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Job Retention Scheme – Update

Dear Payroll Client

We are trying to continue to run our payroll service as best possible in the current situation, with regards to the new changes to employees pay in relation to the job retention scheme we will need you to confirm the following to ensure that we process the correct pay figures to HMRC:-

  • Do you want us to reduce your employees Salaries to 80% or maintain the 100% payment and the employer pay 20%?
  • If you do want us to reduce the salary to 80% when is this to commence?

We have set out below an update from HMRC on the Job Retention scheme to explain the claim process and help you with any further questions you may have.

Claim for wage costs through the Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. We expect the scheme to be up and running by the end of April. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).

Employers can use a portal to claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period.

The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.

Who can claim

  • Any UK organisation with employees can apply, including:
  • Businesses
  • Charities
  • Recruitment agencies (agency workers paid through PAYE)
  • Public authorities
  • You must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.
  • Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme.

Employees you can claim for

Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including:

  • Full-time employees
  • Part-time employees
  • Employees on agency contracts
  • Employees on flexible or zero-hour contracts

The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.

To be eligible for the subsidy, when on furlough, an employee can not undertake work for or on behalf of the organisation. This includes providing services or generating revenue. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

This scheme is only for employees on agency contracts who are not working.

If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.

Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.

You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.

If your employee is on unpaid leave

  • Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.

If your employee is on Statutory Sick Pay

  • Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this.
  • Employees who are shielding in line with public health guidance can be placed on furlough.

If your employee has more than one job

  • If your employee has more than one employer they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.

If your employee does volunteer work or training

  • A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.
  • However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

If your employee is on Maternity Leave, contractual adoption pay, paternity pay or shared parental pay

  • Individuals who are on or plan to take Maternity Leave must take at least 2 weeks off work (4 weeks if they work in a factory or workshop) immediately following the birth of their baby. This is a health and safety requirement. In practice, most women start their Maternity Leave before they give birth.
  • If your employee is eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply, and they are entitled to claim up to 39 weeks of statutory pay or allowance.
  • Employees who qualify for SMP, will still be eligible for 90% of their average weekly earnings in the first 6 weeks, followed by 33 weeks of pay paid at 90% of their average weekly earnings or the statutory flat rate (whichever is lower). The statutory flat rate is currently £148.68 a week, rising to £151.20 a week from April 2020.
  • If you offer enhanced (earnings related) contractual pay to women on Maternity Leave, this is included as wage costs that you can claim through the scheme.
  • The same principles apply where your employee qualifies for contractual adoption, paternity or shared parental pay.

Work out what you can claim

  • Employers need to make a claim for wage costs through this scheme.
  • You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
  • At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.
  • We will issue more guidance on how employers should calculate their claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme becomes live.

Full time and part time employees

  • For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.

Employees whose pay varies

  • If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:
  • The same month’s earning from the previous year
  • Average monthly earnings from the 2019-20 tax year
  • If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
  • If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.
  • Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.

Employer National Insurance and Pension Contributions

  • All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.
  • You can claim a grant from HMRC to cover wages for a furloughed employee, equal to the lower of 80% of an employee’s regular salary or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.
  • You can choose to provide top-up salary in addition to the grant. Employer National Insurance Contributions and automatic enrolment contribution on any additional top-up salary will not be funded through this scheme. Nor will any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income above the lower limit of qualifying earnings (which is £512 per month until 5th April and will be £520 per month from 6th April 2020 onwards).

National Living Wage/National Minimum Wage

  • Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.
  • Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.
  • However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

What you’ll need to make a claim

Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

  • To claim, you will need:
  • Your ePAYE reference number
  • The number of employees being furloughed
  • The claim period (start and end date)
  • Amount claimed (per the minimum length of furloughing of 3 weeks)
  • Your bank account number and sort code
  • Your contact name
  • Your phone number

You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.

Claim

  • You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1 March if applicable.

What to do after you’ve claimed

  • Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.
  • You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.
  • You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted. You can choose to top up the employee’s salary, but you do not have to.

When the government ends the scheme

  • When the government ends the scheme, you must make a decision, depending on your circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).

Employees that have been furloughed

  • Employees that have been furloughed have the same rights as they did previously. That includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.
  • Once the scheme has been closed by the government, HMRC will continue to process remaining claims before terminating the scheme.

Income tax and Employee National Insurance

  • Wages of furloughed employees will be subject to Income Tax and National Insurance as usual. Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt-out or to cease saving into a workplace pension scheme.
  • Employers will be liable to pay Employer National Insurance contributions on wages paid, as well as automatic enrolment contributions on qualifying earnings unless an employee has opted out or has ceased saving into a workplace pension scheme.

