HMRC have published their Employer Bulletin for August 2020. We summarise the key content for you, with links to our detailed guidance on the topics covered. 

Coronavirus Job Retention Scheme (CJRS)

What employers need to do from 1 August

  • From 1 August CJRS no longer funds employers’ National Insurance (NI) and pension contributions. Employers must pay these for all employees, whether furloughed or not.

What employers need to do from 1 September

  • From 1 September, the government will pay 70% of wages up to £2,187.50 per month for the hours that their furloughed employees do not work
  • Employers will need to pay 10% of furloughed employees’ wages to make up 80% of their total wages up to a cap of £2,500 per month. The cap is proportional to the hours not worked.
  • Employers will continue to pay furloughed employees’ NI and pension contributions.

See COVID-19: Coronavirus Job Retention Scheme

Job Retention Bonus

The Job Retention Bonus is a one-off payment of £1,000 for every employee that businesses have received a grant for under CJRS who remain continuously employed to 31 January 2021.

  • The employee must have received earnings in November, December and January and must have been paid on average at least £520 per month and £1,560 in total over the three months.
  • Employers will be able to claim the bonus after they have filed Real-Time Information (RTI) for January 2021. It will be paid from February 2021.

 What employers need to do now if they intend to claim the Job Retention Bonus:

  • Ensure all employee records are up to date.
  • Accurately report employees’ details and wages on the Full Payment Submission through RTI.
  • Make sure all CJRS claims have been accurately submitted and they have told HMRC about any changes needed e.g. if they’ve received too much or too little.

See Job Retention Bonus and COVID-19: Government support tracker.

Make sure you’re paying the correct workplace pension contributions

The Pensions Regulator (TPR) reminds employers that your workplace pension duties apply whether your staff are working or are furloughed under the CJRS.

  • From 1 August you need to pay the pension contributions and NICs for furloughed staff.
  • You can still claim the lower of 80% of staff wages or £2,500 per month, reducing to 70% or £2,187.50 per month in September and 60% or £1,875 in October when the CJRS ends.
  • TPR’s guidance sets out how to calculate normal pension contributions for furloughed workers returning to work part-time. For defined benefit pension schemes information about what to do if you are temporarily suspending or reducing deficit repair contributions can be found on TPR’s COVID-19 webpage.

See Auto-enrolment: Workplace pensions (subscriber guide)

New law to ensure furloughed employees receive full statutory redundancy payments

The Government has introduced legislation to ensure that employees who have benefitted from the CJRS do not lose out on certain entitlements

  • This includes making sure that redundancy pay, notice pay and compensation for unfair dismissal are based on an employee’s normal pay, rather than their reduced furlough pay.
  • The Advisory, Conciliation and Arbitration Service (ACAS) can advise you about how to work out average weekly pay for someone that has been on furlough.

See Termination and leaving payments (from 6 April 2018) 

Deadline to report the disguised remuneration loan charge – 30 September 2020

  • If any of your current or former employees have outstanding disguised remuneration loans subject to the Loan Charge, the deadline to report the details of their loans to HMRC is 30 September 2020. This can be done using the online form on GOV.UK, as well as within the 2018/19 tax return.
  • Anyone who wants to spread their outstanding loan balances evenly across the 2018/19, 2019/20 and 2020/021 tax years will need to do so by 30 September 2020, using the same online form on GOV.UK.

Refunding voluntary payments made in disguised remuneration settlements

Following the 'Independent Loan Charge Review', certain voluntary payments (‘voluntary restitution’) made as part of a disguised remuneration settlement with HMRC can be refunded.

See Disguised remuneration subscriber guide

COVID-19, are you due a repayment?

HMRC remind employers that the quickest and most secure way to receive a repayment is by transfer directly into your bank account.

  • Make sure you enter your bank details on your Employer Payment Summary (EPS).
  • If your software does not include a bank details section, read the guidance pages for alternative contact information.

Off-Payroll Working rules (IR35)

  • The legislation introducing the Off-Payroll Working rules (IR35) to non-public sector organisations from 6 April 2021, is included in Finance Act 2020.
  • The Check Employment Status Tax tool (CEST) can be used by organisations and contractors to consider the appropriate employment status for contracts running past 6 April 2021. HMRC say they will stand by the results given by the tool, provided it is used in accordance with guidance and the information entered is and remains, accurate.

