Employer Bulletin: June 2020
17 June 2020
The latest edition of the Employer Bulletin has been released by HMRC and can be located here.
This particular edition provides advice for businesses on how best to support their employees through the period of uncertainty that has been caused by the outbreak of coronavirus. There are articles on the changes to maternity and paternity pay in relation to calculating the Average Weekly Earnings (AWE) for furloughed employees, information surrounding late filing and payment penalties, and also guidance on how certain expenses and benefits provided to employees should be treated.
There is information relating to more ‘business as usual’ items for payroll professionals including updates on the Employment Allowance, updates to the withdrawal of P45 and P60 stationery, and the Bulletin also includes the recommendation to report expenses and benefits information through HMRC’s online service.
Just a few snippets from the Bulletin are included below, but payroll professionals should read the whole document to ensure that they are as up to date as possible with updates that will inevitably have an impact on the work that they are carrying out.
Coronavirus (COVID-19) – late filing and payment penalties
HMRC has confirmed that it is supporting taxpayers during the Coronavirus (COVID-19) pandemic by providing the option to defer Value Added Tax payments between the period 30 March to 30 June 2020, and the July 2020 income tax self assessment payment on account.
It is important that the tax system continues to work so that it can fund vital services, such as the NHS. This is why customers must continue to pay and file on time, where possible. However, HMRC understands that some individuals and businesses will find it difficult to meet deadlines given the current circumstances. For example, they may not have access to their business premises or be able to provide the necessary paperwork.
HMRC will now accept the impacts of COVID-19 as ‘reasonable excuse’ for people who are late in filing their returns or paying their tax, and the relevant penalties will be cancelled, provided the customer manages to file, or pay. as soon as they are able to.
Customers normally have 30 days to appeal, or ask HMRC for a review, but HMRC accepts that it may not currently be possible for businesses to do this, which is why they are giving people an additional three months to do this, should they need to.
If an individual cannot pay their tax because of COVID-19, HMRC may be able to agree ‘time to pay’ arrangements with them. They are agreed on case-by-case basis and tailored to meet people’s individual circumstances. HMRC has set up a dedicated helpline for dealing with time to pay arrangements. The helpline can be accessed at 0800 024 1222.
Maternity and other parental pay: changes made to the calculation of Average Weekly Earnings for furloughed employees
If an employee was on furlough and they were paid with help from the Coronavirus Job Retention Scheme (CJRS) during any part of the relevant 8-week period, there are different rules about the calculation of their Average Weekly Earnings (AWE) if they are due to start a period of family-related statutory pay on, or after, 25 April 2020.
This is to ensure that the employee’s:
• Eligibility for Statutory Maternity Pay, Statutory Adoption Pay, Statutory Paternity Pay, Statutory Shared Parental Pay, or Statutory Parental Bereavement Pay; and
• Earnings-related rate of Statutory Maternity Pay or Statutory Adoption Pay
are not affected if their earnings are lower than normal, due to being placed on furlough.
These different rules will only apply where the employee’s period of family-related statutory pay begins on, or after, 25 April 2020.
If the employee was on furlough for part or all of the relevant 8-week period, the earnings used to calculate AWE for that period will be the higher of:
- What they actually receive from their employer; or
- What they would have received from their employer had they not been on furlough
Where it is not clear what the employee would have received had they not been on furlough, a helpful starting point is likely to be the reference salary which is used to determine how much can be claimed through the CJRS.
However, bonus payments, commission payments, or other payments which would have qualified as earnings, and which the employee was due to receive in the relevant period, should also be considered.
If an employer is claiming for the employee’s wage costs (the lower of 80% of their reference salary or £2,500 per month) through the CJRS, but they are topping up their wages to full pay at their own cost, no change will be required as the employee’s earnings will not be lower than they would have been, had the employee not been on furlough.
Similarly, no change will be required where, as a result of the coronavirus crisis, the employer and their employee agreed a reduction in their pay during the relevant period outside of the Government’s CJRS.
The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.