HMRC have published their Employer Bulletin for April 2020. We summarise the key content for you, with links to our detailed guidance on the topics covered.
Some of the items included in this update were also included in the Agent update April/May 2020. Rather than duplicate these we have linked to that update where appropriate.
Coronavirus Job Retention Scheme (CJRS)
Employers can now claim online for a grant for 80% of your furloughed employees’ salaries, up to a maximum of £2,500 per employee, per month, through the Coronavirus Job Retention Scheme. The scheme will be open until the end of June 2020.
Before employers claim, you need to:
- Read all the available guidance on GOV.UK.
- Gather all the information and the precise calculations you need. If you have a payroll provider, they should be able to help with this.
- HMRC expect to be very busy so ask that you only call if you can’t find what you need on GOV.UK or through the webchat service
After employers have made a claim, HMRC say you should:
- Keep a note or print-out of your claim reference number. You won’t receive a confirmation SMS or email.
- Retain all records and calculations for your claims, in case HMRC need to contact you.
- Expect to receive funds six working days after you apply, provided your claim matches records that held for your PAYE scheme. Employers should not contact HMRC before then.
- Ask your furloughed employees not to contact HMRC directly as they will not be able to provide them with any information on individual claims.
- HMRC will check claims and act to protect public money against anyone who makes a claim dishonestly or fraudulently. HMRC encourage employers to protect their own credentials and be aware of potential scammers and opportunist criminal activity.
COVID-19 Statutory Sick Pay Rebate Scheme
- The online guidance has been updated to show that the scheme will operate under the Covid-19 Temporary State Aid framework agreed with the European Commission.
- As the rebate scheme is only available to employers with fewer than 250 employees prior to 29 February 2020. Employers will have to confirm that the amount of SSP rebate they are claiming will not take them above the temporary framework ceiling, which is €800,000 for most employers.
Deferral of VAT payments
The Chancellor announced a VAT payments deferral on 20 March.
- All UK VAT-registered businesses can defer VAT payments due between 20 March and 30 June and have until 31 March 2021 to pay any VAT deferred.
- You do not need to inform HMRC if you wish to defer payment.
- If you pay by direct debit you should cancel this with your bank in sufficient time so that HMRC does not attempt to automatically collect on receipt of your VAT return.
- HMRC will continue to pay repayment claims as normal.
- You must continue to submit VAT returns as normal
Coronavirus: Supporting employees
HMRC have provided general guidance to advise you on what support you can provide for your employees, and any tax consequences.
- It applies to any staff home-working due to COVID-19 but does not apply to furloughed workers eligible for the Coronavirus Job Retention Scheme.
The tax treatment will differ depending on whether you provide these things for employees or reimburse purchases made by them.
- Mobile phones and SIM cards. You may provide one mobile phone and SIM card per employee tax-free without a restriction on private use.
- Broadband. If an employee already pays for broadband, no additional expense can be claimed. If a broadband connection is needed to work from home where there was not one previously the broadband fee can be reimbursed by the employer and is non-taxable, as long as any private use is limited.
- Laptops, tablets, computers, office supplies are non-taxable if mainly used for business purposes, with no significant private use.
- Reimbursing expenses for employee purchased office equipment is taxable.
- Expenses such as electricity, heating or broadband. Payment/reimbursement to employees of up to £6 a week (£4 to 6 April 2020) is non-taxable. Receipts must be provided for claims above this amount. Employees should check with their employers if they will make these payments.
- Employer-provided loans. A salary advance or loan to help an employee at a time of hardship is an employment-related loan. Loans below £10,000 in a tax year are non-taxable.
- Temporary accommodation. Where an employee must self-isolate and cannot do so in their own home, employers can reimburse hotel expenses and subsistence costs. This is taxable.
- Employees driving their own vehicle. Normal rules apply and you can pay Approved Mileage Allowance Payments of 45p per mile up to 10,000 miles (25p per mile thereafter) for business miles free of tax and National Insurance Contributions (NICs).
'Significant private use'
For items that are taxable, the exemptions for work-related benefits require you to show that there is no significant private use. HMRC accepts that where:
- the employer’s policy about private use is clearly stated to the employees and sets out the circumstances in which private use may be made and
- any decision of the employer not to recover the costs of private use is a commercial decision
you do not have to keep detailed records of every instance of actual private use to support a claim for exemption.
The 'not significant' condition should not be decided just by the time spent on different uses but in the context of the employee’s duties and the need for them to have the equipment/services provided to carry out those duties.
How to report to HMRC
- Any non-taxable benefit or expense should not be reported to HMRC.
- Expenses related to COVID-19 can be reported in your PAYE Settlement Agreement (PSA) and you can settle the tax and NICs on the benefit or expense, even where the liability would usually be on the employees or on both you and your employees. This is limited to COVID-19 related items.
- If you currently payroll Benefits in Kind, you may continue to do so. Or you can report expenses and benefits through P11D returns.
Benefits and Tax Credits Update
- As part of measures to support the country during the COVID-19 pandemic, the basic element of Working Tax Credit has been increased to £3,040 from 6 April 2020 until 5 April 2021.
- The government is uprating Child Benefit, other tax credits rates and thresholds, and Guardian’s Allowance from 6 April 2020. The full list of Rates and Allowances is here.
- This year, HMRC will automatically renew all tax credits claims apart from those identified as high risk. Individuals will only need to contact HMRC if their details differ from the pack.