Tax Treatment of the Coronavirus Job Retention Grant

  • Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

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Northern Ireland Venues In Urgent Plea For A Reopening Date

Venues in Northern Ireland have called for the Northern Ireland Executive to take decisive action as soon as possible to schedule a reopening date for them without capacity reductions. The rest of the United Kingdom and Ireland have already fully reopened their venues, but this has not been the case here. In a joint statement the venues have made it clear that many of them are at breaking point and a change of policy cannot come soon enough.

The Executive Will Meet Up Tomorrow

The Executive are due to meet tomorrow to discuss the measures that are in place to restrict the infection rate of Covid-19, and they are certainly under pressure to remove the 1 metre social distancing rule which is causing venues up and down the country so much angst.

Call For Removal Of One Metre Social Distancing Rule

Here is the statement from NI venues as copied from an article on the Belfast Live website:

“Music, conference and theatrical venues, along with their staff, performers and supply chain, are collectively calling for a removal of the one metre social distance requirement in Northern Ireland at the scheduled September 23 meeting of the NI Executive.

“The one metre requirement means that the majority of venues have been unable to reopen, and those that have opened are operating on the basis of a dramatically reduced all-seated capacity which is not financially viable.

“Northern Ireland is the only part of the UK and Ireland in which indoor venues are not currently open without capacity reductions, or have a full re-opening date scheduled.

Events Being Cancelled On A Daily Basis

“Events are being cancelled on a daily basis as uncertainty continues. Top international acts such as Genesis, Van Morrison, Laura Marling, JC Stewart and many others have either cancelled or rescheduled indoor performances in Belfast this month alone due to social distancing requirements, at a host of hundreds of thousands of pounds to the local economy.

“Customers in their thousands from Northern Ireland are rushing to purchase tickets for scheduled indoor events in Republic of Ireland from October 22, on account of the certainty the government reopening announcement has provided. Many others are travelling to England and Scotland to attend indoor events there.

“It has been demonstrated elsewhere in the UK that indoor venues can and have reopened to full capacities safely. These include The O2 Arena, Royal Albert Hall and The Palladium in London, as well as the entire West End.

“The NI venue sector is committed to employing bespoke mitigations and safety procedures to ensure audience safety at all times.

“Many venues have been totally unable to trade for almost 18 months, with highly skilled staff unable to work. With the furlough scheme ending in late September, a multitude of businesses are under threat of closure, with staff members at imminent risk of unemployment as winter approaches.

“With other areas of UK and Ireland either fully open, or scheduled to fully open, Northern Ireland is at risk of reputational damage, with a consensus developing that, culturally speaking, it is closed for business.

“Numerous incentive schemes have been developed to improve town and city business, such as Eat Out To Help Out and the High Street Voucher Scheme.

“The music, conference and theatre venue sector has availed of no such incentive scheme and indeed remains effectively closed since March of 2020.

“This sector urgently requires a full re-opening date, and a removal of social distancing requirements in these venue spaces.”

It will be interesting what action the Northern Ireland Executive decide to take tomorrow, the entertainment sector will certainly be waiting with bated breath.

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Details Of High Street Voucher Scheme To Be Announced Today

Today is the day that details of the long awaited High Street Voucher Scheme will be announced, including the start and end dates that it will run. The scheme will mean that everyone in Northern Ireland who are 18 or over will be eligible to apply to receive a £100 pre-paid card that will be able to be spent on the high streets up and down the country.

Important Everyone Applies For The Vouchers

It is important that everyone who is eligible applies and gets these in their hands, as it will give a massive boost to all the fantastic small, independent businesses on our high streets. People will be able to apply for the vouchers on the NI Direct website but it is believed there will also be a phone line available for those who, for any reason, are struggling to apply online. It will also be possible for a limited number of people to get someone else to apply for them, no doubt details of this will also be released today.

A Lot Of Excitement Out There

Northern Ireland`s economy minister Gordon Lyons, speaking to BBC News, said that:

“I know there’s a lot of excitement out there, people are looking forward to spending their cards,

“I’m looking forward to them getting out there as well so we can give that real boost to our economy in the short term and also, hopefully, change behaviours and bring people back into the high street in the long term as well.”

