Pay As You Earn (PAYE) system

With 6 April 2021 quickly approaching, the IR35 reforms are now back on the agenda and fast becoming a priority. Affected businesses need to have their implementation process in place before the IR35 reforms take effect.

IR35 is designed to ensure that appropriate income tax and national insurance contributions (NICs) are paid by contractors who provide their services through an intermediary company. In a nutshell, the IR35 rules bite where, but for that intermediary company, the individual contractor would be deemed an employee of the client. The IR35 reforms are important as they require medium and large businesses to carry out status determinations to assess whether IR35 applies. Where they conclude that IR35 applies (i.e. that there is deemed employment), the IR35 reforms shift responsibility to the client for making tax and NICs deductions through PAYE.Continue Reading IR35 changes – Are you ready?

On 20 March 2020, the chancellor, Rishi Sunak, announced the Coronavirus Job Retention Scheme (the Scheme) as part of the UK government’s measures to help support businesses through the current COVID-19 pandemic. We have seen various iterations of guidance on the Scheme (on 26 March, 4 April, 9 April, 15 April and 17 April), and on 15 April 2020, a Treasury Direction was issued setting out the legal framework. Here is the updated position, as at 20 April 2020.

About the Scheme

What is the Coronavirus Job Retention Scheme? It is a temporary scheme announced by the UK government on 20 March 2020 as part of its package of measures to help support businesses through the current COVID-19 pandemic.

What does the Scheme do? The Scheme allows an employer to designate certain individuals who are paid wages via the Pay As You Earn (PAYE) system as ‘furloughed’, keeping them on payroll but not requiring them to work. The employer can then seek reimbursement of some of its labour costs from the government (see below).

How is the Scheme accessed? Reimbursement is via an HMRC portal which went live on 20 April 2020.

When does the Scheme start? It will be backdated to start from 1 March 2020 and will run for an initial period of four months, but may be extended. Employers can use the Scheme at any time while it is open.

Is the Scheme compulsory? It does not appear to be a compulsory scheme; employers are not obliged to make use of the Scheme, and workers will need to consent to be furloughed if it means a change to their terms and conditions (see ‘Does a worker have to consent to furlough?’ below).Continue Reading Coronavirus Job Retention Scheme (updated position as at 20 April 2020)

On 20 March 2020, the chancellor, Rishi Sunak, announced the Coronavirus Job Retention Scheme (the Scheme) as part of the UK government’s measures to help support businesses through the current COVID-19 pandemic. We have seen various iterations of  guidance on the Scheme (on 26 March, 4 April, 9 April, and 15 April), and on 15 April 2020, a Treasury Direction was issued setting out the legal framework. Here is the updated position, as at 15 April 2020.

About the Scheme

What is the Coronavirus Job Retention Scheme? It is a temporary scheme announced by the UK government on 20 March 2020 as part of its package of measures to help support businesses through the current COVID-19 pandemic.

What does the Scheme do? The Scheme allows an employer to designate certain individuals who are paid wages via the Pay as You Earn (PAYE) system as ‘furloughed’, keeping them on payroll but not requiring them to work. The employer can then seek reimbursement of some of their labour costs from the government (see below).

How is the Scheme accessed? Reimbursement is via an HMRC portal which is due to be live by the end of April 2020.

When does the Scheme start? It will be backdated to start from 1 March 2020 and will run for an initial period of three months, but may be extended. Employers can use the Scheme at any time while it is open. As HMRC is having to build its information technology infrastructure from scratch to administer the Scheme, there may be a delay in funds being available. It is expected to be operational by the end of April.

Is the Scheme compulsory? It does not appear to be a compulsory scheme; employers are not obliged to make use of the Scheme, and workers will need to consent to be furloughed if it means a change to their terms and conditions (see ‘Does a worker have to consent to furlough?’ below).Continue Reading Coronavirus Job Retention Scheme (updated position as at 15 April 2020)

What a month March has been! With the COVID-19 pandemic taking hold across the UK and globally, we’ve seen the UK government responding to the crisis by imposing increasingly restrictive limits on our activities, closing schools and workplaces, introducing emergency legislation within days, and announcing unprecedented levels of financial support. With updates and developments happening daily, it can be hard to keep up. So here’s a roundup of where we are, as at 1 April 2020, in respect of key COVID-19 issues affecting the workplace.

Workplace closures

On 20 March 2020, the prime minister announced that certain businesses (pubs, restaurants, cinemas, theatres, gyms, casinos, leisure centres, etc.) should close, and within days this was extended to businesses that were not providing essential services.

The Health Protection (Coronavirus, Restrictions) (England) Regulations 2020 came into force on 26 March 2020 detailing, specifically, which businesses must close (schedule 2), which can remain open (any business not listed in schedule 2), and which can remain open with limitations (schedule 1). This legislation will be reviewed every 21 days, with the first review due by 15 April 2020. Businesses failing to comply with this legislation face prosecution and fines.Continue Reading Coronavirus (COVID-19) monthly round up as at 1 April 2020

On 20 March 2020, the chancellor, Rishi Sunak, announced the Coronavirus Job Retention Scheme (the Scheme) as part of the UK government’s measures to help support businesses through the current COVID-19 pandemic. Brief guidance followed after the announcement, with more detailed guidance released on the evening of 26 March 2020. There is a lot we still do not know, but here is the updated position.

 About the Scheme

  1. What is the Coronavirus Job Retention Scheme? It is a temporary scheme announced by the UK government on 20 March 2020 as part of its package of measures to help support businesses through the current COVID-19 pandemic. The aim of the scheme is to protect jobs and avoid redundancies in organisations whose operations have been severely affected.
  2. What does the Scheme do? The Scheme allows an employer to designate certain individuals who are paid wages via the Pay As You Earn (PAYE) system as “furloughed”, keeping them on payroll as an alternative to terminating their employment. The employer can then seek reimbursement of some of their labour costs from the government (see #2 under “Payments under the Scheme”).
  3. How is the Scheme accessed? Reimbursement is via an HMRC portal. In guidance released last week, the suggestion was that employers must notify HMRC which individuals have furloughed status, along with details of their earnings, although the updated guidance suggests a more general approach to claiming under the Scheme (see #1 under “Payments under the Scheme”). We expect to understand more about the process once the portal is launched.
  4. When does the Scheme start? It will be back-dated to start from 1 March 2020 and will run for an initial period of three months, but may be extended. Employers can use the Scheme at any time while it is open. As HMRC is having to build its IT infrastructure from scratch to administer the Scheme, there may be a delay in funds being available. It is expected to be operational by the end of April.
  5. Is the Scheme compulsory? It does not appear to be a compulsory scheme; employers are not obliged to make use of the Scheme, and workers will need to consent to be furloughed if it means a change to their terms and conditions (see #2 under “About furloughs” below)

Continue Reading Coronavirus Job Retention Scheme in the UK (updated position as at 27 March 2020)