Skip to main content

Brexit and the impact on immigration rules

Written by admin on . Posted in BREXIT, Employment Law, Law. No Comments on Brexit and the impact on immigration rules

With the end of freedom of movement between the UK and EU from 1 January 2021, the UK has introduced an immigration system that treats all applicants equally. Anyone recruited to work in the UK from outside the UK, excluding Irish citizens, must meet certain requirements and apply for permission. Employers will need a sponsor licence.

The new system does not apply to EEA or Swiss citizens already employed in the UK, although they will have to apply under the EU Settlement Scheme to continue living in the UK.

Sponsor licences

A sponsor licence will normally be required to employ someone from outside the UK, with the application process typically taking six to eight weeks. Once obtained, the licence is valid for four years.

The licence can cover those with long-term job offers and temporary workers. You can apply for a licence covering one or both types of worker. Before applying to be a sponsor, you should check that the people you want to hire will meet the requirements for coming to the UK for work.

Skilled worker route

This will be the route for most workers employed from outside the UK. Visas are only awarded to those who gain sufficient points, with key requirements including:

  • job offer at the required skill level (A Level and equivalent);
  • English spoken to the required standard; and
  • minimum salary threshold.

Applicants can trade characteristics, such as their qualifications, against a lower salary to get the required number of points.

Impact on recruitment

As expected, the impact on employers and their workforces will be varied. You can no longer rely on EU recruitment to fill low-skilled and mid-level occupations, while those recruiting skilled workers face more onerous requirements and greater expense.

The retention of existing workers is more important than ever, and you will need to plan over the longer term how vacancies are to be filled. For some companies, remote working may offer a solution.

A good starting point for anyone looking to employ from outside the UK is the introduction to new recruitment rules for employers found here.

Photo by Metin Ozer on Unsplash

Lockdown 3.0 – What To Expect

Written by admin on . Posted in COVID-19, Employment Law, Employment Tax, Self-Employed, Tax. No Comments on Lockdown 3.0 – What To Expect

As the third Covid-19 lockdown took effect on 5 January 2021, the Chancellor announced a further £4.6 billion in grants to the retail, hospitality and leisure sectors. This new round of support follows extensions to the job retention and loan schemes revealed on 17 December 2020. There may be more to come with the Budget on Wednesday 3 March 2021.

New lockdown 3.0 grants

An extra £4.6 billion in lockdown grants has been directed at the worst affected sectors.

New one-off grants for closed retail, hospitality and leisure businesses have been announced. The new grants are in addition to all other forms of support, such as the Lockdown Restrictions Support Grant (LRSG (Closed) Addendum) which applied to businesses that were forced to close between 5 November  and 2 December 2020.

The new grants in England will be:

  • £4,000 for businesses with a rateable value of £15,000 or under;
  • £6,000 for businesses with a rateable value between £15,000 and £51,000; and
  • £9,000 for businesses with a rateable value of over £51,000.

In addition, £594 million is being made available for Local Authorities and the Devolved Administrations to support other businesses not eligible for the above grants, that might be affected by the latest restrictions. Businesses should apply to their Local Authorities.

The Devolved Administrations will be receiving additional funding in line with the English measures, with £375 million for Scotland, £227 million for Wales and £127 million for Northern Ireland.

The announcement of the new grants talks of helping business “through to the Spring”, with the Chancellor hinting that additional support measures are to come in the Budget on 3 March 2021.

Coronavirus Job Retention Scheme (CJRS)

The CJRS furlough scheme is now running through to April 2021.

On 17 December 2020, the Chancellor announced a further one-month extension of financial support under the Coronavirus Job Retention Scheme (CJRS) to the end of April 2021. As currently, the government will pay 80% of the salary of employees for hours not worked up to a maximum of £2,500. Employers will only be required to pay wages. National Insurance Contributions (NICs) and pensions for hours worked, and NICs and pensions for hours not worked.

Claims for furloughed employees can only be made for those who were employed and on payroll on 30 October 2020. The employer must have made a PAYE RTI submission to HMRC between 20 March and 30 October 2020, notifying a payment of earnings for that employee. This may differ where an employee has been made redundant, or they stopped working on or after 23 September 2020 and have subsequently been re-employed.

Self-employed Income Support Scheme (SEISS)

No change.

No changes to the SEISS were announced alongside the CJRS extension, as the SEISS already runs through to the end of April 2021. Details of the fourth SEISS grant that will cover the three months from February to April have not yet been released.

Loan schemes

Most schemes extended to 31 March 2021.

On 17 December the Chancellor extended access to the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), and the Coronavirus Large Business Interruption Loan Scheme (CLBILS) until the end of March.