“In the meantime, I would encourage people to think about how they can spend their prepaid cards in order to help boost the local economy and help those businesses that have struggled for so long,”

Should They Be Automatically Issued To Pensioners

There have been calls for pensioners, who are less likely to be internet savvy and less likely to be able to access an online portal, to get the high street vouchers automatically issued to them, rather than have to apply for them through this official website, but this doesn`t look like happening. So it is very important for anyone who has elderly relatives or friends to check on them and ensure that they apply for the vouchers, the more people receive them the better for all concerned.

The vouchers will not be able to be spent at online stores, but must be used at independent high street shops, which is a great idea as it will get people back down on to the high street once more, and give a great boost to lots of local economies across Northern Ireland.

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Momentum In Northern Ireland Economy Begins To Slow

Recent reports show that, although the economy here in Northern Ireland continues to grow, the pace of that growth has now slowed. The Purchasing Managers Index (PMI) report produced by the Ulster Bank found that although output has increased in the manufacturing and services sectors, there has been a fall in the retail and construction sectors.

Business Activity Grew At A Slower Rate In August

Richard Ramsey, Chief Economist of Ulster Bank in Northern Ireland, is quoted on the Today UK News website as saying:

“Most of the UK regions saw business activity grow at a slower rate in August, and Northern Ireland was no exception,

“Last month marked local firms’ slowest rates of growth in output, orders and employment in five months. But a two-speed recovery was on show in August at a sector level.

“Manufacturing and services firms saw some loss of momentum in August but still chalked up reasonable rates of growth in output and orders while staffing levels continued to rise at a solid pace. But retailers joined construction in contraction territory, with falling sales and orders. Hiring within retail though continued last month.”

“Elsewhere, the survey revealed again an all-too familiar story, with inflationary pressures and lengthening supplier delivery times. Within the UK, Northern Ireland continues to report the steepest rises in input costs, with local firms raising the prices of their goods and services at faster rates than any other region.

“Price pressures linked to raw materials, fuel, freight, wages and Brexit continued to be cited by survey respondents. Inflationary price pressures in August eased only marginally relative to their recent record highs, although services firms raised their prices at the fastest pace in 13 years.

Firms Will Continue To Grapple With Inflationary Challenges Etc

And on the challenges ahead Mr Ramsey said: “In the meantime, firms will continue to grapple with inflationary challenges, supply chain disruption, skills shortages and adapting to Brexit. But as we saw last week, increased taxation in 2022 will further add to businesses’ mounting cost burden.”

There are certainly huge ongoing challenges that businesses up and down the country will have to negotiate, but we have to face the future with firm optimism that better times are ahead as we move out of the pandemic with the help of the successful vaccine programme. It is good to see that unemployment is reducing as firms take on more staff due to an increase in demand for their products and services. Let us hope that this trend continues in future months.

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Relaxations To Covid Restrictions Introduced On Friday

There will be a further relaxation to the Covid restrictions in Northern Ireland, with the Executive agreeing that these will come into effect from this Friday. These relaxations will include allowing 15 people from 4 separate households to meet indoors, this was previously restricted to 10 people from 3 households.

Some Of The Restrictions That Have Been Removed

The rule that people have to sit at tables and wait to be served in outdoor or indoor settings will also be removed and there will be great joy among many that dancing will be once again permitted at weddings and civil partnership receptions.

When outdoors social distancing is no longer a legal requirement, but if you are indoors either in a work setting or at a restaurant or cafe etc, you should stay 1 metre apart from other people when at all possible. These changes bring Northern Ireland more into line with the policies currently in England. The restrictions will be lifted from 5pm this Friday 11th September, with the Executive meeting again this Thursday to discuss a possible further lifting of Covid measures in the near future.

Would Like To Have Seen More Progress Around Social Distancing

Speaking to the Belfast Telegraph, First Minister Paul Givan was delighted with the changes but hoped they could be further extended as soon as possible. He said:

“Today is progress.

“We have taken on board the health situation and the wider societal, community and economic information as well. Ultimately, I want to see more progress.

“I would have like to have seen progress around social distancing, moving that from regulation into guidance, but that is something that will now form the discussions on Thursday.

“Other jurisdictions, England and Wales and Scotland, they are lifting their restrictions or have already lifted them.

“The Republic of Ireland has now set October 22 as their final date for all restrictions to go and we are moving to that position in Northern Ireland where ultimately we can have these issues dealt with through good advice, rather than having the law and enforcement.”

Business Owners At Their Wits End

In the same article Chief executive of Hospitality Ulster Colin Neill was quoted but he was not so sure that much progress had been made, saying:

“Business owners are at their wit’s end and their anxiety is sky high. This really is an unnecessary place to be in. Is it too much to ask that we try and work our way out of this?”

