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March 30, 2020 By Andrew Gilpin Leave a Comment

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.

November 24, 2020 By Des Ingham Leave a Comment

New Financial Support Package Unveiled For Businesses

As news comes through of very positive trial results for the Oxford vaccine, there has been more good news for Northern Ireland businesses as a new financial support package has been unveiled by Stormont, which has pledged over £200 million in support of the business community.

£95m Voucher Scheme For High Street

Financial Support Package For Northern Ireland

Also households in Northern Ireland will share in a £95 million voucher scheme which they will be able to spend on the high street in a bid to energise our towns and cities. This will come in the form of a pre-paid card for spending on the high street.

The Localised Restrictions Support Scheme will also be extended, this is intended to help non-essential retail, leisure and entertainment firms which will have to shut from Friday under a new two-week lockdown.

Other measures in the package, as detailed on the Belfast Telegraph website, include:

£20m to extend the 12 month rate holiday to the manufacturing sector.
£10.6m for 1,000 wet pubs facing additional financial hardship
£5m to top-up the tourism and hospitality scheme
£4.1m for bed and breakfasts which previously missed out on business support because they pay domestic rates and
£3m for local businesses grow their online sales

Longer Term Support On Business Rates

And Finance Minister Conor Murphy is quoted in the same article, saying:

“In addition to this £213m for business and recognising Covid will continue to be with us for the months to come, the Executive has also agreed to hold £150m centrally for longer-term support on business rates.

“I hope to be able to provide an update on this in the very near future.”

And also in the article Aodhan Connolly, director of the NI Retail Consortium, said: “The £95m that will be given to households to spend on the high street is particularly welcome as it creates a virtuous circle of spending that will support retailers in the leaner months of January and February as well as being of huge benefit to those households whose budgets are already squeezed. This will make a tangible difference to the high street, to livelihoods and too lives.”

Hospitality Firms & Entrepreneurs Crying Out For Help

And Angela McGowan, CBI Northern Ireland director, added:

“NI hospitality firms and entrepreneurs have been crying out for extra help for some time. Targeted support that helps both households and firms in the lead up to Christmas will go part-way to cushioning the blow of what’s been a very difficult year.

“Fast delivery is going to be as critical as the financial support itself.

“Let’s not forget many of these companies have had little or no income for at least nine months. The Executive now needs to engage swiftly with NI business, allocate these as well as outstanding Covid funds, and deliver a recovery plan that enables companies to protect jobs and livelihoods.”

Let us all hope that a corner is slowly being turned and businesses can get back to what they do best. The upcoming vaccine, and these financial support packages will, fingers crossed, be a bridge to better times ahead here in Northern Ireland.

Meanwhile for any accountancy help or advice please give our offices a call on 028 3752 2909 where our friendly team will be able to assist you.

November 22, 2020 By Des Ingham Leave a Comment

Calls From Businesses For A Brexit Transition Extension

The chief executive of Manufacturing Northern Ireland, Stephen Kelly, has told MP`s that most businesses in the region will not be ready for the mandatory border checks that look like coming into play on January 1st 2021, and has asked for an extension to the transition period.

Northern Ireland Protocol Will Involve Border Checks

As things stand the Northern Ireland protocol will involve border checks down the Irish sea at the beginning of next year, whether a deal is thrashed out in the meantime or not. Kelly believes a bit of give and take on the part of both the EU and the UK will be required in order for there to be progress and for the new system, whatever it may eventually be, to work.

An article in The Guardian says that Kelly told the Brexit Select Committe that: “Selling a lasagne at an Asda in Strabane that might make its way to Donegal is not going to pollute the entire single market,” so therefore he called for pragmatism to be used on both sides.

“The EU need to make it work,” he said but they needed to get businesses to “make it stick”.

“We are more than a pawn in the game and say that’s a tug of war and we’re the rope and that rope is sadly being stretched,” he warned.

Depressing Lack Of Progress In Talks

There does not appear to be any great progress in the talks between the EU and the UK so far, with time running out fast. In the same Guardian article as above the European commission vice-president Valdis Dombrovskis is downbeat and believes there is substantial work to do, he is also quoted saying: “I will not start putting specific deadlines: this week, next week. We have seen many deadlines come and go but there’s one deadline which we’ll not be able to move – 1 January,”

And a senior EU diplomat is quoted, saying: “I don’t have the impression that there is much progress,” the diplomat said. “It is time to say: we must now come up with contingency measures, 1 January is getting close. We need a safety net. Of course this sends out a political signal. But we have a business community that we want to tell in good time what to do. ”

Concerning Times For The Business Community

These are very concerning times for the business community in Northern Ireland and it is to be hoped that some deal will be sorted out at the eleventh hour and also that both sides show some pragmatism when it comes to trading between Northern Ireland and the other relevant parties.