Additional support measures

In November 2020 the Financial Conduct Authority (FCA) published fresh guidance across a range of issues including mortgages and consumer credit and loans. The thrust of these was to limit the maximum payment holiday to six months, which had to be agreed three months at a time.

Content supplied by Taxbriefs. Photo by Priscilla Du Preez on Unsplash

Changes to the National Minimum and Living Wages

Written by admin on . Posted in Budget, Employment Law, Employment Tax, Tax. No Comments on Changes to the National Minimum and Living Wages

One of the announcements to come out of the Chancellor’s Spending Review was welcome increases to minimum wages.

From 1 April 2021, the National Living Wage will get a 19p increase, going up to £8.91 per hour, with this rate being extended to employees aged 23 and over. It currently applies to employees aged 25 year and over.

The original plan was for a more substantial increase, but the Low Pay Commission advised against this as it would have had a negative effect on businesses already struggling from Covid-19 restrictions. National Minimum Wage rate increases are similarly constrained, although the apprentice rate will go up by 3.6%. Future and current rates are:

Age From 1 April 2021 Current
National Living Wage 23 and over (currently 25 and over) £8.91 £8.72
National Minimum Wage 21 to 22 (currently 21 to 24) £8.36 £8.20
National Minimum Wage 18 to 20 £6.56 £6.45
National Minimum Wage 16 to 17 £4.62 £4.55
Apprentices under 19 or in first year £4.30 £4.15

 

Apprentices over 19 who have completed the first year of their apprenticeship are entitled to the rate for their age. The provision of accommodation is the only benefit that counts towards national minimum pay, with the maximum offset increasing to £8.36 per day (£58.52 per week).

What counts as working time?

If you are required to work off-site from the main premises, deciding when to charge for your time is not always straightforward. For example:

  • Count time on standby near the workplace, or waiting to collect goods, meet someone for work or start a job, but not rest breaks.
  • Count time travelling in connection with work (including travelling from one assignment to another) and for training, but not travelling between home and work.

For example, if an employee has an appointment in the morning, then travels to the office to work there she should be paid minimum wage for the duration of the appointment plus the journey to the office. The break she takes for lunch at the office, however, is unpaid.

HMRC has a calculator to check if you paying the correct amounts of National Living Wage and National Minimum.

Social media suggestion
The government announced increases to both the National Living and National Minimum wages, although Covid-19 curtailed more substantial rises.

Photo by Annie Spratt on Unsplash

 

Friday Afternoon Meanderings; What Is The Future of The Company Car Benefit?

Written by admin on . Posted in Company Car Tax, Employment Law, Tax. No Comments on Friday Afternoon Meanderings; What Is The Future of The Company Car Benefit?

It’s not often I get nostalgic, but every once in a while, I harken back to my days in the Revenue (now “HMRC”) and in practice as a tax consultant;  to a time when the company car was the fringe benefit that every employee wanted. As my somewhat fuzzy memory recalls, you had ‘made it’ once you had the keys to a car with no worries about servicing, insuring or, sometimes, even fuel costs. It could also make plenty of tax sense, as the cost of the car was not fully reflected in the amount on which tax was charged. Go back far enough and two company cars were not uncommon for some senior executives.

Unsurprisingly, the days of company cars as tax-efficient remuneration have largely passed, other than for electric vehicles. The government approach to company cars brings to mind the comment of Jean-Batiste Colbert, a 17th century French Minister of Finance, who said “the art of taxation consists in so plucking the goose as to procure the largest quantity of feathers with the least possible amount of hissing”.

Some 400 years later, successive UK chancellors have steadily notched up the company car benefit scales to raise additional revenue from a stable to shrinking number of company car drivers. For example, the latest HMRC data show that between 2010/11 and 2018/19, the average company car taxable value has risen by 57% against a 19% increase in inflation over the same period.

Similarly, the taxable value of ‘free’ fuel (i.e. employer-funded fuel) has risen by 44%. As the graph shows, the popularity of ‘free’ fuel has steadily fallen – only about one in eight company car drivers now pays nothing to fill up their tank. If you are one of that minority, do make sure you have enough private mileage to justify the tax you pay. The main reason for the drop in ‘free’ fuel numbers is that for many employees, the tax bill would be greater than their personal refuelling cost.

The gradual demise of the company car is a lesson in how the tax system can subtly alter over time. A major revamp in the treatment of salary sacrifice schemes introduced in 2017 changed the tax landscape for other fringe benefits, too. The one that has survived and still remains attractive – at least for now – is salary sacrifice to fund pension contributions.

