Category: Payroll

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Minimum Wage Update 2022

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With costs going up across the board it is unsurprising that the national living wage is also being increased. However, for businesses, particularly small ones, this could have a dramatic effect on wage bills going forward.

From April 1st 2022, the minimum wage will be increasing from £8.91PH to £9.50PH. This is a 6.6% increase on salaries. There are also increases in the lower age brackets, please follow this link to find out full details – https://www.gov.uk/government/publications/minimum-wage-rates-for-2022 

We encourage you as a business to sit down and review what you are paying your staff, particularly if you have people close to the new minimum or if you are wanting to attract new team members. Keep in mind that £9.50PH is now an entry level salary and if you are wanting to attract high quality candidates you may want to pay them more than this. It is also sensible to look at what your competitors are offering in terms of salary. A good place to start is the supermarkets who are currently hiring at £11 PH.

Work out a plan of if and how you need to increase your team’s wages and then implement the changes by the 1st of April.

accountant with laptop

15 things you didn’t know an accountant could do

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When asked “What does an accountant do?” many people answer with accounts, tax or compliance work. While that’s true, what many don’t know, is that the good ones do so much more. The best accountants will become a part of your team; they will give you strategic advice to save money and boost revenue, they will help you work more efficiently, and they will not only help you plan for your future, but they will help you get there.

To better answer the question, “What does an accountant do?” here is a taster of what they offer to you and your business.

Things an accountant can do…

  1. Launch a start-up

You need to know that your idea will make money and may potentially need to convince investors of the same thing. An accountant can do that for you plus work out your start-up and operating costs and create credible revenue forecasts.

  1. Manage your cash flow

Getting a stable and consistent cash flow is every business owner’s dream. An accountant can make sure that you always have the money there to pay staff and suppliers, as well as cash reserves in case of an emergency.

  1. Help make you more tax-efficient

Everyone knows that an accountant can help you complete and submit your returns at the end of the tax year. What many don’t know is that they can also help you to lower your tax ethically as well as helping you deal with old tax debts and making sure your books are watertight if you’re audited.

  1. Manage your debt

What loan should you choose? Should you use spare cash to pay back loans or reinvest in the business? An accountant can help you develop a specific strategy to manage debt in a way that is best for your business.

  1. Chase unpaid invoices

An accountant takes the ‘chasing money’ headache away from you by setting up an automated invoice system. When a payment is due or overdue, this will send out automatic reminders to your clients until they pay. Some accountants will even call clients who are very overdue with payments.

  1. Improve your business strategy

Yes, your accountant can help you figure out where you want to go and what’s important. They will work with you to set realistic personal, professional, and financial goals, and then they will measure your progress to help you achieve them.

  1. Budgeting and forecasting

Working off a vague set of numbers can result in irreparable damage to a business. With an accountant, you can work to an exact budget where you know exactly what is coming in and going out, and how much money you have to reinvest, and all in real-time. As well as having the figures at your fingertips, you will also know your figures that you’re aiming for and how long you could last in a crisis.

  1. Writing and pitching loan applications

Applying for a loan is a tedious and difficult process, but not with an accountant. They can pull together your numbers to help you write a solid application, not to mention give you the forecasting figures that will win over any loan officer.

  1. Help you with recruitment and payroll

Should you hire a full-time employee or outsource? Will your bottom line benefit more from a salesperson or a technician? Can you afford to hire and train a new employee? All these questions are important and should be handled with confidence. An accountant can help you make the best choices for you and your business and make payroll easy.

  1. Set up your cloud accounting software

Accountants aren’t stuffy number crunchers who speak a different language, they are tech-savvy and future-driven. Using the best tools out there, good accountants can help you automate your business’s accounting so that you’re always on top of your finances wherever you are. As well as implementing this software in your business, they can also train you to use it confidently.

  1. Help your business run more efficiently

In addition to accounting software, accountants can also help you unlock the power of other applications so that you can start working smarter, not harder. They can help you increase productivity with your invoicing, payroll, customer relationship management, staff scheduling and time-recording etc, and integrate all these tools together to create an effortless workflow.

