DMS Posts, Other

Chancellor’s Summer Statement

Sunak’s opening remarks

The chancellor says people are anxious about losing their job and unemployment rising. “We’re not just going to accept this,” he adds.

Sunak says he is announcing a “plan for jobs” to protect, create and support employment.

He says at the start of the crisis the government provided £160bn to cushion the economic fallout from the Covid-19 crisis and lockdown.

Britain is entering the second phase of the government’s economic response, he says. The job responding to the crisis has “only just begun”, he adds.

The chancellor says the government will put the public finances back on a “sustainable footing”, but he suggests this should be in future as Britain rebuilds.

Furlough scheme

The furlough scheme will wind down flexibly and gradually until the end of October, Sunak confirms.

“Leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before,” says the chancellor.

A jobs retention bonus will help to wind down the scheme: businesses will be paid £1,000 to retain furloughed staff. This would cost the Treasury more than £9bn if every job furloughed is protected, Sunak says.

Kickstart scheme

Sunak announces the “kickstart” job creation scheme for young people. The government will pay the wages of new young employees for six months.

There will be an initial £2bn to fund hundreds of thousands of jobs. Sunak says there will be no cap on the number of places available.

Training and jobs

Jobcentre work coach numbers will be doubled, the chancellor says.

Apprenticeships will be supported by bonuses for companies. Firms will get a payment of £2,000 for each apprentice they take on. Companies taking on apprentices aged over 25 will be given £1,500.

Green investment

Sunak says the government wants a “green recovery with concern for our environment at its heart”.

As previously announced, the government will provide £3bn for decarbonising housing and public buildings.

Vouchers worth £5,000 and up to £10,000 for poorer families will be made available out of a £2bn pot to retrofit homes with insulation, helping to cut carbon emissions.

£1bn will be allocated to make public buildings greener.

Stamp duty

The chancellor announces he will cut stamp duty to reinvigorate the housing market.

The threshold for stamp duty will increase from £125,000 to £500,000. The cut will be temporary, running until 31 March 2021, and will take effect immediately.

VAT cut for hospitality

Sunak says 2 million people work in the hospitality sector and that it has been one of the hardest hit by Covid-19, warranting further support from the government.

VAT will be cut from the current rate of 20% to 5% for the next six months on food, accommodation and attractions. The cut lasts from Wednesday 8 July until 12 January 2021.

Sunak says the move is a £4bn catalyst, benefiting more than 150,000 businesses and consumers.

Discounts on eating out

The chancellor announces an “eat out to help out discount” to encourage consumers to spend at restaurants and cafes.

Meals eaten at any participating businesses, from Mondays to Wednesdays in August, will be 50% off up to a maximum discount of £10 per head for everyone, including children.

Businesses will be able to register through a website launching on Monday. Firms can claim money back to have money in their bank accounts within five working days.

Sunak says 1.8 million people work in the industry, whose jobs can be supported. “We can all eat out to help out,” he adds.

DMS Posts, Other

Beware ‘HMRC’ phone scams – surge in calls telling victims they owe taxman £1,000s

Fraudsters are increasingly carrying out sophisticated phone scams which can involve them threatening victims with immediate arrest if they don’t pay £1,000s on the spot – and bogus calls in some cases appear to come from HMRC’s telephone number. If you receive an urgent demand to pay tax over the phone, beware.

HM Revenue & Customs revealed earlier this month that it received more than 60,000 reports of scam calls in the six months leading up to January 2019 – an increase of 360% compared to the previous six months.

And one particularly alarming scam sees fraudsters ring and tell the victim that they will be arrested for tax fraud, unless they instantly hand over payment details and pay a fee – sometimes in excess of £4,000.