Reminder: Changes to the Short-Term Business Visitors (STBV) special arrangement under Regulation 141
See Agent update April/May 2020. The deadline to return application forms to enter the special arrangement has been extended to 17 July 2020.
Off-Payroll Working rules: Reform delayed until 2021
Workplace pensions and COVID-19: The Pensions Regulator update
As an employer, you still need to meet your automatic enrolment duties (AE) duties.
- If you make a claim for a grant under the CJRS, you will be able to claim pension contributions (up to the statutory minimum AE employer pension contribution), on the wages included in the grant. You are not required to make changes to your existing pension arrangements or payroll.
- If you think you may be unable to make your pension contributions, whether you have furloughed employees or not, speak to your provider.
COVID 19: Salary Sacrifice
- If an employee wants to opt-out of a Salary Sacrifice arrangement or you need to suspend/ terminate a Salary Sacrifice arrangement with the employee’s agreement, directly because of a change in their circumstances due to COVID-19, including furloughing, this is allowed.
- EIM42771 explains what you must do to change their employment contract.
- Certain Salary Sacrifice arrangements set up before 6 April 2017 are under transitional rules and these apply until April 2021 but become subject to new rules if they are varied, renewed or modified, unless the change is:
- Directly connected to a change of circumstances as a result of COVID-19.
- Connected to an employee’s statutory sick, maternity, paternity, adoption or shared parental pay.
- Only in connection with a replacement because of accidental damage or otherwise for reasons beyond control of the parties.
Independent Loan Charge Review: What employers should do next
Tax avoidance promoters targeting returning NHS workers
HMRC have published Spotlight 54 to warn those returning to the NHS against signing up to these arrangements.
- In the current climate there are a number of new employment opportunities arising. If you have a new employee who does not have a P45 you will need them to complete a starter checklist.
- It is extremely important that you emphasise that correct completion of this form will ensure that they are given the correct tax code.
- From April 2020 a new checklist comes into effect. GOV.UK will be updated to reflect this change.
COVID-19: Department of Work and Pensions (DWP) Advice
DWP advises businesses needing to increase their workforce as a result of the outbreak, such as those in social care, food logistics, preparation and retail to post vacancies on Find a Job.
Claiming Employment Allowance from April 2020
From April 2020, the Employment Allowance was increased to £4,000 per year.
Official Rate of Interest for the 2020-21 tax year
Employer-provided living accommodation: Removal of concession for 'Representative Occupiers'
The treatment of individuals provided with living accommodation as 'representative occupiers' is an extra-statutory concession (ESC).
A 'representative occupier' relates to posts which existed before 6 April 1977 where an employee:
- resides in living accommodation provided rent-free by the employer; and
- who, as a condition of the contract of employment, is required to reside in that particular living accommodation and is not allowed to reside anywhere else; and
- occupies the house for the purpose of the employer, the employment being such that the employee is reasonably required to reside in it for the better and more effective performance of their duties.
Following a Court of Appeal decision HMRC reviewed the position of all ESCs. The ESC on representative occupiers does not meet the conditions set out for the collection and management of taxes and must be legislated for or withdrawn. The government is not going to legislate this ESC so it will be withdrawn from 6 April 2021.
Reporting Expenses and Benefits in Kind for the tax year ending 5 April 2020
The deadline for reporting any Expenses and Benefits in Kind is 6 July 2020. See Agent update April/May 2020
Scottish Income Tax
Net of Foreign Tax Credit Relief Scheme
This arrangement only applies to employers who are required to deduct foreign tax in addition to UK PAYE from the salaries of employees who are sent to work abroad.
The introduction of Real-Time Information (RTI) does not change the application of the ‘Net of Foreign Tax Credit Relief Scheme’, and employers should have included any net UK tax deducted on their Full Payment Submissions (FPS) throughout the year with any errors corrected before the end of the tax year.
At the end of the tax year the employer must send HMRC a statement showing:
- The name and NINO of each employee included in the arrangement.
- The amount of income subjected to both PAYE and foreign tax and total foreign tax deducted.
- The amount of foreign tax deducted and remitted to the overseas authority which was set off against that employee’s UK PAYE deductions due (foreign tax credit relief).
- Evidence that the foreign tax has been paid.
Full guidance in respect of the net of foreign tax credit relief arrangement is available on GOV.UK.
Internationally mobile workers: Extended filing dates
Some employers with Internationally Mobile workers can register to send in returns and make payments under the procedures at Appendix 7A and 7B. The original filing deadline of 31 March 2020 has been extended to 31 May 2020 due to COVID-19.
Advisory Fuel Rates from 1 March 2020
There have been some changes to the Company Car Advisory Fuel Rates from 1 March 2020.
See Advisory fuel rates (company car drivers)
Company car changes: ULEV and WLTP
Class 1A liabilities payable on Termination Awards and Sporting Testimonials come into effect from 6 April
Construction Industry Scheme (CIS): Filing dates and refunds
Parental Bereavement Leave and Pay
Social Security Contributions
- HMRC notes that COVID-19 and measures taken by governments across Europe to tackle it have created implications around social security coordination rules such as changes to individuals’ working patterns, including work location or hours spent in different EU/ EEA countries, Switzerland, or the UK.
- If you have been subject to changes in any of the above areas due to COVID-19 and subsequent state measures, you should keep paying social security contributions or UK National Insurance as usual, unless expressly told otherwise.
Raising standards of tax advice: Have your say
Stamp Duty: New process for share transactions