November 17, 2020 By Des Ingham Leave a Comment

Hopes Of Growth Next Year As Economy Shrinks By Over 10% In 2020

There are hopes that will the economy will grow back at a steady pace next year after a reduction of over 10% this year claim business advisers EY Ireland.

Strong Labour Market & Large Public Sector Holding Up Economy

They believe that the strong labour market here in Northern Ireland allied to a large public sector would help the economy up from further shrinkage and there could be an economic rebound of around 6% growth in 2021. But one fly in the ointment could be Brexit and what sort of trade agreement will be thrashed out.

Speaking to the Belfast Telegraph, Professor Neil Gibson, chief economist for EY Ireland, said: “The region is heavily dependent on consumer sectors and has a concentration of industrial sectors which have been strongly impacted by Covid-19, namely heavy machinery and transport equipment. However, NI’s favour for large public sector organisations, so often cited as a weakness, has provided stable and secure employment for many.”

The Flexibility & Adaptability Of NI Businesses

On the fact that unemployment levels had remained fairly stable after spiking at 60,000 a few months after the pandemic, Professor Gibson said: “This partly reflects the effectiveness of the furlough scheme but is also an endorsement of the flexibility and adaptability of NI businesses and workers, a commonly cited positive amongst investors to NI.”

And on a future trade agreement between the European Union and the UK he said: “Despite the UK having already left the EU, much remains unclear regarding NI’s unique position, making it very hard for businesses to effectively prepare.”

Michael Hall, managing partner for EY in NI, is also quoted in the Belfast Telegraph, saying:

“Digital technology is unlocking considerable productivity gains across a wide range of firms.

“There is a concern that in a region heavily dominated by very small firms, there may be a lack of resources to make this investment.

“However, in an increasingly broad range of sectors, technology is lowering the cost of entry, removing the cost associated with peripherality and driving competition. Brexit will require exporters to have better data systems in place and it is becoming clearer that digital progress for firms will be a requirement, not an option.”

Glimmers Of Hope On The Horizon

It is certainly a difficult time right now for the vast majority of businesses in Northern Ireland but there are certainly glimmers of hope on the horizon, one of course being the vaccines for Covid-19 that are due to be introduced in the next few months. If they are successful then we could be in for a very much better year in 2021. Meanwhile if you need any help and advice, you know where we are, call our team on 028 3752 2909.

November 16, 2020 By Des Ingham Leave a Comment

The Northern Ireland Protocol To Add Further Bureaucracy For Businesses To Negotiate

It looks as if the new procedures post Brexit as regards to customs will lead to further levels of bureaucracy and more tax payments in order to keep within European Union Law.

Dual VAT Regime To Come Into Force

The new system is likely to require businesses in Northern Ireland to enter a complicated dual-VAT regime, which means they will have to collect the sales tax on behalf of both the UK Treasury and European Union tax authorities, which seems to be grossly unfair. This new protocol will mean that UK authorities will apply EU customs rules to goods entering Northern Ireland.

A Downing Street spokewoman was asked by inews if she could confirm these new arrangements and she said that:

“The Northern Ireland protocol recognises that Northern Ireland is, and will remain, part of the UK’s VAT system and the UK single market. The UK Government has consistently made clear its focus on implementing the VAT requirements of the Protocol in a way that avoids disruption for traders in Northern Ireland.

Maintaining Alignment With The EU VAT Rule For Goods

“Northern Ireland will maintain alignment with the EU VAT rules for goods, including on goods moving to, from and within Northern Ireland, but HMRC will continue to be responsible for the operation of VAT and collection of the revenues in Northern Ireland.”

Speaking on this issue, also in inews, Alex Altmann, a partner at tax and advisory firm Blick Rothenberg claimed:

“We now know how these special rules will work in practice from next year and it is madness for business,” Mr Altmann added. “Northern Irish businesses will be required to operate a dual VAT and customs system.

“Sales to Ireland must follow the EU VAT and Customs rules and might require a Northern Irish business to collect EU VAT, which is then collected by HMRC. Sales from Northern Ireland to the rest of the UK are treated as exports, but might still require charging UK VAT. How to report these transactions are not clear at this stage.

Extremely Complicated Dual Reporting System

“The Northern Irish business community has been hit hard by the economic impact of the coronavirus pandemic. Now they are facing the incredible difficult task to operate this extremely complicated dual reporting system from January next year.”