Those who’ve been contacted by scammers have described the calls as “very convincing”.  MoneySavingExpert.com founder Martin Lewis tweeted about the issue after a distressed victim told him they’d lost £4,000:


Martin Lewis@MartinSLewis

IMPORTANT WARNING PLS SHARE! Beware a spate of SCAM HMRC calls eg “there’s warrant for ur arrest,” “you’re being done for fraud!” so “we need money today!” They can spoof it so it comes from HMRC’s actual number. Never pay. Call HMRC from ANOTHER phone if u want to check

.8:19 AM · Mar 14, 20193.2K4.6K people are Tweeting about this

But HMRC says it will never call you up out of the blue and tell you that you owe money, and will only ever call asking for payment on a debt that you are already aware of.

How does the ‘HMRC’ phone scam work?

This isn’t a new issue – we’ve long warned about this kind of scam call, and fraudsters pretending to be from HMRC use many different tactics to extort money from innocent people. But HMRC says it’s seen a sharp rise in bogus calls over the past six months, and one scam that’s being widely reported at the moment involves scammers ringing you and telling you that you’re suspected of tax fraud and are about to be arrested.

MoneySavers have told us that the fraudster will then ask their victim to confirm details, such as their name and postcode, before telling them how much they ‘owe’. If challenged, fraudsters then begin to give elaborate threats, for example claiming that they are dispatching police officers to arrest you within minutes, or that they will freeze your passport – neither of which, of course, they can do.

Victims are then pressured into giving their card details, which enable the scammers to take money from their account.

To make matters worse, calls often come from a number which appears similar to an HMRC one, and in some cases victims have said scammers have ‘cloned’ an HMRC number so that HMRC’s actual number appears on the screen. This is known as ‘number spoofing’ and is something Action Fraud – the UK’s national reporting centre for fraud – has previously warned about.

How to protect yourself from scam calls

HMRC has issued the following guidance to people to stop them getting caught out:

1. Recognise the signs. Genuine organisations like banks and HMRC will never contact you out of the blue to ask for your PIN, password or bank details.

2. Stay safe. Don’t give out private information, reply to text messages, download attachments or click on links in emails you weren’t expecting.

3. Take action. Forward suspicious emails and details of calls claiming to be from HMRC to phishing@hmrc.gsi.gov.uk and texts to 60599, or contact Action Fraud on 0300 123 2040 if you suffer financial loss.

If you think you’ve received a bogus HMRC call, email or text, you can check it against the examples shown in this HMRC guide. The Gov.uk website also has more info on how to avoid and report scams and recognise genuine HMRC contact, and we’ve more help in our 30+ Ways to Stop Scams guide.

If you do lose money to one of these scams, it may be possible to get money back from your bank. New rules mean that when someone has been tricked into making a payment themselves, they may be able to get cash back.

What does HMRC say?

A HMRC spokesperson said: “We will only ever call you asking for payment on a debt that you are already aware of, either having received a letter about it, or after you’ve told us you owe some tax, for example through a self-assessment return.

“We work relentlessly to close scams down and make people aware of them. HMRC has a trusted brand which can be abused by fraudsters to trick people trying to fulfil their legal obligations. We have invested heavily in protecting taxpayers against scams and anyone who suffers financial loss as a result of one should inform Action Fraud.”

DMS Posts, PAYE

Extention to the Coronavirus JRS and flexible furloughing

Coronavirus (COVID-19) Job Retention Scheme useful links

Check if you can claim through CJRS

Claim for wages through CJRS

Job retention scheme calculator

Guidance on calculating your employee wages to claim

Steps to take before calculating your claim

Work out your employee’s usual and furloughed hours

Business support finder

Get help from HMRC if you need extra support

Working safely during coronavirus (COVID-19) business webinars – find out how to make your workplace COVID-secure

The UK Government, in consultation with industry, has produced guidance for business to help ensure workplaces in England are as safe as possible during the coronavirus pandemic. 

Register to join free webinars, hosted by the Department of Business, Energy and Industrial Strategy, to find out more about how to make your workplace COVID-secure.

Check a National Insurance number using Basic PAYE Tools

NHS test and trace: how it works

Budget, DMS Posts, Tax

What’s changing for small businesses in the 2020/2021 tax year?

