HMRC has confirmed that, at present, it is still working on a process to enable claimants to amend their claims through the Coronavirus Job Retention Scheme (CJRS), should they make any errors.
The advice in the interim is not to make any changes to subsequent claims to account for any previous mistakes as this action could serve to delay payment, or even result in incorrect payments being made.
If HMRC does identify any errors, it will contact either the relevant business or the agent claiming on their behalf to rectify the claim where possible.
After successfully submitting claims through the CJRS, businesses can expect to receive the funds in their bank accounts within six working days if claims match records that HMRC hold for their PAYE scheme.
In order to ensure that claims are correct, it is recommended that the following steps are taken:
Claimants should read the guidance available prior to making an application. In order to access the guidance, they should go to GOV.UK and search for ‘Coronavirus Job Retention Scheme’ to find a step-by-step application guide and a calculator
* You should check that their employees are eligible
* You should check their calculations each time a claim is submitted, as details may have changed.
* Only one claim should be submitted per pay period – multiple claims cannot be submitted for overlapping periods.
* If there are any missing National Insurance numbers for employees, you should try to locate them to avoid delays to claims. Where employees do not yet have an NI number, you should contact HMRC in order to process their claims.
* Double check all of the information in the claim before you submit it, including your bank details.
* Remember that if you are claiming the employment allowance, this will already have reduced your Employer National Insurance liability, so don’t claim for it again.
Claiming for furlough payments – what you will need
The furlough payment recovery mechanism is to be launched sometime during the week commencing 20th April.
Employers must have a UK bank account and have enrolled for PAYE online. This process can take up to 10 days under normal working conditions.
Employers should discuss with their staff and make any changes to the employment contract by agreement.
To make the claim you will need:
* Your PAYE reference number
* The number of employees being furloughed
* Names and National Insurance numbers of the furloughed staff
* Payroll numbers for the furloughed staff
* UTR, Corporation Tax reference or Company Registration Number.
* The claim period (start and end date) minimum 3 consecutive week period)
* Amount claimed
* Bank account number and sort code
* Contact name and phone number
Claims can be backdated to 1st March where employees were already furloughed. Worker’s wages should be reduced to 80% of their salary within the payroll before they are paid. Any employees you place on furlough must be furloughed for a minimum period of 3 consecutive weeks. When they return to work they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.
Employment Law Changes from April 2020
There are quite a few employment law changes from April 2020 that will affect your payroll.
New pay rates from 6th April 2020:
The National Living wage for over 25 year olds increases to £8.72 per hour from £8.21.
The National Minimum Wage for 21 to 24 year olds increases to £8.20 per hour from £7.70.
The National Minimum Wage for 18 to 20 year olds increases to £6.45 per hour from £6.15.
The National Minimum Wage for under 18 year olds increases to £4.55 per hour from £4.35.
The weekly earnings threshold for National Insurance and Statutory payments increases from £118 to £120 per week.
Statutory Sick pay increases from £94.25 to £95.85 per week.
Statutory Maternity/Paternity/Bereavement/Adoption Pay increases from £148.68 to £151.20 per week.
The Employment Allowance increases from £3000 to £4000 per year but will no longer apply to large companies or groups whose total Class 1 NICs for 2019-20 is greater than £100,000. This allowance needs to be claimed each tax year and included in the first Employer Payment Summary submission.
Student loan annual earnings threshold have increased:
Plan 1 £19,390
Plan 2 £26,575
Post graduate £21,000
Class 1A employer NIC is now due on termination payments over £30,000.
Holiday Pay calculations: the reference period for calculating holiday pay increases from 12 to 52 weeks for variable pay workers.
Employers that engage ‘off-payroll’ workers will become responsible for determining their employment status any paying NICS for those who are deemed to be employees.
Voluntary overtime and holiday pay calculations
Employment law states that holiday pay should be equivalent to a normal week’s pay so as not to place employees at a financial detriment when taking a period of annual leave. For employees working fixed hours each week, this is a straightforward calculation. However, calculations are more complicated when employees work varying hours. In these situations, employers must calculate the overall average working time in the 12 weeks immediately prior to taking annual leave. If there is a week during this period where no work occurred, then the calculation must take into account an earlier week where work did take place. A recent landmark ruling means that now, voluntary overtime joins compulsory and non-guaranteed overtime to be included in holiday pay calculations when it is ‘sufficiently regular and settled’. Therefore it is recommended that employers review existing methods of recording overtime shifts and ensure payroll include these in calculations going forward. Employees who receive result-based commission are also entitled to have this include in their holiday pay calculations.
Compulsory overtime, which employers are contractually obliged to offer and employees are obliged to accept, has long been included in these calculations. The requirement to include non-guaranteed overtime, where employers have no obligation to offer, but cannot be refused by employees when it is, came in in 2014
It is important to note that aside from compulsory overtime, all other forms of overtime will only apply to the 4 weeks of annual leave provided by the EU Working Time Directive. This is not required for the additional 1.6 weeks that is provided as a minimum under UK law.
Universal credits affected by Pay Dates
When Universal Credits were introduced, replacing means-tested social security benefits and tax credits, we were told it would streamline the benefits system, tackle poverty amongst low income families, and reduce the scope for error and fraud. This benefit requires the use of employment earnings obtained from employers in real time via the RTI submissions sent to HMRC by the employers each pay period. Receiving information through RTI means a claimants’ universal credit can be amended based on changes to earnings rather than the claimant providing details of their income. However, we are finding that many employees’ universal credits can be affected by different pay dates submitted in the RTI submissions.
In a recent judicial review case heard at High Court brought on behalf of four single mothers, it was ruled that the DWP had been wrongly interpreting the UC regulations. The case challenged the rigid, automated assessment system in UC which meant the mothers lost hundreds of pounds each year and were subject to large variations in the UC awards because of the pay dates on which their paydays and UC ‘assessment periods’ happened to fall. The mothers all had monthly paydays that clashed with the dates of their monthly UC assessment periods, with the result that if they were paid early some months, because for example their pay day fell on a weekend or bank holiday, they were treated as receiving two monthly wages in one assessment period, which in turn dramatically reduced their UC award. This is a problem which has affected many working claimants. The rulings from this hearing means the DWP should adjust its calculation of UC awards when it is clear amounts received in an assessment period do not, in fact, reflect the earned income payable in respect of that period. In other words, wages are to be allocated to the month in which they were earned rather than to the assessment period in which they were received.
HMRC has recently issued guidance about the dates employers should report in FPS returns when the regular payment day falls on a non-banking day. With a nod to the impact of payroll on UC, HMRC state it is essential to use the correct payment date as it could impact on your employees’ financial situation, including benefits such as Universal Credit. Acknowledging the occasions when employees are paid on a different day to that agreed, such as when the regular pay date falls on a Saturday, Sunday or bank holiday, HMRC advises that a payment reporting easement applies. When payments are paid early for this reason then the date entered in the FPS submission should be the regular payment date.