  1. Improve your inventory management

Many business owners don’t realise how much money is lost due to poor inventory management. What an accountant can do is help you identify the cost of holding inventory and how much revenue is lost, so you can start to place accurate (and cost-effective) orders.

  1. Help you plan for the future

Do you want to sell your business in the future? Do you have a succession plan? Do you want to retire early? All these questions need to be addressed and planned for early on in your business journey. As well as helping you develop a plan for the future, an accountant will keep this larger goal in mind and will help you stay on track.

  1. Listen and support you

A good accountant will become an essential part of your team. They will be your financial advisor for all aspects of your life and will be there to listen and support you whenever you need them (not just appear in your life at the end of the tax year).

  1. Give you peace of mind

Your business, your finances, and the welfare of you and your family are probably the three most important things in your life. An accountant can help ease this pressure, giving you the reassurance and confidence that everything is being done or is planned for. The result? Peace of mind and being able to sleep soundly.

Furlough

Furlough scheme extended to 30 September 2021

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The current version of the furlough scheme that started on 1 November 2020 was scheduled to end on 30 April 2021. In order to avoid a “cliff-edge” with resulting widespread redundancies the chancellor has announced a further extension of the scheme and also a phased reduction in support to employers. The CJRS furlough grant for May and June will remain at 80% of the employees’ usual pay for hours not working but it will then be limited to 70% for July and then 60% for August and September.

This phased reduction will operate in a similar way as in September and October 2020 with the employer being required to contribute the remaining 10% and then 20% of an employee’s regular pay so that they continue to receive 80% pay for furloughed hours.

In addition to the 10% and 20% contributions employers will continue to be responsible for paying employers national insurance and pension contributions on the full amount being paid to employees.

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What is the job retention scheme bonus?

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Employers will be able to claim a one-off payment of £1,000 for every employee they have previously received a grant for under the Coronavirus Job Retention Scheme (CJRS), and who remains continuously employed through to the end of January 2021.

To be eligible, the employee must have received earnings in November, December and January, and must have been paid an average of at least £520 per month, and a total of at least £1,560 across the three months.

As the employer, you will be able to claim the bonus after you have filed PAYE information for January 2021, and the bonus will be paid from February 2021. More detailed guidance, including how you can claim the bonus online, will be available by the end of September.

What you need to do now 

If you intend to claim the Job Retention Bonus you must:

  • ensure all your employee records are up to date
  • accurately report employees’ details and wages on the Full Payment Submission (FPS) through the Real Time Information (RTI) reporting system
  • make sure all of your CJRS claims have been accurately submitted and you have told HMRC about any changes needed (for example if you have received too much or too little).

Reminder of changes to CJRS

From 1 August 2020 CJRS continues to provide grants for furloughed employees but no longer funds employers’ National Insurance (NI) and pension contributions. You now have to make these payments from your own resources for all employees, whether furloughed or not. HMRC guidance has been updated to reflect these changes.

Making sure your data is right

It is important that you provide the data HMRC need to process your claim. Payment of your grant may be at risk or delayed if you submit a claim that is incomplete or incorrect. HMRC may be in touch to request employee data if it’s missing from your previous claims.

National Insurance numbers

You need to provide a National Insurance number (NINO) for all employees as part of your CJRS claim. The only exception is in the very limited circumstances where an employee genuinely does not have a NINO, for example if they are under 16 years old.

If you are claiming for an employee whose NINO you do not currently know, you can check their number by searching GOV.UK for ‘Check a National Insurance Number using basic PAYE Tools’.

HMRC can no longer accept claims for fewer than 100 employees by phone where you do not have all employee NINO’s unless the employees you are claiming for genuinely do not have these.

Claimed too much in error?

If you have claimed too much for a CJRS grant and have not repaid it, you must notify HMRC and repay the money by the latest of whichever date applies below:

  • 90 days after receiving the CJRS money you’re not entitled to
  • 90 days from when circumstances changed so that you were no longer entitled to keep the CJRS grant
  • 20 October 2020 if you received CJRS money you are not entitled to or if your circumstances changed on or before 22 July.

