Change is coming: are you prepared? This April, the new financial year brings significant changes to the employer landscape – namely, IR35 and the EU settlement scheme. Read on for the key facts and dates you need to know to ensure your business is ready.
IR35 applies to people who work for a business in a self-employed capacity but are essentially employees. Clamping down on this practice, changes to UK law will see HMRC recover unpaid tax and National Insurance from businesses if they believe employers are guilty of using self-employment loopholes to avoid giving employees necessary rights and benefits.
From 1 April 2021, companies that employ more than 50 employees or have a turnover of over £10.2 million will need to pay tax or National Insurance for workers or contractors who are essentially employees.
What’s the difference between an employee and a contractor?
Employees have a contract, paid holidays, PAYE, pensions, and a host of employment rights. Meanwhile, self-employed freelancers, workers, and contractors submit invoices, aren’t entitled to holiday or sick pay, and don’t share the same rights as employees.
EU settled status
Another critical change coming to the world of employment is the EU settled status. This applies to businesses with EU citizens working for them, as the individuals will have to reapply for residency status.
Post-Brexit, EU workers can only remain in the UK if they arrived before 31 December 2020 and have applied for residency via the EU Settlement Scheme.
Once individuals have settled status, they’re free to remain in the UK indefinitely and may be eligible to apply for citizenship.
Pre-settled status is available to those who have been in the UK for less than five years. It permits them to stay for five years, after which they can choose to apply for full settled status if they wish to remain here.
The good news is, there’s still time to apply for EU settled status if you or your employees haven’t done it yet.
The deadline for employees to apply for EU settled status is 30 June 2021. It’s free, and you can do it here: https://www.gov.uk/settled-status-eu-citizens-families/applying-for-settled-status
If you’re unsure whether your employees have a legal right to work in the UK post-Brexit, you can check here: https://www.gov.uk/government/publications/right-to-work-checklist
Can I still employ someone from outside the UK post-Brexit?
Free movement between the UK and the EU ended on 31 December 2020, and a new points-based immigration system is in place in the UK.
So, while you can still employ people from the EU to work in your business following Brexit, they must score the necessary points and have a relevant work permit or status, and you must have a sponsor licence from the Home Office.
Skilled workers who have a job offer from an approved employer sponsor must have a skill level equivalent of RQF3 (equivalent to A level), speak English, score 70 points on the system, and earn at least £25,600 (or the “going rate” for the job).
Employees earning lower salaries may still apply by “trading” points, or if their job is on the shortage occupation list.
You may also transfer an employee from another part of your international business to work in the UK via an “intra-company transfer”, but certain stipulations apply.
Need help preparing for IR35 or post-Brexit employment?
Hopefully, this summary will help you work through the changes coming up in 2021.
If you still need any advice or support, we’re here to help. Call us on 0330 555 1139 or drop us a line at email@example.com
You can also take a look at our webinar below, delivered for RIBA West London to share some insight on HR matters currently affecting their members. After many interminable months of furlough doom and gloom, it was great to talk about how businesses can prepare for the future:
- Brexit and work permits
- IR35 and the impact on contracts
- And more
Check out the recording below and ensure you plan for the upcoming change.
With the (dare we say it?) unprecedented events of 2020 behind us, it’s time to look ahead to 2021. January is the ideal time to reflect on lessons learned in the previous year and prepare for a successful 12 months.
Now, more than ever, it’s vital to tackle the year head-on armed with as much information and foresight as possible.
Read on to see what we gleaned from the challenges of 2020, and how you can set your business up for a fruitful 2021.
How did we support you through 2020?
Hopefully, we were able to support you and your business during the trials of 2020, whether as a client or simply by reading our blogs for HR advice and suggestions on navigating the many issues the year threw at us.
In a rapidly changing landscape of furlough, redundancies and working from home, we sought to be your HR helpline and respond to your shifting needs. As well as providing plenty of free advice, we also created useful resources to address topical challenges happening in your business.
Finding the positives in 2020, we posted a guest blog full of insightful advice on maximising efficiency, income and budget, as well as encouraging you to recognise your strengths and congratulate yourself on surviving what was undoubtedly one of the most challenging years in business.
Appreciating your positive qualities is a fantastic way to grow, both personally and professionally.
In July, we created a free restructuring toolkit to help you work through the changes in your business from an HR perspective. The kit featured advice on redundancy, a business plan template, meeting record templates, at-risk employee communications and a redundancy notice period template.