Source: HMRC September 2020

 

 

Winter Blues: Furlough Scheme Version 2.0

Written by admin on . Posted in COVID-19, Employment Law, Tax. No Comments on Winter Blues: Furlough Scheme Version 2.0

With the announcement of another national lockdown, the furlough scheme has been extended for a further month from 1 November until 2 December.

The extension of financial support under the Coronavirus Job Retention Scheme (CJRS) is the same as that given for August, with employees receiving 80% of their salary for hours not worked, capped at £2,500 per month. Employers have to cover National Insurance contributions (NICs) and workplace pension costs.

Two new job support schemes (JSS Closed and JSS Open) set out in the Chancellor’s Winter Economy Plan will now not take effect until the furlough scheme ends.

Differences

One important difference from the previous furlough scheme is that claims can be made for employees notified to HMRC with an RTI submission by 30 October. Otherwise, the extension is similar to the old scheme:

  • Employees recently made redundant can be rehired and furloughed if they were employed up to 23 September.
  • Businesses will be paid upfront to cover their salary costs.
  • Flexible furloughing is allowed, with the employer paying as normal for hours worked. For hours not worked, the employer can make up the employee’s full pay if they wish.
  • Employees can be on any type of contract.
  • Hours not worked will be calculated by reference to the usual hours worked by the employee.
  • The employer’s furlough claim must be for a minimum period of seven consecutive days.
  • Neither the employer nor the employee needs to have previously used the furlough scheme prior to 1 November.

When will the extension end?

There are conflicting reports of whether the lockdown will end, as planned, on 2 December, or whether it will be extended if the infection rate has not fallen sufficiently. Presumably, the furlough scheme will be extended in line with any lockdown extension, although the government is not making any promises.

There should, however, be no gap in eligibility for support between the furlough scheme ending and the new JSSs being introduced.

If you need help in assessing your situation, please let us know.

Photo by Aaron Burden on Unsplash

 

Chancellor Unveils Winter Economy Plan

Written by admin on . Posted in Budget, COVID-19, Employment Law, Tax. No Comments on Chancellor Unveils Winter Economy Plan

The latest pandemic support measures are much less generous than before.

Despite cancelling this year’s Autumn Budget, Rishi Sunak has still made an early autumn appearance before the House of Commons to announce his ‘Winter Economy Plan’. He announced new employment support and amendments to existing schemes.

Job Support Scheme (JSS)

The JSS is the next stage of the furlough scheme (strictly the Coronavirus Job Retention Scheme (CJRS)), which comes to an end on 31 October. The JSS, which will run until 30 April 2021, is aimed primarily at small and medium-sized employers and will only apply to employees who work at least one third of their normal hours. For the hours that are not worked, the government and the employer will each pay one third of lost pay. The net results in terms of employee income and employer costs are shown in the table.

Hours Worked

As

%

Normal Hours

 Employee Income Earned

 

% Full Pay

 Employer Non-working Contribution

 

% Full Pay

 Government Non-working Contribution*

   

% Full Pay

 Total Employee Income

 

% Full Pay

 Total Employer Outlay  

          

% Full Pay
25.00 25.00   0.00   0.00 25.00 25.00
33.33 33.33 22.22 22.22 77.77 55.55
50.00 50.00 16.67 16.67 83.34 66.67
75.00 75.00  8.33  8.33 91.66 83.33
      100.00    100.00 – –     100.00     100.00

*Capped at £697.92 per month.

Payments under the JSS will not affect an employer’s entitlement to the £1,000 Job Retention Bonus.

Self-Employed Income Support Scheme (SEISS)

The existing scheme has been restructured and extended to April 2021. Only those already eligible will be entitled to claim. The first grant, covering the three months to 31 January 2021, will cover 20% of average monthly trading profits and is capped at £1,875. The terms of the grant for the next three months will be set ‘in due course’.

Both the JSS and revised SEISS are considerably less generous than the existing CJRS and SEISS, which have so far (to 20 September) cost the Treasury over £52 billion. This cut to support is understandable from the government’s financial viewpoint, but it is also a reminder of the importance that your personal financial planning makes provision for an adequate cash reserve.

Photo by Donnie Rosie on Unsplash

When is a van a car?

Written by admin on . Posted in Company Car Tax, Employment Law, Law, Tax. No Comments on When is a van a car?

The tax treatment of cars and vans is quite different, with van classification far more beneficial from both an employer and employee perspective. However, the distinction is not always clear-cut, especially where vans have been modified to turn them into multi-purpose vehicles.

In what is now being referred to as the “Coca Cola van case”, the Court of Appeal has ruled that three modified crew-cab vehicles provided by Coca-Cola to its employees, who used them privately, are cars rather than vans, despite the vehicles having the outward appearance of a van.

