| FURLOUGH 4.0 |
| Our partners at www.PayrollForNannies.co.uk provide payroll advice for parents and nannies and have provided this content. For more advice and support please get in touch with them. Rishi Sunak, the Chancellor of the Exchequer, announced a new raft of support measures connected to the continuing COVID-19 pandemic. This seems to be a response to the growing lock-down and complaints that the government was not doing enough to assist businesses and their employees. The Job Support Scheme When originally announced, the JSS – which will come into effect on 1 November – saw employers paying a third of their employees’ wages for hours not worked and required employees to be working 33% of their normal hours. This announcement reduces the employer contribution to those unworked hours to just 5%, and reduces the minimum hours requirements to 20%, so those working just one day a week will be eligible. Employers will pay their staff normally for hours they work. Then, they’ll be paid two-thirds of their pay for the remaining hours (with the employer covering 5% and the government paying 95%). So people will still see lower take-home pay – we have prepared the table below. Normal Hours JSS Hours Take home percentage of contracted hours 20% 80% 74% 25% 75% 75% 30% 70% 76% 33% 67% 77% 35% 65% 78% 40% 60% 80% 45% 55% 81% 50% 50% 83% 55% 45% 85% 60% 40% 86% 65% 35% 88% 70% 30% 90% 75% 25% 92% 80% 20% 93% 85% 15% 95% 90% 10% 97% 95% 5% 98% The maximum payment will be £1541.75 per month. The cap is set above median earnings for employees in August at a reference salary of £3,125 per month. The employer will be reimbursed in arrears for the government contribution. The relevant employee(s) must not be on a redundancy notice. The JSS is intended to protect viable jobs over next six months after the furlough scheme ends at the end of the month. All small and medium-sized firms with a UK PAYE scheme and UK bank account are eligible – but large firms are only eligible if their turnover has fallen in the pandemic and can document this. The JSS is open to firms who have not used the earlier CJRS scheme. That means that if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer only £44. Employers will continue to be entitled to receive the £1,000 Job Retention Bonus: https://src-time.co.uk/the-job-retention-bonus-explained/ Self-Employment Income Support Scheme As part of the Winter Economy Plan, Rishi Sunak had announced an extension to the Self Employment Income Support Scheme (SEISS). There was to be a lump sum to cover November to January next year, worth 20 per cent of average monthly profits, capped at £1,875. There was also to be a second grant for February to April 2021of an unspecified value. Today’s announcement sets the amount of profits covered by the two forthcoming self-employed grants from 20 per cent to 40 per cent, meaning the maximum grant will increase from £1,875 to £3,750. Business Support Grants The Chancellor has also announced approved additional funding to support cash grants of up to £2,100 per month primarily for businesses in the hospitality, accommodation and leisure sector who may be adversely impacted by the restrictions in high-alert level areas. These grants will be available retrospectively for areas who have already been subject to restrictions and come on top of higher levels of additional business support for Local Authorities moving into Tier 3. Local Authorities (LAs) will be able to support businesses in high-alert level areas which are not legally closed, but which are severely impacted by the restrictions on socialising. The funding LAs will receive will be based on the number of hospitalities, hotel, B&B, and leisure businesses in their area. LAs will receive a funding amount that will be the equivalent of:For properties with a rateable value of £15,000 or under, grants of £934 per month.For properties with a rateable value of between £15,000-£51,000, grants of £1,400 per month.For properties with a rateable value of £51,000, grants of £2,100 per month.This is equivalent to 70% of the grant amounts given to legally closed businesses (worth up to £3,000/month). Local Authorities will also receive a 5% top up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, but which do not neatly fit into these categories. It will be up to Local Authorities to determine which businesses are eligible for grant funding in their local areas, and what precise funding to allocate to each business – the above levels are an approximate guide. Businesses in Very High alert level areas will qualify for greater support whether closed (up to £3,000/month) or open. In the latter case support is being provided through business support packages provided to Local Authorities as they move into the alert level. SRC-Time are one of the South East’s leading accountancy firms in advising the self-employed and partnerships in all aspects of their tax affairs and we are able to assist in any issue raised above. |
Category: payroll
Things to consider when employing a non UK nanny
Our partners at www.PayrollForNannies.co.uk provide payroll advice for parents and nannies and have provided this content. For more advice and support please get in touch with them.
It is important to make sure you take proper steps to make sure nanny can be employed legally in the UK. If you do not you could face a £20,000 penalty or worst case scenario a 2 year prison sentence!
You must take a photocopy for identity check of a passport, birth certificate or national ID card. We would always recommend you see an original version before taking a copy.
An EEA (European Economic Area), employers must check their right to work documents, take a photocopy, and make sure they are from the EEA country.
For a more detailed guide:
Small Employer Relief
Our partners at www.PayrollForNannies.co.uk provide payroll advice for parents and nannies and have provided this content. For more advice and support please get in touch with them.
