UK Payroll News

Employee National Insurance

6th January 2024 – Changes to Employee National Insurance

In his Autumn Statement on 22 November 2023 the Chancellor of the Exchequer announced that there would be a decrease in the rate of Employee National Insurance from 12% to 10%, effective from 6 January 2024.

Coronavirus (COVID-19) – September Update

1st September 2021 – Coronavirus Job Retention Scheme (CJRS)

As from 1 September, the government will pay 60% of wages/salary up to a cap of £1,875.00 for the hours the employee is on furlough.

Employers will pay employers NICs and pension contributions and top up the employees’ wages/salary to ensure that they receive 80% of their wages/salary to a cap of £2,500.00, for the time they are furloughed.

Please note that the furlough scheme ends 30 September 2021.

Coronavirus (COVID-19) – August Update

1st August 2021 – Coronavirus Job Retention Scheme (CJRS)

Coronavirus Job Retention Scheme August and September
As from 1 August, the government has made changes to the furlough job retention scheme. They will pay 60% of wages up to a cap of £1,875.00 for the hours an employee is on furlough and employers will pay 20% of wages up to £625.00 making a total of 80%, along with ER NICs and pension contributions for the hours the employee is on furlough.

This will also be the same for September and then the scheme will cease.

Coronavirus (COVID-19) – March Update

1st March 2021 – Coronavirus Job Retention Scheme (CJRS)

Coronavirus Job Retention Scheme Extended to September

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.

However, 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.

Then in August and September, this will 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.

Coronavirus (COVID-19) – February Update

1st February 2021 – Coronavirus Job Retention Scheme (CJRS)

For February 2021, the government will continue to pay 80% of wages up to a cap of £2,500.00 for the hours the employee is on furlough. Employers will continue to pay ER NICs and pension contributions. The government has extended the scheme until the 30 April 2021

Coronavirus (COVID-19) – January Update

1st January 2021 – Coronavirus Job Retention Scheme (CJRS)

For January 2021, the government will continue to pay 80% of wages up to a cap of £2,500.00 for the hours the employee is on furlough.
Employers will continue to pay ER NICs and pension contributions.
The government will review the scheme in January 2021.

Coronavirus (COVID-19) – December Update

1st December 2020 – Coronavirus Job Retention Scheme (CJRS)

For December 2020, the government will continue to pay 80% of wages up to a cap of £2,500.00 for the hours the employee is on furlough. Employers will continue to pay ER NICs and pension contributions. The government will review the scheme in January 2021

Coronavirus (COVID-19) – November Update

4th November 2020 – Coronavirus Job Retention Scheme (CJRS) EXTENDED

Due to the government reinstigating a lock down from midnight 4 November for 4 weeks the CJR scheme has been extended and 80% of current salaries up to a capped maximum of £2,500.00 will be paid for the employee’s on furlough during this period.

Businesses across the UK are being provided with additional financial support as part of the government’s plan for the next phase of its response to the coronavirus outbreak, the Prime Minister announced today (31 October).

Throughout the crisis the government’s priority has been to protect lives and livelihoods. Today the Prime Minister said the government’s Coronavirus Job Retention Scheme (CJRS) – also known as the Furlough scheme – will remain open until December, with employees receiving 80% of their current salary for hours not worked, up to a maximum of £2,500. Under the extended scheme, the cost for employers of retaining workers will be reduced compared to the current scheme, which ends today.

This means the extended furlough scheme is more generous for employers than it was in October.

1st November 2020 – Coronavirus Job Retention Scheme (CJRS)

A new Job Support Scheme will be introduced from 1 November to protect viable jobs in businesses who are facing lower demand over the winter months due to Coronavirus. This scheme will take over from the current Coronavirus Job Retention Scheme (CJRS) which closes on 31st October 2020.

Under the scheme, which will run for six months and help keep employees attached to the workforce, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand.

Employers will continue to pay the wages of staff for the hours they work – but for the hours not worked, the government and the employer will each pay one third of their equivalent salary.

This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can’t work.

In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.

JOB RETENTION BONUS

For those of you who were perhaps unaware of the Jobs Retention Bonus, the Government announced that employers will be entitled to claim a £1,000 one off taxable payment for each eligible employee that you furloughed and kept continuously employed until 31 January 2021. Please note that this bonus is only payable for staff who used the CJRS scheme.

The Job Retention Bonus scheme will be open for claims from 15th February 2021 and further guidance on how to access the online claim services is expected in January 2021.

Coronavirus (COVID-19) – October Update

1st October 2020 – Furlough update

As from 1 October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough.

Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.

The scheme close’s on the 31 October.

