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

Coronavirus Job Retention Scheme, October changes, closing down the scheme and Job Retention Bonus

Coronavirus Job Retention Scheme (CJRS)

What you need to do as an employer from 1 October:

  • From 1 October HMRC will pay 60% of usual wages up to a cap of £1,875 per month for the hours furloughed employees do not work.
  • You will continue to pay furloughed employees at least 80% of their usual wages for the hours they do not work, up to a cap of £2,500 per month.
  • You must fund the difference between this and the CJRS grant and continue to pay your furloughed employees’ National Insurance and pension contributions out of your own funds.
  • The scheme closes on 31 October. You should make final claims on or before 30 November as you will not be able to submit or change any claims after that date.

See COVID-19: Coronavirus Job Retention Scheme

Job Retention Bonus (JRB)

The Job Retention Bonus lets you claim a one-off payment of £1,000 for each eligible employee you have furloughed, claimed for under the CJRS and kept continuously employed until 31 January 2021.

  • You do not have to pay this money to your employee.
  • Employees must earn at least £1,560 between 6 November 2020 and 5 February 2021 and have received earnings in the November, December and January tax months.
  • Employees must not be serving a contractual or statutory notice period on 31 January 2021.
  • You will be able to claim the bonus from 15 February until 31 March 2021, after you submit PAYE information under Real-Time Information (RTI) for the period up to 5 February 2021.
  • You can still claim the JRB if you claim for that employee through the Job Support Scheme, but you must meet the eligibility criteria for both.

See COVID-19: Job Retention Bonus

New COVID-19 support schemes

The government has announced additional support for businesses and employees impacted by COVID-19 across the UK.

Job Support Scheme (JSS)

 A new Job Support Scheme will be introduced from 1 November. It will run for six months initially.

  • You will continue to pay the wages for the hours your staff work.
  • For the hours not worked, you and the government will each pay one-third of their usual wages (capped at £697.92 per month).
  • You must meet your share of the pay for unworked hours, plus Employer National Insurance Contributions (NICs) and statutory pension contributions, from your own funds.
  • Employees will receive at least two-thirds of their usual wages for the hours not worked.
  • Claims can be made in December and grants will be paid on a monthly basis.
  • The Job Support Scheme will be open to all UK employers even if you have not previously applied under the CJRS.

See COVID-19: Job Support Scheme

Extension to the reduced rate of VAT for Hospitality and Tourism

  • The temporarily reduced rate of VAT (5%) to tourist attractions and goods and services supplied by the hospitality sector has been extended to 31 March 2021 across the UK.

See COVID-19: VAT payments

VAT Deferral New Payment Scheme

If you deferred VAT payments that were due between 20 March and 30 June 2020, these payments need to be made to HMRC by 31 March 2021.

You can:

  • Use the New Payment Scheme to spread these payments over equal instalments up to 31 March 2022
  • Make payments as normal by 31 March 2021
  • Make Time to Pay arrangements with HMRC.

See COVID-19: VAT payments

New Self Assessment Self-Serve Time to Pay Scheme

  • If you deferred paying your July 2020 Payment on Account, you must pay the deferred amount, plus any balancing payment and first 2020-2021 Payment on Account, by 31 January 2021.
  • If you cannot pay and have Self Assessment (SA) tax debts of up to £30,000 you can set up a Time to Pay payment plan of up to 12 months online without contacting HMRC.
    • If your SA debts are over £30,000, or you need more than 12 months you can still use the Time to Pay arrangement but will need to call HMRC.     
  • HMRC has identified that some SA customers, who deferred their July 2020 Payment on account, may receive a Self Assessment statement showing that payment is due and interest is accruing. HMRC confirm they will not impose any late payment interest or penalties on the deferred July 2020 Payment on Account, provided it is paid in full by 31 January 2021.

See COVID 19: Deferring Income Tax payments

Do you have employees working from home because of COVID-19?

If you have asked employees to work at home because of COVID-19 they may have extra expenses.

  • If you have not reimbursed your employees, they can claim tax relief on £6 per week or £26 per month for these extra costs. To claim more, they must provide HMRC with evidence to support their claim.
  • They can only claim if you have asked them to work from home for all or part of the week.

How to claim:

  • The quickest and easiest way to claim is to apply online at GOV.UK. Search ‘Claim tax relief for your job expenses’.

See COVID-19: Working from home

National Insurance Number delays

Due to COVID-19, the Department for Work & Pensions (DWP) can only offer a National Insurance Number (NINo) service to a limited number of applicants.