A new tax year is starting on April 6th, which will mean many of the changes announced in recent Budgets will come into effect. Before the 2020/2021 tax year kicks off, here’s a roundup of some of the key changes small business.

Changes to some tax and National Insurance rates and bands

Some of the rates and bands have been frozen, while others have increased. Here are the rates and bands that will come into effect on 6th April:

England, Northern Ireland and Wales

2020/212019/20
Personal allowance£12,500£12,500
Employee’s NI becomes due at£9,500£8,632
Employer’s NI becomes due at£8,788£8,632
Higher rate tax becomes due at£50,000£50,000
Class 2 NI becomes due when profits exceed£6,475£6,365
Class 2 NI per week£3.05£3.00
Class 4 NI becomes due when profits exceed£9,500£8,632

Scottish Tax Rates and Bands

The Scottish rates of income tax will change to the below on 11th May 2020.

2020/212019/20
Personal allowance£0 – £12,500£0 – £12,500
Starter rate 19%£12,501 – £14,585£12,501 – £14,549
Basic rate 20%£14,586 – £25,158£14,550 – £24,944
Intermediate rate 21%£25,159 – £43,430£24,945 – £43,430
Higher rate 41%£43,431 – £150,000£43,431 – £150,000
Top rate 46%Over £150,000Over £150,000

Employment Allowance Increased

The Employment Allowance will increase from £3,000 to £4,000 on 6th April but from this date, only businesses with an employer’s NI liability of under £100,000 a year will be eligible to claim the allowance.

National Minimum Wage / National Living Wage rates per hour increased

The following rates will all increase on 6th April:

2020/212019/20
Employees aged 25 and over: NLW£8.72£8.21
Employees aged under 18: NMW£4.55£4.35
Employees aged 18-20: NMW£6.45£6.15
Employees aged 21-24: NMW£8.20£7.70

Student Loan Income thresholds

The levels of income above which student loan repayments are due will change on 6th April as follows:

2020/212019/20
Undergraduate loan: plan 1£19,390£18,935
Undergraduate loan: plan 2£26,575£25,725
Postgraduate loan£21,000£21,000

Working from home rate for employees increased

If any of your clients operate their own limited company and claim costs for working from home, HMRC will ask them for proof of any working from home costs of over £6 (rather than £4) from 6th April 2020.

Delays and cancellations to planned changes

Corporation Tax rate holds steady

The rate at which limited companies pay Corporation Tax was originally planned to decrease from 19% to 17% on 1st April but these plans have now been cancelled. The rate of Corporation Tax will now remain at 19%.

IR35 changes delayed

Changes to the operation of IR35 legislation in the private sector that were due to take effect on 6th April 2020 have now been delayed until April 2021.

DMS Posts, PAYE, Tax

Coronavirus Job Retention Scheme – What do we know so far?

The Government announced an extensive package of support on Friday 20 March for employers coping with the commercial difficulties arising from Covid-19. This has been welcomed by employers, many of whom we have been speaking to, who have been extremely concerned about how to pay wages when revenues have dried up or they have been forced to close. Those businesses have been facing very tough choices around lay off, short term working and redundancies – while trying to balance the finances, needs of the business and the livelihoods of their staff and communities. 

The key measure announced to help employers is the Coronavirus Job Retention Scheme. Through this, employers can claim a grant to cover up to 80% of an employee’s wage costs. At the time of writing (19:00 on 22 March), we are awaiting detailed guidance as to exactly how this will work: but what do we know about the scheme so far?

Which employers are eligible for the scheme?

All UK employers can apply – you don’t need to be in any specific sectors, just pay people via PAYE. This includes businesses of any size and includes charitable or non profit. 

How do you access the scheme?

According to guidance on the Gov.uk webpage, employers will need to:

  • designate affected employees as ‘furloughed workers,’ and notify their employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC will set out further details on the information required.

It is unclear at this time what (if any) financial information an employer would need to provide to HMRC to show that you cannot cover staff costs due to Covid-19. 