Modification

The three vans in question were panel vans modified with a second row of seats behind the driver, turning them into crew cabs. With two of the vehicles, the additional seats could only be removed with tools. For the other vehicle, the seats were removed during working hours.

Primarily suited

For benefit purposes, classification as a van depends on a vehicle being primarily suited to the carrying of goods.

The Court of Appeal’s view was that the modifications had transformed the three vans into multi-purpose vehicles, equally suitable for carrying either goods or passengers. Not being primarily suited to the carrying of goods, the vehicles therefore did not qualify as vans.

What a vehicle looks like on the inside overrides its outward appearance.

The decision could also see crew cabs reclassified for capital allowance purposes (so no annual investment allowance), but still considered vans for VAT purposes provided they can carry a payload of one tonne or more.

Implications

Employers should be aware of the tax implications of providing similar modified crew cab vehicles where private use is permitted.

The decision will mean a higher benefit charge for employees, and additional class 1A NICs for employers. The change should be applied from 2020/21 onwards, and also potentially backdated to 2018/19 (when the case was heard at the Upper Tribunal).

HMRC guidance on the difference between cars and vans for car benefit purposes can be found here .

Photo by Paul Hanaoka on Unsplash

 

HMRC targets employers over CJRS claims

Written by admin on . Posted in COVID-19, Employment Law, Law, Tax. No Comments on HMRC targets employers over CJRS claims

With reports of two-thirds of furloughed employees continuing to work during the Covid-19 lockdown, despite the initial prohibition of work as an explicit condition of furlough, it is no surprise that HMRC has already written to 3,000 employers it believes may need to repay some or all of the grant they have received under the Coronavirus Job Retention Scheme (CJRS).

Until 30 June, it was a condition of the scheme that furloughed employees cease all work in relation to their employment. Flexible furlough was brought in from 1 July, so HMRC are likely to only pursue the most blatant cases of employees continuing to work, such as where an employer instructed them to do so.

Incorrect claims

HMRC will also be concerned where an employer has:

  • Claimed more grant than they are entitled to, for example, where a claim is based on inflated wage figures.
  • Claimed the grant despite not meeting the conditions such as including ineligible employees.
  • Not passed the grant on as wages to the furloughed employees.

HMRC’s target is those who have deliberately defrauded the system. However, even if they believe no mistake has been made in their claims, any employer contacted by HMRC should respond to the enquiry.

Amnesty

An employer can repay any overpaid amount of CJRS grant without incurring a penalty provided HMRC is notified within 90 days of the later of:

  • 20th October 2020;
  • the date the grant was received, or
  • the date when circumstances changed so the employer is no longer entitled to keep the grant.

Failure to meet the deadlines could result in a minimum penalty of 30% of the grant improperly claimed, with a potential maximum penalty of 100%.

The overpaid amount may be recovered by HMRC making an assessment. Otherwise, the employer will be subject to a tax charge payable on the usual tax due dates for an individual or a company.

Latest HMRC guidance on eligibility for the furlough scheme can be found here.

Photo by Markus Winkler on Unsplash

Revised furlough scheme stretched through October

Written by admin on . Posted in Employment Law. No Comments on Revised furlough scheme stretched through October

The Covid-19 furlough scheme has been effectively revised into a new scheme running from 1 July until 31 October, but this comes with a level of complexity that did not exist in its original guise.

Much of the complexity arises because employers can now bring furloughed employees back to work flexibly on a part-time basis, while still being able to claim under the scheme for the hours not worked.

One very important change is that claims cannot now straddle months. This is because the scheme rules will change from month to month.

From 1 July, only employees who were furloughed under the original scheme ending on
30 June are eligible for further grants. However, the minimum three-week furlough period has now been removed.

Hours worked

For flexibly furloughed employees, employers will have to calculate the employee’s:

  • Usual hours – There are two different calculations depending on whether an employee works fixed or variable (or zero) hours. The calculation can be confusing and may not always deliver the obvious answer, especially for employees on variable or zero hours.
  • Actual hours worked – This could be an issue for directors who have no fixed hours. Accurate record keeping will be essential for both employees and directors. For hours actually worked, employees must be paid their normal wage.
  • Furloughed hours worked – Simply calculated as usual hours less worked hours.

A new written agreement is required for flexibly furloughed employees to confirm the new arrangements.

When claiming for flexibly furloughed employees, employers should not claim until they are sure of the exact number of hours that will be worked during the claim period. If a claim is made in advance and fewer hours are worked than expected, a refund will have to be made to HMRC.

Maximum number

With certain exceptions, the maximum number of employees included in a furlough claim from 1 July onwards cannot exceed the highest number of employees included in any claim up to and including 30 June.

HMRC has provided various worked examples of how to calculate an employees’ wages, NICs and pension contributions.