Employer Bulletin: August 2021

HMRC have published their Employer Bulletin for August 2021. We have summarised the key content for you, with links to our detailed guidance on the topics covered.

Changes to right to work checks from 1 July 2021

The process for completing right to work checks on EU, EEA, and Swiss citizens has changed from 1 July 2021.

• EU passports or ID cards can no longer be accepted by employers as valid proof of right to work, with the exception of Irish citizens.
• A job applicant's right to work must be checked online.
• EU, EEA, and Swiss citizens employed before 1 July 2021 do not need to be retrospectively checked.

Coronavirus Job Retention Scheme (CJRS)

• The deadline for CJRS claims for July 2021 is 16 August 2021. 
• HMRC's templates should be used when claiming for 16 or more employees. 

The Government will pay:

• 70% of employees’ usual wages for hours not worked, up to a cap of £2,187.50, to the end of July 2021.
• 60% in August 2021 and September 2021, up to a cap of £1,875.

See COVID-19: Coronavirus Job Retention Scheme (CJRS) from 1 November 2020

Coronavirus and social security coordination with the EU

• Where the work location of employees who normally work in the UK, the EU, or both, has changed temporarily because of COVID-19 related travel restrictions, HMRC can consider individual circumstances to decide whether National Insurance Contributions (NICs) are due in the UK.
• If proof of having to pay UK NICs is needed, it is possible to apply for a certificate.
• EU arrangements allowing HMRC to disregard changes to individuals’ work locations due to COVID-19 related travel restrictions will end no later than 31 December 2021.

Student loan types

There are four types of student loans collected through PAYE and Self Assessment.

To ensure your employees do not pay any more or less than necessary you should:

• Check your online account for student/postgraduate loan start and stop notices.
• Tell HMRC if correspondence email or address details have changed. 
• Take the correct action to start loan deductions as soon as possible.
• Record the deductions correctly on your Full Payment Submission (FPS).

See Student Loans

Correct payment of National Minimum Wage to apprentices

All apprentices are entitled to be paid at least the National Minimum Wage, but around one in five apprentices earn less than their legal entitlement.

Common errors noted by HMRC are:

• Failure to pay the higher age-related minimum wage rate to those apprentices who are aged 19 and over and have completed the first year of their apprenticeship.
• Paying the £4.30 per hour minimum wage apprentice rate before or after an apprenticeship actually starts or finishes.
• Not paying for all the time worked by an apprentice: training time is working time.

See National Living Wage rates/National Minimum Wages rates

Electronic payment deadline falls on a weekend

The electronic payment deadline of 22 August 2021 falls on a Sunday.

• Employers must make sure payment reaches HMRC on time. Late payments may result in a penalty. 
• Cleared funds must be in HMRC’s account by 20 August 2021, unless you are able to arrange a Faster Payment.

See Penalties: PAYE and late payment and Calendar of tax deadlines

Informal payrolling of Benefits In Kind

• HMRC will only accept new informal payrolling arrangements for Benefits In Kind (BIK) during the 2021-22 tax year.
• Businesses that previously had an informal payrolling arrangement must register for formal payrolling before April 2022 for 2022-23 as informal arrangements can only apply for a maximum of one tax year

See Payrolling of benefits

PAYE Settlement Agreement payments

Electronic payments of NICs and tax in respect of PAYE Settlement Agreements for 2020-21 must clear HMRC's bank account by 22 October 2021.

• Late payment may result in a penalty and/or interest.
• Use the PSA reference number from the HMRC payslip, for example, XA123456789012, when making payment.
  • If you do not have your PSA reference number, contact HMRC's office dealing with your application.
  • Do not use your PAYE Accounts Office reference (format: 123PA12345678) to make payment as this will cause the incorrect allocation of the amount paid. 

See: PAYE Settlement Agreements and Calendar of tax deadlines

Tax avoidance: don’t get caught out

HMRC’s ‘Tax avoidance — don’t get caught out’ campaign helps contractors make informed choices when people or businesses offer them tax avoidance schemes.

• Help your contractors spot tax avoidance schemes by highlighting the dangers and financial risks.
• Follow HMRC guidance on how to report an avoidance scheme, how to get out of a scheme and on working through an umbrella company.

See Spotlight 45: Umbrella companies and Disguised remuneration loan charge

Off-Payroll Working rules (IR35) support

• HMRC have provided a number of resources following the Off-Payroll Working changes from 6 April 2021. These include a video, webinar and links to their webchat from certain questions in the CEST tool.  

Off-payroll (IR35) contracted out services: make sure you are applying the rules correctly

• HMRC are aware of arrangements being put in place following the 6 April 2021Off-Payroll Working changes which mean some organisations would no longer be responsible for considering the Off-Payroll Working rules.
  • These may be labelled as ‘contracted out services’ or ‘statement of works’.
• HMRC recommend approaching claims that you do not need to consider the Off-Payroll Working rules with caution.

See Off-Payroll Working: PSCs & Private Sector Engagers

VAT reverse charge on construction and building services

The VAT reverse charge on construction and building services came in on 1 March 2021. 

See CIS: Construction Industry reverse charge

P11D(b) penalty warning letters

• 2020-21 P11D(b)s filed on or before 6 July 2021 have been captured by HMRC. 
• Some employers and their agents may receive a penalty warning letter from HMRC, where a return was expected, but not delivered. 
• The letter warns employers that they may have incurred a penalty and should file their outstanding return as soon as possible to avoid further penalties. Information on the action they need to take is included in the letter.
• Employers who registered to payroll benefits for 2020-21 still need to submit a P11D(b) to tell HMRC about the Class 1A NICs due.
• A nil P11D(b) can be submitted to HMRC if you do not owe Class 1A NICs by completing a declaration.

Kickstart Scheme: funding 

Employers of all sizes can apply for Kickstart Scheme funding to create new jobs for 16 to 24-year-olds on Universal Credit.

Funding will cover:

• 100% of the National Minimum Wage for 25 hours per week for a total of six months.
• Employer NICs.
• Minimum automatic enrolment pension contributions.
• £1,500 grant per job to cover set-up costs and employability support

See Kickstart Scheme open for applications

New shared parental leave tool

• The Department for Business, Energy and Industrial Strategy (BEIS) has launched a new online tool to help working families make the most of the Shared Parental Leave and Pay Scheme.

External link

Employer Bulletin: August 2021