Aimed at maximising your reduced budget and limited time, the kit is still available for free on our website – download it here.
Return to work toolkit
Bringing your employees back to work after lockdowns and furlough periods was another task to overcome in 2020. To ease the transition, we created a free HR return to work guide. This pack included risk assessments, Covid-safe workplace advice, office hours tips, flexible working support and wellbeing guidance.
Now we’re in our third lockdown, this pack will once again prove useful when your team returns to the office. Download yours here.
Why is HR important to your business in 2021?
With constant changes occurring in the world of work, HR is the cornerstone of your business and can enable you to support your teams through the pandemic’s everyday challenges.
As HR specialists, we understand your employees’ needs and can help you implement processes and procedures that will support your teams and safeguard your business.
Plus, we stay on top of HR trends, technology and challenges to communicate the critical takeaways to you in a simple, digestible format with clear advice on how you can keep your business protected and productive.
Why you need to start planning your year
Forget diets and detoxes: top of your list of new year’s resolutions should be business planning!
Plotting out your objectives and targets for the year may seem tricky at such a confusing time, but it will provide you with a roadmap through which to steer your business through the coming months.
Setting targets helps you prepare for all eventualities, meaning no nasty surprises. Plus, it can encourage positive changes in behaviour which spark higher retention rates, less pressure and increased productivity among your team.
What’s more, planning the year will enable you to react fast to industry or nationwide changes, understand your budget and funding options better and manage staffing levels successfully.
A crucial part of your planning for the year should include your appraisal schedule. As every business tries to perform to its potential during challenging circumstances, appraisals can help you assess what’s working and what’s not. In doing so, you can carve out a clear action plan to ensure your business maximises its resources to hit key targets.
Find out more about appraisals and download your free guide here.
HR changes post-Brexit
January 2021 sees a new points-based immigration system implemented in the UK, so employers who wish to recruit or retain non-UK citizens must follow specific processes to stay compliant. Plus, employees themselves may have the reapply for residency status.
If you’re unsure about these issues and how they might affect your team, check out our blog on the subject here.
Keep following our blog and social media channels to stay updated on all the latest post-Brexit HR news as it develops over this year.
Preparing for IR35
Originally scheduled to be introduced in April 2020, the IR35 tax legislation will now come into play this April.
For a full explanation of the changes due to be implemented – and how you can prepare for them – check out our blog on IR35 here.
Here to support you
As you take your business into 2021, we want to reassure you that we’ll be here with you every step of the way.
HR is a critical element in the smooth running of your business, especially during challenging periods. So, we will be providing advice, support and guidance at every turn.
Whether you’re a client or you use our free HR resources – like the restructuring toolkit, the return to work toolkit or the appraisals toolkit, for example – we will be working hard for you throughout 2021 and beyond.
Remember, we’re always available for a chat, advice or support – please contact us if we can help your business with any kind of HR guidance.
It can be hard to keep on top of the latest advice and regulations at the best of times when you’re spread thin and busy with deadlines – let alone in the middle of a global pandemic.
Understandably, many of our clients feel overwhelmed by all the information out there. Especially with so many opinion pieces and inaccurate assumptions, it can be hard to know what to trust.
To help you cut through all of this noise, we’ve collated some useful resources to help address your most pressing concerns.
This article outlines some of the key changes that you should be aware of and points you in the right direction for more information and support should you need it.
We hope it helps in this stressful time.
Coronavirus Job Retention Scheme
It is well reported that HMRC will reimburse 80% of furloughed workers’ wage costs up to a cap of £2,500pm. This is part of their plan to support businesses during the coronavirus outbreak.
Who counts as a furloughed worker?
A furloughed worker is someone who is still employed but not working, perhaps due to a lack of work. The purpose of this scheme is to help businesses to continue paying employees that would have otherwise been laid off by putting them on temporary leave.
Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including:
- Full-time employees
- Part-time employees
- Employees on agency contracts
- Employees on flexible or zero-hour contracts
If you have made employees redundant since 28 February 2020, you can rehire and cover these employees under the scheme too.
What will it cost the employer?
The Coronavirus Job Retention Scheme is open to all UK employers for at least three months starting from 1 March 2020. In addition to the 80% grant covered by the government, businesses must also pay:
- Employer National Insurance contribution
- Minimum enrolment employer pension contribution
Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme.