DWP can only allocate a NINo for employment purposes if they can confirm the applicant has the right to work in the UK and their identity. Currently, they can only accept applications from those granted permission to work in the UK by the Home Office prior to them coming to the UK. This is because DWP can validate these applications with the Home Office.

  • For other applicants who have not interacted with the Home Office, their identity and right to work would usually be confirmed by DWP at a face to face interview. This service is temporarily suspended due to COVID.
  • It is not yet possible to offer a virtual service but DWP is developing a digital solution to reintroduce the process incrementally over the coming months.
  • You can employ someone before they get their NINo, provided you can confirm they are legally entitled to work in the UK. All RTI submissions should include as many other personal details as possible.
  • For people who have a NINo but cannot remember it, they can get a confirmation by using their Personal Tax Account, or the HMRC App.

Off-Payroll Working rules (IR35)

Education and support available to customers

At the start of October 2020, HMRC relaunched its programme of support to help you prepare.

You need to prepare for the changes if you are:

  • A medium or large-sized non-public sector organisation engaging contractors who work through their own intermediary.
  • An employment agency which supplies contractors who work through their own intermediary.
  • A public authority: there are additional changes from April 2021.
  • A contractor who provides services through your own limited company or other intermediary.

Most of the support here is also available for tax agents, to help you understand the changes for you and your clients. Please help your clients to prepare for the changes by sharing information on the support available with anyone who may be affected by the rules.

The Employer Bulletin includes a detailed table setting out what support is most appropriate depending on individual circumstances.

See Off-Payroll Working: PSCs & Private Sector Engagers

UK Transition and social security

Changes for UK employers sending workers to the EU, the EEA or Switzerland from 1 January 2021 and for workers from the EU, EEA or Switzerland coming to work in the UK.

If you are an employer who sends employees to work in the EU, EEA or Switzerland or you employ employees from one of those countries, you should read the following.

Employee starting work in the EU, EEA or Switzerland before 1 January 2021

Current European social security coordination rules will be used to work out which country’s social security scheme you and your employee will have to pay contributions to.

  • This covers UK based employees starting work in one or more of EU, EEA countries and Switzerland before 1 January 2021, and those from UK, EU, EEA/Switzerland working in one of those countries before 1 January 2021.

Applying for a PDA1 or E101 certificate for a period that starts before 1 January 2021

The current EU social security coordination rules will continue to apply after 31 December 2020 to certain individuals, whether a future relationship agreement between the UK and the EU on social security coordination is agreed or not.

  • Employers and individuals should continue to apply for PDA1s and E101s as normal if they start working before 1 January 2021 in a situation involving the UK and an EEA country or Switzerland.
  • To apply for a PDA1/ E101 use forms CA3822 if you are sending an employee to work in another country within the EEA, or form CA8421 if your employee works in two or more of any of the UK, EU, EEA countries or Switzerland.
  • The PDA1/ E101 can be used as evidence that HMRC has applied EU social security coordination rules and has determined that UK National Insurance contributions are due.
  • If HMRC has issued a PDA1/E101 that started before 1 January 2021, you and your employee will pay UK NICs for the period stated on the document.

Employees starting work in the EU, EEA or Switzerland after 1 January 2021

Applying for a PDA1 or E101 certificate for a period that starts after 1 January 2021

Employers and individuals should continue to apply to HMRC for PDA1s and E101s for employees who are to start working after 31 December 2020 in a situation involving the UK and an EEA country or Switzerland. For example, an employee you send to work temporarily in France.

  • Whilst negotiations are ongoing, HMRC will only be able to process applications for PDA1s/ E101s for employees in the scope of the Withdrawal Agreement, one of the related agreements with EFTA countries and Switzerland.

Workers from the EU, EEA and Switzerland coming to the UK

If you employ a person from the EU, EEA or Switzerland before 1 January 2021 and they have a PDA1 which shows they are subject to an EEA country/ Swiss legislation, you and they will not have to pay UK NICs for the period stated on the PDA1, even if it ends after 31 December 2020.

  • If they have a PDA1showing they are subject to UK legislation, you and they will have to pay UK National Insurance.
  • If you employ an individual from the EU, EEA or Switzerland who does not have a PDA1 and they work in two or more of any of the UK, EU, EEA countries or Switzerland, you or the employee should apply for a PDA1 to the social security institution of the country where they reside.

UK’s future relationship with the EU

The Government has been clear that there will be changes to future social security coordination arrangements for those individuals not in the scope of the Withdrawal Agreement and the related agreements with EEA EFTA countries and Switzerland. They continue to work with the EU to establish practical, reciprocal provisions on social security coordination.

Right to work in the EU, EEA and Switzerland after 31 December 2020

For periods after 31 December 2020, employees should check the immigration rules in the country that they will be working in especially if they are a frontier worker.