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Another Furlough Update

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CORONAVIRUS JOB RETENTION SCHEME (CJRS) UPDATE.

From 1st July “Flexible Furlough” was introduced and the calculations and time recording of full-time, part-time and fully furloughed employees has become more complicated.

Changes are occurring regularly as the Government and HMRC make clarifications to the scheme. If you have any queries regarding your claim talk to us first.

The latest changes are outlined below:

Steps to take before calculating your claim using the Coronavirus Job Retention Scheme

Wording has been added to make it clear that HMRC will not decline or seek repayment of any grant based solely on the particular choice between fixed or variable approach to calculating usual hours, as long as a reasonable choice is made

See: https://www.gov.uk/guidance/steps-to-take-before-calculating-your-claim-using-the-coronavirus-job-retention-scheme?utm_source=e431e0b9-f22e-4543-b2b9-01c631e87961&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

HMRC has issued further guidance on the CJRS Individuals you can claim for who are not employees:

You can claim a grant for individuals who are not employees – as long as they’re paid via PAYE. The groups you can claim for include:

  • office holders (including company directors)
  • salaried members of Limited Liability Partnerships (LLPs)
  • agency workers (including those employed by umbrella companies)
  • limb (b) workers
  • Contingent workers in the public sector
  • Contractors with public sector engagements in scope of IR35 off-payroll working rules (IR35)

Individuals who are paid through PAYE but not necessarily employees in employment law, can continue to be furloughed from 1 July as long as you have previously submitted a claim for them for a furlough period of at least 3 weeks between 1 March and 30 June 2020.

See: https://www.gov.uk/government/publications/individuals-you-can-claim-for-who-are-not-employees?utm_source=1cc1078c-073c-45c9-a179-daa90bd46bb3&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

Paying employee taxes and pension contributions

There is also an update on ‘Paying employee taxes and pension contributions’ section and added wording to section on employee rights to make it clear that you can continue to claim for a furloughed employee who is serving a statutory notice period.

See: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme?utm_source=0d23eb32-d558-4713-ba3e-58ea7cf51edb&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

The process HMRC is developing to recover overclaimed grant amounts through the tax system

Information has been added about the process HMRC is developing to recover overclaimed grant amounts through the tax system.

If you have made an error in a claim and do not plan to submit further claims, you should contact HMRC to let them know about the error and find out how to pay back any overclaimed amounts. Once you have contacted HMRC you will be given a payment reference number and directed to make a payment.

The Government are introducing legislation to recover overclaimed grant amounts through the tax system. If you repay any overclaimed grant amounts back through the above methods then this will reduce or, if the full amount is repaid, prevent any potential tax liability under that legislation. Further guidance on this will be issued in due course.

If you have made an error that has resulted in an underclaimed amount, you should contact HMRC to amend your claim. As you are increasing the amount of your claim, they need to conduct additional checks.

See: https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme?utm_source=5334b049-902e-4fdd-bfc2-9a7c1c222c4c&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

Ballet dancers

FLEXIBLE FURLOUGHING

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Flexible Furloughing

From 1 July 2020, Businesses will have the flexibility to bring previously furloughed employees back to work part-time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August.

Businesses can decide the hours and shift patterns that their employees will work on their return and you will be responsible for paying their wages in full while working. 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.

Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing.

When claiming the CJRS grant for furloughed hours, you will report and claim for a minimum period of a week. Businesses can choose to make claims for longer periods such as on monthly or two weekly cycles if this is more appropriate.

You will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. We can assist and make the claims for you.

If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.

Employer contributions

From August, the government grant will be tapered as follows:

  • For June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER’s NICs) and pension contributions for the hours the employee does not work – employers will have to pay employees for the hours they work.
  • In August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER’s NIC’s and pension contributions.
  • From 1 September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
  • For the final month of the scheme in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
  • the cap on the furlough grant will be proportional to the hours not worked.