Coronavirus (COVID-19) – September Update

1st September 2020 – Furlough update

As from 1 September, the government will pay 70% of wages/salary up to a cap of £2,187.50 for the hours the employee is on furlough.

Employers will pay ER NICs and pension contributions and top up employees’ wages/salary to ensure they receive 80% of their wages/salary up to a cap of £2,500, for time they are furloughed

Coronavirus (COVID-19) – August Update

1st August 2020 – Furlough update

As from 1 August, the government has made changes to the furlough job retention scheme. They will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough.

Coronavirus (COVID-19) – July Update

1st July 2020 – Flexible Furloughing

From 1st July 2020 you will now have the flexibility to bring back previously furloughed employees to work part-time. The government will still pay 80% of wages for any of their normal hours they do not work up until the end of August. But you the employer will need to pay the hours they work for you.

You can decide the hours and shift patterns that your employees will work. This means that employees can work as much or as little as your business needs, with no minimum time that you can furlough staff for.

Changes to the Coronavirus Job Retention Scheme (CJRS)

The scheme will close to anyone who hasn’t been furloughed for 3 weeks by 30th June. If you intend to furlough an employee who hasn’t been furloughed before, you will need to agree that with them and start their period of furlough on or before 10th June. This is the last day on which someone who has never been furloughed before can start a period of furlough and qualify for the scheme. This ensures the minimum 3 week period is complete by 30th June.

You have until 31st July to make any furlough claims for any periods up until 30th June.

Making changes to over-claimed furlough claims

If you have made an error in a CJRS claim that means you have received too much money, you must pay this back to HMRC. HMRC have updated their system so you can tell them if you have over-claimed in a previous claim. When you apply you will be asked if you need to reduce the amount to take account of a previous error. Your new claim amount will be reduced to reflect this. If you have made an error and do not plan to submit further claims, HMRC are working on a process that will allow you to let them know.

The Coronavirus Statutory Sick Pay Rebate Scheme is now live on GOV.UK.

If you are an employer with less than 250 staff, you can now claim for coronavirus-related Statutory Sick Pay (SSP).

Holiday when on furlough

Workers continue to accrue holiday whilst on furlough and can take holiday without it disrupting the Coronavirus Job Retention Scheme (CJRS). Employers can require staff to take holiday if they give enough notice to the worker, which is double the length of the holiday. Holiday pay should reflect what they would have earned if they had been at work and working. Where this calculated rate is above the furlough pay, the employer must pay the difference.

Support for staff and businesses affected by Coronavirus

The budget unveiled a £30 billion package to support the economy through the COVID-19 outbreak. SSP will now be available for eligible employees diagnosed with COVID-19 or for those who are unable to work because they are self-isolating. SSP will be payable from day one instead of day 4. The government will allow small and medium-sized businesses (less than 250 employees) to reclaim this SSP for up to 2 weeks. Employers should maintain records of staff absences, but employees will not need to provide a GP fit note. The government will work with employers over the coming months to set up the repayment plan as soon as possible.

Coronavirus (COVID-19) – Job Retention Scheme

HMRC have set up a Job Retention Scheme, it’s for UK employers who need support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. You will need to declare which employees this would affect and these would be declared as “furloughed workers”.

There will be an online HMRC portal to upload the employees information and at the moment there is no information on this portal yet. It appears HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. They are urgently working to set up a system for reimbursement.

At the moment it’s not been confirmed when the portal will be open and when HMRC will be able reimburse the employer. We have seen on several websites the scheme can be back-dated to 01.03.20, but we are not sure that is 100% correct. There is a short-term aid as part of the ‘Coronavirus Business Interruption Loan Scheme’ which they advise you will need to talk to your bank about.

You can find our more information from the UK Gov website at this link:

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-paying-tax-time-to-pay-service

As soon as we know anything else we will let you know.

New employers have an instant start date for auto-enrolment duties

Any new employers that set up their business from October 2017 will not have a staging date, so their AE duties start as soon as they take on their first member of staff. Employers with instant duties will also need to complete a declaration of compliance within 5 months of their duties start date.

Automatic enrolment changes

On 6th April 2018, all employers will be required to increase the minimum contribution from the current level of 2% of qualifying earnings to 5%. Employers must contribute at least 2%.

No Employment Allowance for single director companies

From April 2016, single director companies will not be able to claim the Employment Allowance as it goes contrary to the policy of encouraging employers to employ more employees when these companies will not be doing so. This is on going for subsequent tax years.

PILON’s = Payments in lieu of notice

From 6th April 2018, all payments in lieu of notice, whether contractual or non-contractual – will be fully subject to a charge of tax and class 1 NICs.
This rule change is intended to end the confusion regarding the treatment of PILON’s that existed before 6th April 2018.
The change introduces the concept of ‘post-employment notice pay’ which represents the amount of basic pay the employee will not receive because their employment was terminated without full or proper notice given.