In order to qualify for small employer relief, your liability for national insurance for the last complete tax year needs to be £45,000 or less.
An employer hiring a nanny will often meet the criteria of small employer relief.
This means that for statutory payments such as maternity pay, paternity pay, shared parental pay and adoption pay, you can reclaim 100% of these payments plus an additional 3% to help towards the cost of your employers NI.
It is important that this is noted in the payroll software, so if you ever have statutory payments, they will get deducted off your tax and national insurance liability each quarter.
Employers with a liability of more than £45,000.00 in last complete tax year can only claim back 92% of the above statutory payments.
Benefits in Kind
Our partners at www.PayrollForNannies.co.uk provide payroll advice for parents and nannies and have provided this content. For more advice and support please get in touch with them.
Benefits in kind are benefits which both Employers and Employees can receive from their employment, which are not included in their salary.
As an employee, you pay tax on company benefits. The amount of tax you pay, depends on what kind of benefits you get and their value and it is the employer who deducts the amounts from the employee’s gross earnings. However, some company benefits, are tax free.
Most common benefits in Kind for nannies are listed below:
Private Car Mileage / Fuel Allowance
– Is not a taxable benefit if the employee is using the car during working hours. If they are using the car to get to and from work and outside their normal working hours, then this would be classed as a benefit in kind. If nanny is using their own car whilst they are at work, up to 0.45p per mile is tax free. Anything above this amount would be classed as a benefit and kind and will need to be reported to HMRC.
Private Medical Insurance
Subscriptions and Professional Fees
- Such as paying for nanny’s Ofsted registration, DBS check, Nanny’s Public Liability Insurance
Living Accommodation
If you are providing living accommodation where the nanny has separate living quarters to the employer, this is classed as a benefit in kind, along with any bills and furniture you provide
Beneficial loans – Interest free or low interest
- Any low –interest or interest free loans above the value of £10,000 are a Benefit in Kind.
Flights – which do not include family holidays if you are taking the nanny with you
Any declarations for Benefits in Kind need to be submitted to HMRC via for P11(D) by 6th July each year. As an employer, there will be Class 1A National Insurance of 13.8% on the taxable benefit.
For more help and advice on this or any other payroll related matter please contact our recommended partners Payroll for Nannies https://www.payrollfornannies.co.uk/
THE JOB RETENTION BONUS EXPLAINED
Our partners at www.PayrollForNannies.co.uk provide payroll advice for parents and nannies and have provided this content. For more advice and support please get in touch with them.
In our review of Rishi Sunak’s Winter Economy Plan https://src-time.co.uk/government-announces-further-covid-19-support/, we referred to the Job Retention Bonus (JRB) which was announced earlier this year to sit alongside the Coronavirus Job Retention Scheme (CJRS), although it does not actually form part of it. The Chancellor has decided that when the new Job Support Scheme (JSS) commences on 1 November, it will be possible to claim both it and the JRB.
Background
The Chancellor of the Exchequer announced the scheme in July 2020 as an incentive for employers to retain staff in respect of whom they were receiving CJRS payments, after the CJRS scheme had ended.
The scheme comprises a one-off payment to employers of £1,000 in respect of every eligible employee for whom the employer has made a valid claim under the CJRS and who remains continuously employed through to 31 January 2021.
The JRB payment will be subject to corporation tax or income tax, so the business must include the whole amount as income when calculating its taxable profits.
Employers will be able to claim the JRB through gov.uk after they have filed their RTI returns for January. Payments will be made to employers from February 2021 by direct bank transfer
Qualifying employers
All types of employers are eligible for the scheme including recruitment agencies and umbrella companies, as well as those private households operating a PAYE scheme in respect of domestic staff. The employer must:
- have a UK bank account
- have complied with their obligations to pay and file PAYE accurately and on time under the RTI reporting system for all employees to the end of January 2021; and
- be up to date with payroll obligations and have addressed all requests from HMRC to provide missing employee data in respect of historic CJRS claims.
Employee eligibility
Each employee must have been:
- furloughed and the subject of an eligible CJRS claim;
- continuously employed by the relevant employer from the time of the employer’s most recent CJRS claim for them, to 31 January 2021; and
- paid a total of at least £1,560 for the period 1 November 2020 to 31 January 2021. The employee does not have to be paid £520 in each month but must have received some earnings in each of the three calendar months that have been paid and reported to HMRC via RTI.
Claims may be made for employees who are office holders, company directors and agency workers, including those employed by umbrella companies. These criteria must be met regardless of the frequency of the employee’s pay periods, their hours worked or rate of pay.
Employees who have returned from statutory parental leave or who are military reservists returning to work after 10 June 2020, for whom a CJRS claim has been made, all qualify provided the other eligibility criteria are met, as do employees who are on fixed term contracts.
