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Changes to Furlough Pay from 1 July 2021

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Don’t forget the changes to Furlough Pay from 1 July 2021, when the level of grant will be reduced and you will be asked to contribute towards the cost of your furloughed employees’ wages. To be eligible for the grant you must continue to pay your furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough. Wage caps are proportional to the hours not worked.

JULY 2021
GOVERNMENT PAYS FOR HOURS NOT WORKED 70% UP TO £2187.50
EMPLOYER PAYS FOR ERS NIC AND PENSION YES
EMPLOYER PAYS FOR HOURS NOT WORKED 10% UP TO £312.50
FOR HOURS NOT WORKED EMPLOYEE RECEIVES 80% UP TO £2500

AUGUST 2021
GOVERNMENT PAYS FOR HOURS NOT WORKED 60% UP TO £1875
EMPLOYER PAYS FOR ERS NIC AND PENSION YES
EMPLOYER PAYS FOR HOURS NOT WORKED 20% UP TO £625
FOR HOURS NOT WORKED EMPLOYEE RECEIVES 80% UP TO £2500

SEPTEMBER 2021
GOVERNMENT PAYS FOR HOURS NOT WORKED 60% UP TO £1875
EMPLOYER PAYS FOR ERS NIC AND PENSION YES
EMPLOYER PAYS FOR HOURS NOT WORKED 20% UP TO £625
FOR HOURS NOT WORKED EMPLOYEE RECEIVES 80% UP TO £2500

You can continue to choose to top up your employees’ wages above the 80% total and £2,500 cap for the hours not worked at your own expense.
Click here for more details This furlough scheme is then due to close on 30th September 2021.

Incorrect Tax Codes…is yours correct?

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Research of 54,000 UK employees has found that 36% had paid too much tax as a result of being given the wrong tax code in the previous 4 years. This has meant employees have lost out on an average of £204.00 each.

Shocking statistics from our perspective as payrollers are:

47% of employees never check their payslips
71% believe someone other than themselves is responsible for making sure they pay the correct tax (typically HMRC or their employer)
32% did not know that having more then one job affects their tax.

The complexities of the UK tax system make it hard for ordinary tax payers to check their own tax code. Most employees have no idea they even need to, assuming HMRC automatically issue the correct tax code and that their employer would know if it was wrong. From our experience, we can tell you this is not the case. Where employees are unaware they could have a problem, their employers will also be unaware a problem exists.

To avoid your employees being on an incorrect tax code, we have a few tips:

* Ensure new starters complete the employment declaration correctly. Is this their first job since April? Is this their only job now? Do they have another job also?
* Employers: ALWAYS tell your employees to check their payslips every pay period! If they don’t check, how will they know if their tax is correct?
* Employees: NEVER assume your employer would know what tax code you should be on and NEVER assume HMRC are always correct!
* Employees: HMRC will always issue you a breakdown of how they calculated your tax code. If it looks wrong, or you are unsure about it, please contact HMRC immediately to get it corrected soonest.

As an online agent for our clients, tax code notifications are issued by HMRC and downloaded direct into our payroll software. We are not given any explanations as to the reason for that tax code change, as that is personal to the employees only.

Check the current tax year’s tax bandings here.

Coronavirus Job Retention Scheme Extended to September

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The Coronavirus job Retention Scheme (CJRS) has been extended again from June until the end of September 2021.
The UK government will continue to pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month. The cap affects anyone on an annual salary of £37,500 or more.

From July 2021 CJRS grants will reduce to cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50. Employers will need to continue to pay their furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month. They also need to pay the associated Employer National Insurance contributions and pension contributions on subsidised furlough pay from their own funds.

In August and September, this will then reduce to 60% of employees’ usual wages up to a cap of £1,875. Employers will need to continue to pay their furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month. They also need to pay the associated Employer National Insurance contributions and pension contributions on subsidised furlough pay from their own funds.

When claiming for periods from 1 May 2021 onwards, eligible employees must have been employed on 2 March 2021 and had a Real Time Information (RTI) submission to HMRC notifying a payment of earnings for that employee by their employer between 20 March 2020 and 2 March 2021. You can find out more about the CJRS on GOV.UK.

Employment Law Changes from April 2021

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The employment law changes from April 2021 that will affect your payroll are as follows:

Annual free pay allowance increasing from £12500 to £12570 meaning the standard tax code will be 1257L.
The 20% basic rate for tax banding increases from £37500 to £37700.

The National Insurance weekly earnings limit for employees is £184.00 and £170 for employers.
The National Insurance monthly earnings limit for employees is £797.00 and £737 for employers.

National Minimum Wage Rates:
Under 18 year olds increases from £4.55 to £4.62 per hour
18-20 year olds increases from £6.45 to £6.56 per hour
21-22 year olds increases from £8.20 to £8.36 per hour
23-24 year olds increases from £8.20 to £8.91 per hour
The National Living Wage from £8.72 (over 25s) to £8.91 (over 23s)

Statutory Rates:
Statutory Sick Pay increases to £96.35 per week
Statutory Maternity/Adoption/Paternity Pay increases to £151.97 per week

Coronavirus Job Retention Scheme Extended

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In light of the increased restrictions needed to curb the coronavirus pandemic, the government have extended the Coronavirus Job Retention scheme (CJRS) that was originally due to end 31st October 2020. CJRS has been extended to 31 March for all parts of the UK.

• From 1st November, the UK Government will pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month. The UK Government will review the policy in January. Employers must continue to pay all employers National Insurance and pension contributions. Employers can choose to top up their furloughed employees’ pay beyond the 80% but they are not required to do so.

• Employers and their employees do not need to have used the scheme before to claim for periods from 1 November. Go to GOV.UK for full eligibility criteria.
• HMRC intend to publish details of employers who use the scheme for claim periods from December, and employees will be able to find out if their employer has claimed for them under the scheme.
• There are now monthly deadlines for claims. Claims for period on or after 1st November must be submitted within 14 calendar days after the month they relate to, unless this falls on a weekend in which case the deadline is the next weekday. Claims for periods up to 31 October will not be accepted after 30 November.
• You can claim for employees who were on your payroll on 30th October 2020 and included in an RTI submission to HMRC between 20th March and 30th October 2020. If employees were on your payroll and included in an RTI submission on or before 23rd September and were made redundant or stopped working for you, they can also qualify for the scheme if you re-employ them.
• You must agree working hours with your employees you wish to furlough and agree any changes to their employment contact.
• You cannot claim for more employees than you have previously claimed for.
• The Job Retention Bonus will no longer be paid in February 2021 and an alternative retention incentive will be put in place at the appropriate time.
• The launch of the Job Support Scheme due to start 1st November has also been postponed.

For help with your furlough calculations please click here for the Job Retention Scheme Calculator.

Employers will need to keep the records that support the amount of CJRS grant they claim, in case HMRC need to check it. Employers and authorised agents can view, print or download copies of previously submitted claims by logging onto their CJRS service on GOV.UK.