GDPR

On 25th May 2018, the General Data Protection Regulation (GDPR) will be implemented in the UK. It will apply to personal data processed within the EU and to organisations outside the EU that supply goods and services to individuals within the EU. It is no longer adequate to say you comply with the regulations, you will be required to demonstrate it and appoint a data protection officer within your organisation, no matter how small. Transferring information by email will no longer be acceptable, unless it is encrypted.

Payrolling Benefits in Kind

PAYE legislation is changing. If you intend to or already payroll benefits and expenses you must register them with HMRC before 6th April 2018 using their new online Payroll Benefits in Kind (PBIK) service for 2018-2019 tax year. If you use this service and tax your employees’ benefits and expenses through payroll you won’t have to report them on a P11D. This will be on going for subsequent tax years i.e. you need to register before the start of the tax year.

Student Loan Deductions

From 6th April 2016 there will be an additional loan deduction – the original Student Loan will be known as Plan Type 1 with an Earnings Threshold of £17495.

The new Loan type will be Plan Type 2 with an Earnings Threshold of £21,000. P45 will not be changed but a revised Starter Checklist will ask the questions on this – if employee doesn’t know which type they are paying then employers must use Plan Type 1 until HMRC inform otherwise. Student Loan % = 9.

Dispensations

All dispensations cease on the 5th April 2016 and are replaced by Expenses exemption except for Benefits which are payrolled and detailed in the in the Payrolling Benefits in Kind section. Employers need to decide what does not need to go on a P11D as a business expense and ensure they have an expense policy.

Payrolling Benefits in Kind 2016/17

Optional for employers to decide i f t hey wish to payroll t heir Benefits in Kind (BIK) for the 2016/17 Tax Year. All BIK’s can be payrolled apart from Living Accommodation, Credit Cards & Vouchers, and Beneficial Loans. Employers must have registered with HMRC before 5th April 2016 in order to do this for the 2016/17 Tax Year.

Any current dispensation given by HMRC, to payroll BIK will cease on the 5th April and in order to continue employers will need to register with HMRC before the 5th April 2016. Once registered, employers can choose which benefits to payroll and which employees to exclude as they could be Long Term sick, Mat leave or on sabbatical with no pay or employee does not wish to have benefit payrolled.

Please inform your payroll contact if you decide to do this before pay period 01 of 2016/17 commences. This will mean no P11D or P46 Car for such employees in respect of 2016/17 onwards.

Child Care Vouchers

From early 2017 (date to be announced) no-one can enter into a CCV scheme. There will be a new Tax Free Childcare scheme which will not impact on employers. Where for every 80p the parents put into an account the Government will put in 20p.

National Living Wage

April 2016 April 2017 Adult rate (25 and over) £7.20 TBA

Payroll Rate Changes from 6th April 2015

Tax freezes announced in Queen’s speech

Tax and National Insurance will be frozen for 5 years and the personal allowance raised to £12,500 by a range of new laws announced in the Queen’s speech. It also announced that free childcare will be doubled to 30 hours a week.

Advisory Fuel Rates

The advisory fuel rates changed on 1st June 2015. The rates are used to repay employees tax-free for fuel used on business mileage. They only apply where employers reimburse employees for business travel in their company cars or require them to repay the cost of fuel used for private travel. Click here for the new rates

Change to Employment Allowance

From April 2015 individuals who employ personal carers are now eligible to claim the Employment Allowance

No penalties for short filing delays

Employers will not incur penalties for delays of up to three days in filing RTI information from March HMRC has announced.

New Marriage Allowance

From 6th April 2015, if you are married or in a civil partnership you can now transfer £1,060 of unused personal allowance from one spouse or civil partner to the other. It will save the couple tax of £212 for 2015-16. The marriage allowance can only be claimed where one person has unused personal allowance and the other partner is taxed at no more than 20%. The claim must be done online through the GOV.UK website by the person transferring their allowance.

Penalty notices for late RTI reporting now in force

Filing penalties came into force on 6 October 2014 for businesses with schemes of 50 or more employees. Those affected will receive a letter outlining the penalties incurred for October to December quarter 2014. HMRC issues a penalty when the Full Payment Submission (FPS) is late, it has not received the expected number of FPSs or when it has not received an Employer Payment Summary if no employees have been paid in a tax month. The largest employers can face charges of up to £400 a month. Penalties will also start in March 2015 for those with 49 or less staff where fines are limited to £200 for between 10 and 49 staff and £100 for 9 or less. Each penalty on the notice will carry an identification number and details of the procedure to follow if they want to appeal.