  • A frontier worker is a person who resides in either the UK or the EU, EEA or Switzerland who works in one or more of those countries but not the one they reside in. This could affect individuals resident in the UK who work in the EU, EEA or Switzerland.

The UK’s social security agreement with the Republic of Ireland

The UK has reached a reciprocal agreement with Ireland which ensures that social security coordination continues after 31 December 2020 when considering moves by UK or Irish nationals between the UK and Ireland.

Refunds of National Insurance contributions for Aircrew

If your employee’s home base is or has been in the UK and you and they have paid UK National Insurance contributions, but they did not reside in the EU or UK at this time, you and they may be entitled to a refund of those contributions You should contact HMRC to discuss the potential refund.

Apply for grants if you complete customs declarations

The next phase of the customs grant scheme is open for applications on a first-come, first-served basis. Applications will close on 30 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.

Student Loan Repayments

HMRC may write to tell you to stop taking current year deductions and refund through your payroll, where Student and/or Postgraduate Loan deductions have been taken incorrectly in the current tax year.

  • Repayments for previous years will no longer be issued by payable order. HMRC will make electronic payments directly to bank accounts instead.
  • HMRC will write to taxpayers requesting they either call or write in with their bank account details to allow them to process their refund. If your employee has any concerns about the letter we have issued, tell them to call HMRC on 0300 200 3300.

Student and Postgraduate Loans thresholds and rates from 6 April 2021:

  • The thresholds for Plan 1 and Plan 2 Student Loans are increasing from April 2021.

See Employer Bulletin: February 2020

PAYE for employer’s webchat service in the Business Tax Account

From 17th September, a webchat service has been added to the 2020-2021 Annual Statement page within the ePAYE online service.

If a green button appears at the bottom right-hand side of this page, you can click to ask HMRC a question to someone on the Employers’ helpdesk. This is part of a test and learn initiative; after three months, HMRC will assess how successful it has been and decide whether it will remain as a permanent feature in the account.

New Employment Allowance status option on PAYE for employers

PAYE for employers within the Business Tax Account is the quickest and easiest way to keep up to date with your employer liabilities and to track payments. You can now also check to see if you’ve claimed Employment Allowance for the tax year with a new feature on the right-hand navigational links under 'Employment Allowance status'.

See Employers' NICs allowance

PAYE RTI penalties, a continuation of the risk-based approach to charging penalties

Following HMRC’s review of the effectiveness of the risk-based approach to PAYE late filing and late payment penalties, they have confirmed this approach will continue for the 2020-2021 tax year.

This means that late filing and late payment penalties will continue to be considered on a risk-assessed basis rather than issued automatically.

Employers can now include problems caused by COVID-19 as the reasonable excuse that prevented them from meeting their tax obligation.

Late Filing Penalties

As in previous years, HMRC will continue to not charge penalties automatically if a Full Payment Submission (FPS) is filed late but within three days of the payment date and there remains no pattern of persistent late filing.

Employers who persistently file after the statutory filing date but within three days will continue to be monitored and may be contacted or considered for a late filing penalty.

Late Payment Penalties

The due date to make PAYE payment to HMRC electronically remains the 22nd of the month (or quarter if you pay quarterly) following the tax month/period to which they relate. If you pay by cheque or other non-electronic payment means, you must pay by 19th of the following month/quarter to which the payment relates.

If you pay late, HMRC may charge interest on the amount outstanding until the total amount is paid. You may also face a late payment penalty which HMRC will assess under a risk-based approach.

See Penalties: RTI (Real-Time Information) for PAYE

Reporting your payroll information accurately and on time

The payment date you report on your FPS should be on or before the date you pay your employees, not the payroll run date or another date from your payroll system unless the normal payment date falls on a non-banking day.

When a regular payday falls on a non-banking day and because of this, payment is made on the:

  • Last working day before the regular payday.
  • Next working day after the regular payday.

for PAYE purposes the payment may be treated as having been made on the regular payday. This is also the date that should be reported on the FPS as the ‘payment date’ even if the actual payment is made slightly earlier or later.

For NICs purposes, the payment must be treated as if it had been made at its regular time if the actual and regular payment days are in the same tax year or across a tax year.

  • HMRC find that employers entering the incorrect payment date is the reason why they receive a penalty.
  • If you are unable to report payments on time and you have a reasonable excuse for doing so you should use a late reporting reason code. You must include the code for every payment on the FPS where the circumstances apply.
  • Note that when you receive an electronic message from HMRC saying they have successfully received your submission, it does not necessarily mean that it was correct and on time.