The employer will be able to claim a grant of up to 80% of the employees wage for all employment costs, up to a cap of £2,500 per month.

The scheme will be backdated to 1 March (useful for employers who have already had to make lay offs) and will be open for at least 3 months, but extended ‘for longer if necessary’. 

As this is a reimbursement grant, the employer will make the wage payment to the furloughed employee and then be reimbursed by HMRC. At this stage the timescale is unknown, although the Chancellor suggested the first payouts could be made by the end of April at the latest. Please see here for more details of support that may assist with cash flow through this time.

What does Furloughed mean?

There is no previous legal term for this and it is a completely new concept to English Employment Law. The common definition of to ‘furlough’ is to allow or force someone to be absent temporarily from work. 

We understand that if an employer needs to make an employee redundant or lay them off, they can instead discuss with the employee them becoming classified as a ‘furloughed worker’. This would mean they would remain on the employer’s payroll, rather than being made redundant or laid off with no pay. Their employment would continue but they could not undertake any work for the employer while classified in this way.  

We are still waiting for the detail, but it seems most likely that if an employee has an express lay off clause in their contract, the employer could designate the employee as a furloughed worker. The employer would need to discuss this with staff. 

If the employee does not have a lay off clause in their contract, the employer is likely to need to have a discussion and seek the employee’s consent to be classified as a furloughed worker.  Given that the alternative could be redundancy, most employees are likely to agree. This may depend on what amount of paid notice, Statutory Redundancy Pay and holiday pay they would receive if made redundant. It may also depend on whether the employer is able to ‘top up’ the pay (so the furloughed worker is paid 100% not 80%) or offer for the employee to take or be paid for their accrued but not yet taken annual leave as well. 

Does the employer have to pay more than 80% to Furloughed Workers?

No – the early guidance is clear that the employer could choose to fund the differences between this payment and the employee’s salary, but does not have to.

At this point in time we don’t know whether the 80% grant is limited to just salary or whether it extends to include Employers National Insurance or costs for any benefits such as pensions, health insurance etc. Although it seems unlikely, this might mean that the sum actually paid to the employee is less than 80% of net salary, so care should be given by employers when communicating with staff to say that wage payments for furloughed employees will be in accordance with the scheme.  

We also don’t know how that 80% would be calculated for those whose monthly or weekly salary varies. Again at this stage it is best to communicate to those staff that payments will be in accordance with the scheme once clarified. 

Possible knock on impacts?

At this stage, it is right to feel relieved that there will be a safety net. Further clarification will be welcome, especially in the following areas which could become problematic as this develops:

  • If an employer need some employees to continue to work, how do they choose who to classify as a furloughed worker and who should work on? In the absence of any guidance, we would recommend a selection criteria akin to a redundancy selection matrix, making sure you avoid any discriminatory criteria. It will be interesting to see whether any Government emphasis is placed on giving furloughed status to those who have medical conditions that place them at higher risk from Covid-19 or those who need to care for dependants. Without that Government emphasis employers may face discrimination risks in doing so. 
  • How do you deal with dissatisfaction of those good employees that you ask to carry working on, when other possibly less high performing employees are offered and become furloughed?
  • How do you deal with those on Maternity? We expect it will be the position that those on maternity remain on maternity leave until they wish to return, at which point you would need to assess whether there is work for them or offer them to be furloughed. This could cause issues given that the payment to employees who are furloughed could be significantly higher than statutory maternity pay.
  • What about those who are currently off sick or self isolating on SSP? Should they be furloughed?
  • If there is a delay in payment by HMRC, can you pass that delay on to your employees? This seems unlikely to be encouraged and without provision by the Government may amount to a breach of contract or unlawful deduction of wages. HMRC has set-up a dedicated helpline on 0800 0159 559 for businesses and individuals in financial distress.

We anticipate HMRC will provide details in due course and we will provide updates regularly. In the interim we recommend you regularly check the Gov.uk website which is being updated most days.