See Working: PSCs & Private Sector Engagers 

Applications open for £50m customs grant scheme

The next phase of the customs grant scheme is now open for applications on a first-come, first-served basis. Applications will close on 3 June 2021, or earlier if all funding is allocated

  • Customs intermediaries including customs brokers, freight forwarders and express parcel operators as well as traders who complete their own declarations can now apply for grant funding to support with recruitment, training and IT to handle customs declarations.
  • The grant can cover salary costs for new or redeployed staff, up to a limit of £12,000 per person and £3,000 for recruitment costs for new employees.
  • The grant for IT will cover expenses for increasing capacity or productivity for customs declarations, customs software, set-up costs and related hardware.

VAT reverse charge on building and construction services delayed

  • The reverse charge measure will now come into effect on 1 March 2021, to help the construction sector deal with the impacts of COVID-19.
  • Every VAT registered construction business should have received an individual letter in February 2020, advising them to check if they might be liable for the reverse charge.

The key aspects are:

  • It will apply to standard and reduced-rated supplies of building and construction services made to VAT-registered businesses who make onward supplies of those building and construction services.
  • The contractor will be responsible for paying the output VAT due, rather than the sub-contractor but can continue to reclaim this amount as input tax.
  • The scope of supplies affected is similar to the supplies required to be reported under the Construction Industry Scheme but does not include supplies of staff or workers for use by the customer.
  • The legislation introduces the idea of 'end-users' and 'intermediary suppliers'. This covers businesses/groups of associated businesses that do not make supplies of building and construction services to third parties who are excluded from the scope of the reverse charge if they receive such supplies, this includes landlords, tenants and property developers.

See Construction Industry Scheme VAT reverse charge subscriber guide

End of VAT payment deferrals period

  • As part of government support during the COVID-19 pandemic, HMRC gave businesses the option to defer VAT payments due between 20 March and 30 June until 31 March 2021 without incurring late payment interest or penalties.
  • VAT deferred through the scheme can be paid through ad hoc payments and overpayments ahead of the deadline if preferred, so long as full payment is made by that date.
  • The scheme ended on 30 June. Businesses now need to set up any cancelled direct debits in time for payment of their next VAT return.

See COVID-19: VAT payments

Student Loan Repayments

  • The general principle in deciding how to treat income for Student and or Postgraduate Loan deduction purposes is to follow the normal rules for Class 1 NICs.
  • Examples of what earning periods to use can be found in Guide CWG2 and Collection of Student Loans Manual 17065 and 17070.

Student and Postgraduate Loan Generic Notification Service (GNS) Messages

Employers are reminded to check the HMRC Online Services for GNS messages.

  • HMRC send GNS messages as a reminder to take deductions, stop taking deductions, use the correct plan/loan type and to not take Student Loan/Postgraduate Loan (PGL) deductions for employments subject to the Off-Payroll Working rules and for employees with an occupational pension rather than a salary. These employees are not liable for Student Loan and PGL deductions.

New Scottish Student Loan Plan type

  • Scotland will raise their Student Loan earnings threshold to £25,000 from April 2021 for new and existing borrowers. The repayment period will be reduced from 35 years to 30 in line with England & Wales.
  • This has created the need for a new Scottish Student Loan Plan type. On 6 April 2021, anyone who has taken a Student Loan from Scotland will repay under a new Plan type 4. Employers will be notified of any moves in loan plan type to plan 4 in time for April 2021.

Finance Act 2020 changes to company car tax

At Budget 2017 the government announced it would bring in legislation for the use of the worldwide harmonised light vehicle test procedure (WLTP) for measuring CO2 emissions for all cars first registered on or after 6 April 2020.

  • Finance Act 2020 introduces modified tables of WLTP-appropriate percentages to be used for calculating company car tax for the years 2020-2021 and 2021-2022.
  • The appropriate percentage for zero-emission cars first registered before 6 April 2020 has also been modified for those years.

See Company cars

PAYE Online service for reporting P11D, P11D(b) and P46(car)

HMRC are redesigning the PAYE Expenses and Benefits and are looking for organisations that employ anywhere from 5 to 250 employees to participate in User Research.

The August electronic payment deadline falls on a weekend

  • The next electronic payment deadline falls on Saturday 22 August.
  • You need to have cleared funds in HMRC’s account by the 21 August unless you are able to arrange a Faster Payment to clear on the payment deadline. If your payment is late you may be charged interest and/or a late payment penalty.

Toolkits, helping to reduce errors

 Accurate record-keeping will help to ensure that the correct data can be sent to HMRC by the due dates and reduce delays in payments.

The following HMRC toolkits have recently been updated.

Paying HMRC

A reminder that you can pay HMRC by:

  • Direct Debit
  • Faster Payment
  • BACs/CHAPs
  • Personal debit card
  • Corporate credit and debit card. Payments made by corporate credit card incur a surcharge, this will also apply to corporate debit cards from 1 November 2020.

External link

Employer Bulletin: August 2020