A breakdown of the government support available for businesses
How to access the scheme
Claiming Statutory Sick Pay (SSP)
If you’re self-isolating because of COVID-19, you are entitled to receive Statutory Sick Pay (SSP) of £94.25 per week.
When can I claim SSP?
New legislation has been brought forward to give you access to SSP from the first day you’re self-isolating and cannot work. This new legislation came into action on 13.03.20 and overrides the previous 4-day caveat.
How to report and manage sickness in 10 easy steps
When should I self-isolate?
How to claim SSP
Changes to IR35
In light of the coronavirus creating business uncertainty and high levels of stress, the Treasury confirmed that they would postpone IR35 for another year.
This means that businesses now have until April 2021 to address the reforms necessary. These changes will drive major change in the contracting industry.
What is IR35?
IR35 is designed to combat tax avoidance by “disguised employees”. Under new rules, every medium and large private sector business in the UK will become liable for setting the tax status of any employee that they hire – including contract and temporary workers.
The new rules will apply to businesses with either:
- 50+ employees
- An annual turnover of over £10.2 million
With many companies already reviewing their policies and contracts in response to the COVID-19 outbreak, now is a great time to address IR35 so that you’re prepared when the changes come in next April.
What are the changes that IR35 will make?
Understanding off-payroll working (IR35)
The Good Work Plan
As of April 2020, The Good Work Plan comes into place. This is a plan that sets out the government’s vision for the future of the UK labour market. It seeks to “reward people for hard work” in a bid to boost productivity and earnings in the UK.
The new plan details how to address issues in our labour market, such as:
- The implications of new forms of work
- The rise of digital platforms
- Impacts of new working models
The Good Work Plan also draws on recommendations about:
- Employment status
- Agency workers
- Increasing transparency in the labour market
- The enforcement of employment rights
What changes you should expect to see from The Good Work Plan
Policy Paper – Good Work Plan
Deferring VAT and Income Tax Payments
The government have announced that they will support businesses by deferring tax payments, as outlined below.
- If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.
- For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.
All UK businesses and self-employed individuals are eligible. There is no application required.
Relieve temporary financial distress with HMRC Time to Pay Offer
A breakdown of the government support available for businesses
Supporting your employees’ financial wellbeing
Typically, your employee’s largest financial outgoing will be their monthly mortgage payment.
Taking a break from their mortgage – with a mortgage holiday of up to three months – can act as welcome financial relief. In this unsettling time, if you are having to cut or reduce hours, it may be worth providing some resources for your employees to access this aid.
Am I Eligible?
Whether you are eligible to take a payment holiday, for how long, and the conditions you must meet depends on:
- Your lender
- Your mortgage contract
- Your financial circumstance
It is best to advice that your employee contacts their bank directly to discuss a mortgage payment holiday. However, please do make them aware that this will make their payments go up afterwards.
What About Those Who Rent?
The government has announced a package of measures to protect renters that may be affected by Coronavirus and a subsequent loss of earnings. The emergency legislation means:
- You cannot be evicted from social or private rented accommodation while this national emergency is taking place
- Landlords can take out a mortgage holiday on their Buy to Let mortgage
Pros and Cons of a Mortgage Holiday
Mortgages and Coronavirus: Information for Consumers by FCA
Government Press Release – Protection for Renters
If you are still unsure about how you should be responding to the COVID-19 outbreak, please refer to GOV.UK platform here. It is frequently updated with the latest information and advice.
For further guidance for employees, employers and businesses, please visit the government website here.
It is well recognised that isolation and the stress of the outbreak may be triggering for many, leading to a decline in mental health.
In order to help you address this, we’ve attached some useful resources that help you become aware of your own mental state and some handy tips that may help you look after yourself during this difficult time.
Discover how you should be looking after your mental health during the Coronavirus outbreak here.
The mental health charity, MIND, have also released some support and resources to help you during this time. You can access this here.
Working from Home
If you’ve recently transitioned from office to home, the resources below may help you settle into your new work environment more seamlessly!
Tips for creating a positive environment to work from are available here.
Top tips for working from home are also available here.
We also appreciate that it is especially hard for those who are working from home whilst simultaneously juggling homeschooling. If you’re looking for some advice about working from home with children, you can find some tips here.
If you have any concerns or questions about the latest changes in legislation or how they may affect you, please do not hesitate to contact us online or email firstname.lastname@example.org and we will try our best to point you in the right direction.