied by the 7.

Fortnightly pay, the above threshold amounts (£732 and £520) will need to divided first, by the calendar days in the month and then multiplied by the 14.

Four weekly pay, the above threshold amounts (£732 and £520) will need to divided first, by the calendar days in the month and then multiplied by the 28. 

Phased Employer Contribution

Assuming the hours and amounts remain the same in the worked examples above:

July 2020                              HMRC will reimburse £1,250, £121.99 and £29.70 = £1,401.69

August 2020                        HMRC will reimburse £1,250

September 2020               HMRC will reimburse £1,093.75, employer tops up £156.25 to £1,250

No reimbursement for employer’s NIC or Pension

October 2020                     HMRC will reimburse £937.50, employer tops up £312.50 to £1,250

No reimbursement for employer’s NIC or Pension

If you have any questions about the Furlough Scheme New Rules, please do get in touch with the team. We are all here and happy to help.