CJRS claims worth a review

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The Coronavirus Job Retention Scheme (CJRS) ended on 30 September 2021. Claims for September had to be submitted no later than 14 October 2021 and any amendments for amounts you were entitled to (but did not claim for in error), had to be made by 28 October 2021.

HMRC has been increasing its compliance checks in recent months with employers it believes may have falsely claimed Government money via the CJRS. Although it is targeting primarily companies it believes have fraudulently made incorrect claims, we recommend all companies review previous claims to make sure that no amounts have been overclaimed via the CJRS.

By documenting such a review, even if it shows no overclaims, companies can demonstrate that they have taken their compliance obligations seriously, which is the behaviour HMRC expects. Doing so will mean that should HMRC select a company for review, this compliant approach may help prevent HMRC from conducting a detailed review of claims during an employer compliance review that arises within the next six years (the period companies are required to keep records for) which could be a time consuming exercise.

Stay updated on fuel rates

HMRC updated the advisory fuel rates on 1 September. It’s important that employers use the current and correct rates to reimburse employees for their business travel using a company car at the correct amounts as using a higher rate than appropriate will give rise to taxable employment income. The updated fuel rates are as follows:

Engine size

Petrol – rate per mile

LPG – rate per mile

1400cc or less

12 pence

7 pence

1401cc to 2000cc

14 pence

8 pence

Over 2000cc

20 pence

12 pence

Engine size

Diesel – rate per mile

1600cc or less

10 pence

1601cc to 2000cc

12 pence

Over 2000cc

15 pence

The advisory electricity rate for fully electric cars is 4 pence per mile.

Whenever employers reimburse costs of business travel in company cars, or receive payment from employees for the cost of fuel for private use at differing rates, records must be kept that support the rates used.

EU social security deal ends soon

Do you have employees who normally work in the UK, the EU, or both, who have had to change their work location temporarily because of COVID-19-related travel restrictions? If so, HMRC can consider individual circumstances, including where an individual normally works, to decide whether national insurance contributions are due in the UK.

The arrangements with the EU, which allow HMRC to disregard changes to individuals’ work locations caused solely by COVID-19 related restrictions, will end no later than 31 December 2021. However this is likely to be reviewed continuously along with any further COVID-19 developments.

Claim working from home tax relief

Many employers have required their employees to work from home during the pandemic, increasing the employees’ household costs.

Tax relief is available in respect of such additional household costs (such as heating, metered water bills or business calls) up to certain limits – whether these are reimbursed by their employer or not. Tax relief is available on the following:

  • a fixed rate of £6 a week for tax years 2020/21 and 2021/22 (£4 a week for previous tax years) – HMRC does not require evidence of the extra costs – or
  • the exact amount of extra costs incurred above the weekly amount – individuals need to keep evidence of the additional expense (such as receipts, bills or contracts)

HMRC has confirmed that the £6 a week allowance does not need to be apportioned for those working from home for part of the tax year. Tax relief of £312 can be claimed by the employee, as long as they were working from home at some point in the tax year.

As an employer, if you have reimbursed more than £6 per week as a round sum allowance to employees for the expense of working from home, some of that payment may be taxable. Any such taxable payment would be liable for PAYE income tax and Class 1 national insurance contributions.

If you have not reimbursed employees for the additional expense, they can claim the tax relief themselves using the HMRC online service or via their Self-Assessment tax return.

Scottish student loans Plan Type 4

A reminder to update your payroll software to include the new Student Loan Plan 4. If your software does not include Plan 4 , you will need to speak to your software provider immediately.

It is important to check your online notifications and start notices to make sure you are using the correct plan type, as this will impact your employees’ take home pay and student loan balance.

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