Important dates

It is important to note that the scheme will close to new entrants from 30 June. From this point onwards, you will only be able to furlough employees that you have furloughed for a full three-week period prior to 30 June.

This means that the final date that you can furlough an employee for the first time will be 10 June for the current three-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.

Guidance and support

Further support on how to calculate claims with the extra flexibility will be available by 12 June and we will keep you informed about the detail and your written requirements in due course. If you have any questions please contact us.

See: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme?utm_source=1a8e753d-c67e-41e9-8664-32969211b852&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

Germ

What did Rishi mean I get 80%?

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What did Rishi mean I get 80%?

The government has at last announced a package of support for self-employed individuals and clarified more about how to access the coronavirus job retention scheme.

Let’s start with the Coronavirus Job Retention Scheme:

In terms of the clarified advice on the Coronavirus Job Retention Scheme, we have learnt:

  • You can claim for any employees who have been PAYE on your payroll including part-time or full-time employees, flexible or zero hours employees, employees on agency contracts who are now NOT working
  • If the employee is currently on Statutory Sick Pay, e.g. because they are self-isolating, they are not eligible for the scheme until they have come off Statutory Sick Pay
  • You will get a grant for the wages you will pay out to Furloughed employees
  • The “up to £2500 per month” is actually “up to £2500 per month + associated Employer NI contributions, and minimum enrolment employer pension contributions on that wage”
  • The scheme is not yet live, but when it is we will be in contact for how you can make a claim.

Further details can be found here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

A quick summary of the grant being made available for self-employed individuals:

Self-employed individuals will be eligible of a taxable grant up to £2500 per month for at least 3 months, which will be equal to 80% of their profits. And the self-employed can carry on working to access this grant. So far so good. But with all these things there are caveats, namely:

  • If you are a director of a limited business, or operate through a personal services company then this scheme does not apply to you
  • You need to have a trading profit of less than £50, 000 in 2018-19 or an average trading profit of less than £50,000 from 2016/17, 2017/18 and 2018/19.
  • More than half your income in these periods must come from self-employment. If you started trading between 2016 – 2019, HMRC will only use the years that you filed a self-assessment tax return
  • You need to have submitted your personal tax return for 2018/19 (and if you haven’t you must do so by April 23rd 2020)
  • You have been trading in 2019/2020
  • You need to have lost money due to COVID-19

You may be thinking, but I’m self-employed but get paid as a mixture of dividends and salary. Why can’t I access this scheme? The government may have put IR35 back for a year for the private sector, but they do seem to be making a point here!

Full details of the scheme can be found here: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

How will HMRC work out what I can claim?

HMRC will take your trading profit for the last 3 years you have traded, then divide by 3 and divide by 12 to get your average monthly profit.

Example: Dave is a self-employed plumber who has been trading for 3 years. In his self-assessment tax returns he declared a profit of £48 000, £35 000 and £45 000. His average monthly profit is: (48 000 + 35 000 + 45 000)/(3*12) = £3 556. This means he would be eligible to claim for £2500 per month of grant.

Example: Sarah is a mobile hairdresser and started trading in May 2019. Her self-employed income was 20% of her income for the year, so she is not eligible for the scheme, as her trading profits in tax year 2018/2019 was not more than half of her taxable income for 2018/2019.

Example: Rishi is a taxi driver and started trading in April 2018. His trading profit in 2018/2019 was £20 500. He got all of his income from self-employment in 2018/2019. He would, therefore, be entitled to £20 500/12 = £1708.33 of a monthly grant.

How do I make a claim?

If you are eligible, HMRC will be in touch.

What help is available to me as someone who is self-employed but operates through a limited company and doesn’t have premises?

In this scenario then you may be able to access a grant via the Coronavirus Job Retention Scheme. I.e. if you pay yourself a salary through payroll, then you may be able to get 80% of this salary. However, you would need to prove you are no longer working and have Furloughed yourself to access the scheme.

If you have any questions please email jade@1accounts.co.uk and she will be happy to help!