P35 declaration no longer mandatory

HMRC have said that the tax year end P35 questions are no longer required for the 2014-15 tax year end procedure. The decision may be too late for some software companies for this tax year, in which case you will still need to provide the P35 declaration as usual

Abolition of employers’ NI for under 21’s

From 6th April 2015, employers will not have to pay Class 1 National Insurance contributions for employees under 21 years of age. This is restricted to earnings up to the Upper Earnings Limit which is expected to be £813 per week for the 2015-16 tax year.

New rights to time off for ante-natal appointments

From 1st October 2014 an employee who is the partner of a pregnant woman is entitled to take time off during working hours so they can accompany the woman when she attends an ante-natal care appointment which is made on advice of a medical practitioner, midwife or nurse. This is limited to no more than two appointments, with the maximum time off during working hours for each appointment being no more than 6.5 hours.

Holiday pay ruling

Where an employee’s salary includes regular sales commission, that commission must be included in holiday pay according to the latest ruling by the European Court of Justice. This concerns the four weeks statutory minimum holiday, not the 5.6 weeks granted in the UK. The court has held that workers must not be discouraged from taking annual leave therefore holiday calculations should include an allowance for commission to prevent workers from suffering any disadvantage. Employers should consider the implications of this outcome and undertake a review of their contracts and policies to ensure it is clear how holiday pay is calculated.

Flexible Working Regulations

The new provisions came into force on 30th June 2014. They extend the right to make request for flexible working to any employee who has been employed for 26 weeks, not just to certain parents and carers as is currently the case. More than a quarter of British workers are likely to make a flexible working request.

Interest on late HMRC payments

HMRC now charges interest on any late PAYE and Construction Industry Scheme payments. For employers that pay monthly, the first payment of the 2014-15 tax year was due 19th May or 22nd May if paying electronically. From the date the payment is due to the date it is paid in full, HMRC will charge interest daily. To avoid an interest charge employers should pay by the due date the amounts reported on their Full Payment Submission (FPS) less any deductions reported on an Employer Payment Submission (EPS) if applicable.

Maximum Penalty for illegally employing an immigrant doubles

From 14th May, the Immigration Act 2014 states that where an employer is found to have employed workers who are subject to immigration control but do not have the right to work in the UK, the maximum penalty has now increased from £10,000 to £20,000 per illegally employed worker. Employers must make sure they are up to date with right-to-work checks and legal requirements or face serious consequences including criminal prosecution.

P46 obsolete

From 6 April 2014, HMRC have replaced the P46 starter forms on its internet site with starter checklists to help employers gather the information needed to submit a full payment submission.

£2000 Employment Allowance

The new Employment Allowance is available from 6 April 2014. If you are eligible you can reduce your employer Class 1 NICs by up to £2000 each tax year. You can claim your allowance through your payroll software or HMRC’s Basic PAYE Tools. Reduce your employer Class 1 NICs payment due by an equal amount of employment allowance, but no more than £2000 per year.

Abolition of SSP Percentage Threshold Scheme

The current percentage threshold scheme for recovering Statutory Sick Pay will be abolished from April 2014. As SSP is often claimed in arrears, you will not be able to report SSP recovered once the SSP field is removed form the EPS from 6th April 2014. However employers will still be able to make late claims for sickness periods up to 5th April 2014 via the clerical process for RTI years.

National Minimum Wage penalties increased

Rogue employers who do not pay their workers the National Minimum Wage will face an increased penalty of up to £20,000 as part of government’s crackdown on employers who break the law. Currently the maximum penalty is £5,000.

Age Exception certificates ceased

HMRC have ceased issuing age exception cards for employees reaching state pension age. From now on, employers must obtain sight of an employee’s birth certificate or passport as evidence of date of birth. Both can be photocopied or scanned and kept on file as proof that employee’s NICs are no longer payable. If an employee is reluctant to provide a birth certificate, they can contact HMRC to obtain a letter confirming they have reached state pension age.

Cancelling new PAYE schemes

From October 2013, if HMRC have been contacted to set up a new PAYE scheme, but there has been no activity on the scheme, it will be automatically reviewed after 120 days to see if it can be cancelled. So if no RTI submissions have been made; no payments have been made to HMRC; there is no evidence of employees; there is no evidence that Class 1A NICs are due, then the PAYE scheme will be closed and a letter issued to the business address.

RTI ‘relaxation’ for small employers

HMRC have announced that they will extend the relaxation of the reporting requirement for RTI that payments to employees should be reported on or before each pay day. Extended until 5th April 2016, employers with fewer than 9 employees may send information to HMRC no later than the end of the tax month (5th).