See RTI: Real-Time Information for PAYE

Generic Notification Service (GNS) electronic warning messages

Do not ignore these messages, they are intended to notify you that you haven’t filed on time or paid on time. You can check your messages in the same way you do if you receive electronic coding notifications, either by logging into PAYE Online and selecting the generic notifications from within the 'Notice summary' section, using the PAYE Desktop Viewer, using your commercial software, or accessing your Business Tax Account and using the ‘messages’ link.

RTI Payment codes

To make sure the PAYE payment allocations are correct, you need to make the monthly payment to the 13-digit accounts office number connected to the PAYE reference, along with a 4-digit code. The bulletin includes a table setting out these codes for 2020/21 here.

Making your PAYE Settlement Agreement (PSA) payment

  • Some PSA customers may not have received a payslip confirming the amount owed under their PSA arrangement for 2019/-2020. You must still pay any tax and National Insurance due under your PSA by 22 October 2020 (19 October 2020 if paying by post) even if you have not received confirmation of your calculation or a payslip.
  • If you pay late you may have to pay interest and/or a late payment penalty.
  • When making payment ensure you quote your PSA reference number. Do not use your PAYE Accounts Office reference. If you do not have your PSA reference number contact the PSA team on 0300 322 7077.

See PAYE Settlement Agreement

Disguised remuneration loan charge

The deadline for settling disguised remuneration scheme use in order to not pay the loan charge has passed. If you haven’t reported and paid the loan charge already, you should do so now.

See Disguised remuneration loan charge (subscriber guide)

New General Anti-Abuse Rule advisory panel opinion published

HMRC have published 'Spotlight 56 – Disguised remuneration: tax avoidance by owner-managed companies using remuneration trusts'.

See Spotlight 56: Disguised remuneration 

The November electronic payment deadline falls on a weekend

  • The next electronic payment deadline falls on a Sunday.
  • You need to have cleared funds in HMRC’s account by the 20 November 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.

Changes to HMRC opening hours

At the start of the pandemic, HMRC reduced phone helpline opening hours to 8am - 4pm but are now extending these to 8am - 6pm and changing webchat opening hours to close at 8pm and on Sundays.

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

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

Update on the withdrawal of P45 and P60 bulk stationery

From 1 August 2020, HMRC withdrew the facility to order blank P45s and P60s. The majority of employers can no longer order blank paper forms. Employers who are exempt from operating their payroll online are not affected by the change and can continue to order by phone on 0300 200 3205.

Make sure to stay on top of your workplace pension responsibilities and avoid legal action

The Pensions Regulator (TPR) has continued to monitor pensions throughout the pandemic crisis. While your business might have changed due to COVID-19, your responsibilities towards your staff haven’t. You must:

  • Continue to assess and put eligible staff into a pension.
  • Continue to make the correct contributions on time.
  • Complete your re-enrolment duties and your declaration of compliance.

With the Coronavirus Job Retention Scheme due to close on 31 October, make sure you’re aware of your automatic enrolment duties.

See Auto-enrolment: Workplace pensions (subscriber guide).

Peer Networks/Small Business Leadership Programme

The Government is investing £20 million to improve small businesses’ management, productivity and problem-solving skills through two training programmes. There are 6,000 on the Peer Networks programme (with a possible further 4,000, subject to demand) and 2,000 places available on the Small Business Leadership Programme.

See £20m in new grants for SMEs

 Corporate Criminal Offences, more than just a legislative tool, and why you should care

In September 2017, legislation known as the Corporate Criminal Offences (CCO), was introduced which can hold a corporate liable if it fails to prevent any associated person from facilitating tax fraud.

  • No matter the size of your business, or the type of service you provide, if there is a chance someone associated with your business could facilitate fraud through their actions then CCO is something you should know about.
  • If you believe your organisation has committed the offence it is always in your best interest to voluntarily disclose that to HMRC. You can do so using the dedicated CCO Self-Reporting Portal.

See Offence: Failure to prevent tax evasion

Check if you need to tell HMRC about additional income

HMRC has launched interactive guidance on GOV.UK to let users check if they need to tell HMRC about extra income in addition to their main PAYE income, by answering a series of questions. Using their answers, HMRC will direct them onto the relevant next steps.

The guidance is for people receiving a ‘casual’ income (online or in-person), who do not know that they might need to declare it, or possibly pay tax on it and things like:

  • Selling things, for example at car boot sales or auctions, or online.
  • Doing casual jobs such as gardening, food delivery or babysitting.
  • Charging other people for using your equipment or tools.
  • Renting out property or part of your home, including for holidays.

See Trading and Property Allowances

External link

Employer Bulletin: October 2020

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