“We have been pressing Executive Ministers to engage with our sector, and work in partnership with us to ensure that urgency is injected into the recovery phase,” he said.

“They might not want to hear it, but we are now on the cusp of the Christmas planning period for the sector and we do not need another disaster on our hands.

“We need a reasonable timeframe set out to guide us on how we can make the most of a vital part of the year for the whole industry.”

It is probably understandable for Mr Neil to take this stance as the hospitality sector has been hit very badly by the restrictions and any further delay could be fatal for some of the businesses in this area.

Finally we would like to take this opportunity to ask that if you have any concerns over your taxes, or any general accountancy issues, you get in touch with our team by calling us on 028 3752 2909.

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Survey Shows Reluctance From Many Business People To Attend Face-To-Face Events

A recent survey has shown that there are quite a large proportion of business people who still feel uncomfortable in attending physical events where they are face-to-face with other business people, but instead they are looking to carry on communications through the virtual channels that there are available online.

Many Business People Feeling Uncomfortable Attending Events

In fact 1 in 4 business people in Northern Ireland who responded to the survey said that they couldn`t see themselves attending a live event again, whilst there were only 30% who actually said they felt comfortable when attending such an event. This is despite the fact that 77% of the population of Northern Ireland are now fully vaccinated, with 86% having had a at least one dose of a Covid-19 vaccine.

The survey found that events such as committee meetings and Annual General Meetings were particularly off the agenda for many business people. This attitude is likely to prevail for some time we assume, as peoples habits have now changed to such an extent that they feel very reticent to be in close contact with a large number of people at any one time.

A Shift Has Taken Place When It Comes To Events

The survey was run by Chartered Accountants Ireland and director at this industry body, Brendan O’Hora, is quoted in the Irish News as saying:

“Our findings show that at this stage of the pandemic, even with a large proportion of adults covered by the vaccination programme in both jurisdictions on this island, a shift has taken place when it comes to events, be they CPD courses, AGMs, conferences or social gatherings.

“We see a strong appetite to attend larger scale conferences, awards ceremonies, dinners, and social events in person, because while virtual events offered attendees greater time efficiency and flexibility in the last 18 months, for three-in-four respondents it came at the expense of networking opportunities.”

The Personal Touch Can Certainly Improve Business Relations

There are advantages for business people to physically attend certain events because there is no getting away from the fact that the personal touch can engender more trust and can definitely improve business relations in many circumstances. However people need to feel safe when attending any such event so it is imperative that all safety precautions are put in place to reduce the chances of anyone passing on the Covid-19 virus to any of the other attendees.

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Employment Numbers Go Past Pre-Pandemic Levels In Northern Ireland

There is welcome news out today that employment numbers hit a record high in July in Northern Ireland, with an estimated 762,000 people on a payroll. This is 1.3% higher than before Covid-19 came to darken our shores, and a huge 3.1% higher than July of last year, which is quite the turnaround. These statistics are from The Northern Ireland Statistics and Research Agency and are a very good indicator of how the economy is performing and of course the demand for staff across the country.

Includes Workers On The Furlough Scheme

These figures include workers who are being paid through the furlough scheme. There are just short of 45,000 workers benefiting from the furlough scheme at present, the scheme is slowly winding down and will end completely in October. How much this will affect the overall payroll figures is unclear right now, but there are signs that the economic climate is warming up nicely.

Just this week there has been good news from two companies, with bus manufacturer Wrightbus, who are based in Ballymena, looking to take on 300 more employees after gaining new orders. Also Workrise, which is a US based firm, is looking to create over 150 technology jobs in Belfast. All good news.

Coronavirus Cases

Meanwhile there have been 7 more coronavirus related deaths in Northern Ireland over the past 24 hours with 1,564 new cases of the virus reported over the same period. These cases show that we are not out of the woods yet, but we are maybe staggering towards a clearing at the very least.

The data from the last few weeks has shown more than anything how the vaccine has been so effective in preventing serious illness for anyone who has been double jabbed. It is not impossible to still get very ill after two vaccines (and there is a chance you can still transmit the virus) but the possibility is drastically reduced, which is wonderful news.

This means that the business community can finally start planning with some certitude, as the chances of another heavy lockdown are very remote indeed, although we can`t say completely non-existent due to the chance of the virus mutating so that it evades the vaccines, however unlikely that may be.

The future is certainly beginning to look a lot brighter. Finally if you require any help from our accountancy team please get in touch with our offices ASAP on 028 3752 2909.