The payroll implications of Friday’s Covid-19 announcements

To start this blog on a positive note, the level of support for UK business announced by the Chancellor on Friday 20 March is unparalleled in UK history.

Looking at the implications to payroll of this announcement, recovery of two weeks’ Statutory Sick Pay for businesses with less than 250 employees for Coronavirus related sickness, is welcome, although not yet enshrined in law and until that happens no reclaims are available. If you are an employer, you are required to keep a note of any related sickness and reclaim this at a later date. As we currently understand the situation, once the law is enshrined, claims can be backdated to 13 March 2020.

The Coronavirus Job Retention Scheme, again, is extremely good news but does ask more questions on a practical level, that hopefully will be ironed out over the next few days. Questions like:

  • What is the process for making a claim – is it via an HMRC portal that is yet to be set up?
  • Do employment contracts need to be reviewed/renegotiated to allow for ‘furloughing’, granting leaves of absence?
  • Is the 80% of salary that is referenced related to Gross or Net pay? Initial advice appears to say ‘furloughed workers wages costs’. So we would assume Gross pay?
  • Are Workplace pension costs included?
  • Again the system to deal with this is not in place and the question we will be asked is “when can I get my hands on the cash?”
    Hopefully we will know more soon.

The payroll side of the announcements does appear to be promising non-repayable grants and reimbursements and so provides good news in terms of the potential cash to be received, it is just a case of when.

From the self-employed side of the announcements, and we believe there are more to come, Income Tax payment has been deferred to July 2020 for the second payment on account for ‘self-employed’ individuals, again good news for the self-employed. This is an automatic offer which does not need to be claimed. However, you will need to watch cashflow at 31 January 2021, as effectively this payment will become one whole tax year’s liability (2nd POA 2019/20, Balancing Payment 2019/20 and 1st POA 2020/21). I presume, however time to pay arrangements will still be available.

For further information on your payroll, or for support with managing your payroll over the coming weeks, please speak either to Brian or your usual UHY contact.