This is certainly not great news for a huge number of businesses in Northern Ireland. If you require any help or advice on these new regulations that will shortly come into force, or you need help with any other accountancy related matter, get in touch with WHR Accountants by calling us on 028 3752 2909.

November 10, 2020 By Des Ingham Leave a Comment

Vaccine Offers Real Hope At Last

Well we think this is the news we have all been waiting for! A vaccine for Covid-19 has been developed by pharmaceutical companies Pfizer and BioNTech and is in fact one of 11 vaccines that are currently in the final stages of testing.

This Vaccine Could Be A Game-Changer

The reason why this looks like it could well be a game-changer is that early results have shown that it could prevent more than 90% of people from getting the coronavirus. The companies are now going to apply for emergency approval to begin using this vaccine and it is even believed a limited amount of people could well be able to have the vaccine before the end of the year.

So although this year and indeed Christmas could well prove challenging for the general public and all businesses, fingers crossed the vaccine could start getting rolled out to the general population sometime early next year.

Good News For The Economy

This is the first piece of good news we have had for the economy for a long, long time. We should not get carried away just yet but it gives businesses in Northern Ireland the motivation to hang on in there until the new year where things might just begin to return to some form of normality if this vaccine proves to be effective in the fight against Covid-19.

Follow The Existing Rules As This Is Not Over Yet

It is vital that people still stay safe in the meantime and follow the rules in regard to wearing masks and keeping a distance. Health secretary Matt Hancock said this on BBC Breakfast, copied from the BBC News website:

“We still appeal this morning for people’s patience, firstly to follow existing rules, because this is still a deadly disease and this is not over yet.

“Even once we start to roll it out, we still need to look after ourselves, look after our community by following the rules and being careful to stop the spread of transmission.

“The NHS is ready, we’re prepared, I’ve put in the extra £150m today, the GPs are ready, we’re working with the pharmacists, the hospitals are going to play a very important role,” he said.

Asked how many people would need to be vaccinated before life can return to normal, he said: “Well the answer to that is we just don’t know.

“So the trials can tell you if a vaccine is clinically safe and if it’s effective at protecting an individual from the disease. What we can’t know, until we’ve vaccinated a significant proportion of the population, is how much it stops the transmission of the disease.”

It is nice to be able to write about some positive news for once, we need to stay cautious of course, but it is certainly something to hang on to and make us feel more buoyant about the medium and long term future.

November 9, 2020 By Des Ingham Leave a Comment

Latest Survey For Northern Ireland Shows The Economy In A State Of Stagnation

These are worrying times for the business community in Northern Ireland and this is borne out by a recent survey by the Ulster Bank which shows business output stagnating in the month of October with no real prospect of any growth on the horizon. With orders for businesses falling and employees getting laid off the future looks uncertain at best.

Significant Declines In Employment Levels

Manufacturing, services and retail firms all reported significant declines in employment levels, while the construction sector posted a modest drop in headcount. And economic data shows that the economy in Northern Ireland shrank by 4.5% in the first quarter of the year compared to the previous year.

Ulster Bank chief economist Richard Ramsey is quoted on a BBC News website article as saying:

“What little momentum there was has been lost during the start of the fourth quarter, with output growth stagnating in October,” he said.

“With new orders posting their third successive decline in October and restrictions to remain in place for at least the first half of November, the prospect of a pick-up in growth anytime soon looks slim.

“Meanwhile Northern Ireland’s largest export market, the Republic of Ireland, posted its second successive month of contraction.

“Subdued demand from the Republic is contributing to the continued marked decline in local firms’ export orders.

“The resurgence of Covid-19 and the reintroduction of lockdowns across Europe is expected to see economies contract over the course of the fourth quarter,” said Mr Ramsey.

“Northern Ireland is not expected to be any different with the economy set for an annual decline of around 15% for 2020.

“The longer the restrictions remain in place the deeper the contraction will be.

“The extension of the furlough period until the end of March 2021 will provide some much needed certainty for businesses in an abnormally uncertain world.”

Restrictions On Business Trade Have Had A Huge Effect On The Economic Climate

It seems that Northern Ireland has been hit particularly badly by the pandemic, the economy was already showing signs of decline before it hit our shores, once it did restrictions on business trade have had a huge effect on the economic climate.

We have been helping businesses finding the funding they require, and any grants they may be eligible for, to help them in this difficult time, and we have also helped businesses formulate new business plans. If you require any help with your business get in touch with our team on 028 3752 2909.