October 2020 Payroll news: Furlough, Employment Allowance, National Living Wage and Pensions
In the world of Payroll, there have been a lot of changes since April, none more so than the Government's Coronavirus Job Retention scheme. This scheme ends on the 31st of October and all employers should be aware to carry out a post-COVID review of their payroll. As the CJRS scheme was based on previous earnings there are a few things to consider:
- Are you paying all your employees at least the minimum wage?
- If you are committed to the national living wage, are you keeping track of new rates?
- Directors allowances increased in April – are you maximising this benefit?
- Are you claiming the correct allowances as a company?
Furlough Scheme
A reminder that the furlough scheme will end on the 31st October 2020, more importantly, the Government contribution to furlough drops from 70% to 60% from the 1st October. You’re also required to top up your employees’ salaries to at least 80% of their wages.
All claims must be submitted no later than 30 November 2020. To manage this, we’re asking our clients to provide all relevant information so we can process payroll and furlough claims at least 7 days before the desired payment date.
Employment Allowance
While previously most companies were entitled to claim the Employers Allowance will now only apply to smaller businesses. Those with an Employer NI bill of £100,000 or more in the previous tax year will not be able to claim the allowance.
For the 2020/21 tax year, the Employment Allowance is increasing to £4,000 (it was £3,000 in the 2019/20 tax year). This means that an employer can reduce the amount of National Insurance contributions they pay for their employees by up to £4,000 for the 2020/2021 tax year.
Your payroll provider should automatically adjust your PAYE to reflect this unless you advise us otherwise.
National Living Wage & Minimum Wage
From April 2020, a new National Living Wage of £8.72 an hour for those aged 25 and over was put in place.
The National Minimum Wage will change as follows:
Apprentice rate = £4.15
Age 16 & 17 = £4.55
Age 18 to 20 = £6.45
Age 21 to 24 = £8.20
If you were utilising CJRS for any staff being paid minimum wage, then the above rates will not have been implemented in April and will need reviewing when CJRS comes to an end/your employees return from furlough leave.
Remember, if you don’t implement these changes, you will incur penalties.
Your payroll provider should automatically update any employee’s pay if they will be affected by this.
Pensions/Auto-enrolment/Re-Enrolment
Did you know? Every three years you must put certain staff who have left your pension scheme back into it. This is called a re-enrolment.
Whether you have the staff to put back into your scheme or not, you must complete a re-declaration of compliance to tell payroll how you have met your obligations.
Remember, re-enrolment and re-declaration are your legal responsibilities and if you don't act, you could be fined.
We appreciate that pensions are complicated and not everyone understands the regulations, that’s why payroll providers are here to help. For instance, we offer an “Auto-Enrolment” service that manages the re-enrolment and re-declaration process for a monthly cost of £5 for up to 5 employees and £1 per employee per month thereafter.
Under the Pensions Act 2008, the responsibility lies with you to make sure the right minimum contributions are being paid for your staff.
Quill is here to support you by informing you if we notice that the contribution levels are below those required.
If you are already paying above the increased amounts, you don’t need to take any further action. You also need to let your staff know about any increases being applied to their contributions.
Contact our Payroll Services team today to arrange a free of charge meeting and see how we can help you save time and money with your payroll administration.