Note that the employee must not be serving a contractual or statutory notice period, that started before 1 February 2021.
Holiday Allowance
A full time nanny is entitled to 28 days holiday (5.6 weeks) which includes bank holidays. Employers are entitled to choose all the dates of holiday nanny should take, but in practice nanny normally chooses 2 weeks while the employer chooses the other 2 weeks.
In your contract with nanny, make sure you ask for notice for nanny’s proposed holiday this will allow you to find alternative childcare. Some employers ask for at least 4 weeks notice.
We would recommend you keep note of holiday taken paid or unpaid, just in case nanny leaves part way through the year and has over taken on holiday. This way any unpaid or over paid holiday can be paid/deducted in her final payslip.
If nanny works more than 5 days a week, their holiday entitlement is capped at 28 days. It is not a problem if you agree more day’s holiday with nanny – this could be a condition of her working for over a stated amount of time.
If nanny is part time, she is entitled to annual leave (28 days including bank holidays), but pro-rated. So if nanny works 2 days a week, her holiday allowance is calculated:
2 days a week x 5.6 annual holiday allowance = 11.20 days holiday.
You must not round the holiday allowance down to 11, but can round it up to 11.5 days.
If nanny works different hours each week, you calculate her holiday pay by averaging her last 12 weeks worked hours then multiply it by 5.6, this then gives you her holiday entitlement in hours for the year and when she has a day’s holiday or was due to work on a public holiday, whatever hours she was scheduled to work that day are then deducted from her overall annual entitlement.
For more advice and support on this or any other payroll related matter please contact our recommended partners Payroll for Nannies https://www.payrollfornannies.co.uk/
Job Retention Bonus
A one-off payment of £1,000 will be made to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme at the end of October 2020 and the end of January 2021. Payments will be made from February 2021.
This bonus will be available to any employer who has furloughed an employee, even if just for the minimum three week period.
For more advice and support about Coronavirus and how it might affect employment or any other pay related issues please get in touch.
NEW CALCULATION METHOD FOR FOR CJRS AFTER 1 AUGUST
From 1 August 2020, the level of the CJRS grant paid to employers will be reduced each month. To be eligible for the grant employers must pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed.
The timetable for changes to the scheme is set out below. Wage caps are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours:
- There are no changes to grant levels in June.
- For June and July, the government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee is on furlough. Employers will have to pay employees for the hours they work.
- For August, the government 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.
- For September, the government will pay 70% of wages 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 to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
| July | August | September | October | |
| Government contribution: employer NICs and pension contributions | Yes | No | No | No |
| Government contribution: wages | 80% up to £2,500 | 80% up to £2,500 | 70% up to £2,187.50 | 60% up to £1,875 |
| Employer contribution: employer NICs and pension contributions | No | Yes | Yes | Yes |
| Employer contribution: wages | – | – | 10% up to £312.50 | 20% up to £625 |
| Employee receives | 80% up to £2,500 per month | 80% up to £2,500 per month | 80% up to £2,500 per month | 80% up to £2,500 per month |
- For 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.
Employers will continue to able to choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked.
COVID-19 PLANNING – THE SECOND WAVE
Many medical experts are predicting a second wave of the COVID-19 Pandemic, which may arrive in the autumn as temperatures fall.
Although we do not want to try to predict the future, we examine a few possibilities and suggest some planning ideas.
Government Support resumes
Since the software and legislation is in place for both CJRS and SEISS, it would be relatively straightforward for the government to reactivate the schemes, perhaps with a smaller percentage of state support or in the case of CJRS, with an enhanced contribution from employers.
It may be argued that this would prove ruinously expensive for the country, but government borrowing can be scheduled over decades, as were war debts from WW1 and WW2. Of course, the government may raise National Insurance (NI) and tax rates to recoup some of this expenditure. There have even been rumours of a Net Wealth Tax being introduced.
The continuation of bank loans guaranteed by the government such as Business Bounce Back Loans and Coronavirus Business Interruption Loan Scheme could be another tool in the hands of the Treasury.
Government Support is not resumed
In this case there will be considerable issues for those businesses which are dependent on government support which may need to carefully consider their future.
Parental Bereavement Leave
As of 6th of April 2020, the government have introduced a new entitlement called Parental Bereavement Leave and Pay.
Under this leave/pay, parents who lose a child with a day-one employment right can take 2 weeks off work. These 2 weeks are at a statutory rate of £151.20 from April 2020.
Parental Bereavement pay is for adoptive parents, parents of a child born to surrogate, parents who are fostering to adopt and individuals caring for a child in their home, continuously for a period of 4 weeks ending with the date of death.
Parents will be able to take the leave as either a single block of 2 weeks, or as 2 separate blocks of one week each taken at different times across the first year after their child’s death. This means they can match their leave to the times they need it most, which could be in the early days or over the first anniversary.