*AMAZING 40% BLACK FRIDAY OFFER – NEW CHILDMINDERS*
If you are a new childminding business then you didn’t receive the self employed government support scheme grants but at Accountancy Kids we’ve got your back covered.
We know cash flow is tight so this Black Friday we have a fabulous discount available for new childminders that started business after 1st April 2019. We are offering a 40% discount for the preparation of book-keeping, annual accounts and one self assessment tax return for tax year ended 2020/21.
Drop us an email with the following code: AKids40 before 30th November 2020 to receive your discount offer.
The terms of this offer includes the continuation of services for at least one more tax year for 2021/22.
We love to bring good cheer to all childcare business so if your looking for a new Accountant then come and join the Black Friday fun. Use code AKids20
Tax-Free Childcare eligibility further extended
The government has extended the eligibility criteria for support with childcare from 1 November 2020. What do you need to know?
What is Tax-Free Childcare (TFC)?
Well, it isn’t completely tax free, it’s a 20% tax-free bonus to help with childcare costs. Working parents can open a TFC account which is topped up by £2 for every £8 contributed, up to a maximum of £2,000 per child, per year. The money is then used to pay a registered childcare provider. Those earning over £100,000 or less than the national minimum wage for 16 hours per week aren’t eligible for the scheme. Due to the pandemic, lots of people are facing a reduction in their income and may not meet the criteria despite still needing childcare in order to work.
What is the government doing about it?
From 1 November 2020, eligible working parents who receive support through the new Job Support Scheme and extended Self-Employment Income Support Scheme will continue to receive their childcare entitlements, including the 30 hours offer and TFC, even if their income levels fall below the threshold temporarily whilst on these schemes.
What parents need to do
Don’t delay, HMRC are urging parents to check this website https://www.childcarechoices.gov.uk/ to see which offers work best for them.
Updates from previous job support scheme post
- The employee must work at least 20% of their usual hours as defined by the previous CJRS scheme closed on 31st October 2020.
- The reduction in hours must be agreed in writing with the employee.
- Employees must be on the payroll of the employer between 6 April 2019 and 23 September 2020 and included on at least one RTI return in that period and submitted to HMRC on the 23 September 2020.
How much is paid
- The employer must pay for all of the worked hours at the employee’s agreed reference salary.
- The employer must pay up to 5% of the value of the hours not worked, up to £125 per month.
- The government will cover up to two thirds of the hours not worked.
- The employer must pay all the employers national insurance on all the wages the employee receives plus any employers minimum contribution to a workplace pension
- Employers will be able to claim under either JSS from the 8 December 2020.
- A claim can’t be submitted for a particular employee until the employee’s wages have been paid and reported under RTI.
Example of JSS Open
Carol is employed as a childminding assistant on an annual salary of £15,000 or £1,250 per month. In a normal month she would work 140 hours, which is £8.93 per hour.
It was agreed that due to coronavirus restrictions and a reduction of children attending the setting that Carol would work 28 hours per month for £250.04. To qualify for the JSS Open, the employer must pay Carol 5% of her remaining normal hours £50.00 (5.6 hours x £8.93). The JSS grant should cover the cost of 61.67% of the total 112 non working hours : £617.06 (69.07 x £8.93).
The total pay received by Carol is £916.84 (£250.04 + £50.01 + £616.79), which is 73.33% of her normal pay.
The employer would also have to pay employers national insurance and workplace pension payments on this wage.
Example of JSS Closed
Dawn has an annual salary of £18,000 or £1,500 per month. Under this scheme the grant will cover for two thirds of the normal pay of furloughed employees, who cannot work at all, up to a maximum of £2,083.33 per month. The employee must give up one third of their wages and will have to agree to that change in their employment contract in writing. This example is based on a business located in a Tier 3 zone.
The salary payable to Dawn is £1,500 x 2/3 = £1,000 per month.
The employer would also have to pay employers national insurance and workplace pension payments on this wage.
Grant amount increased
The next two stages of the Self-Employment Income Support Scheme (SEISS) cover the periods from November 2020 through to April 2021.
The SEISS was already due to be extended beyond 31 October 2020. Initially, there were to be two grants covering three months each with the first being equal to 20% of average trading profits. It has been announced that the first of the new grants, covering November to January 2021, will be doubled to 40%. The overall cap is doubling too, meaning a maximum grant of £3,750. There is no information as to what the level of support for the period from February through to April will be just yet.
JSS new changes announced
The job support scheme was due to change from the 1st November 2020 to a less attractive scheme from the two previous support schemes for employees. However, due to the worsening pandemic conditions and the introduction of a Tier system for local authorities the scheme has now changed again.
What are the changes
It’s just been announced that employers will be expected to pay 5% of the cost of unworked hours under the Job Support Scheme (JSS) instead of the 33% originally communicated.
When originally announced, the JSS required employers to pay one third of their employees’ wages for hours not worked. Employees were required to be working 33% of their normal hours. But today’s announcement reduces the employer’s contribution to those unworked hours to 5% and cuts the minimum hours requirement to 20%. This means that staff working just one day per week will be eligible.
We will come back and update this page with a worked example on how the payroll employee costs are calculated for employers operating payroll. Any additional government guidance on the mechanics of the scheme changes will be updated on this page.
Bonus payable to employer
The Job Retention Bonus is a £1,000 one-off taxable payment to you (the employer), for each eligible employee that you furloughed and kept continuously employed until 31 January 2021. The bonus can be claimed between the 15th February 2021 and 31st March 2021.
An employee must have received taxable pay in each of the three tax months:
- 6 November – 5 December
- 6 December – 5 January
- 6 January – 5 February
- The employee must have received at least £1,560 as taxable pay across those three tax months, any tax free allowance or adjustment as driven by their tax code is not deducted/added to the taxable pay.
- The full payment submission for each of those three months has been sent under RTI to HMRC on time and is accurate.
Please be careful with the threshold amount, an employee may receive £2,500 taxable pay over the three month period but if they only worked two months from the three then they won’t receive the bonus. The employee must work in all three tax months.
An employee ceases to be eligible for the bonus scheme if:
- The employer has repaid all CJRS grant claimed in respect of that employee.
- They are not paid at least once in each of the three tax months.
- Their total taxable pay does not reach £1,560 across the three months.
- A leaving date has been reported on or before 31 January 2021.
- They are placed on contractual or statutory notice of termination of their employment at any point before 31 January 2021.
Your payroll agent should be able to apply for the bonus on your behalf.
The bonus is recognised as other income for income tax or corporation tax purposes.
Are you struggling to pay your tax bills?
Did you know that the second payments on account for 2019/2020, due by the 31st July 2020 was deferred automatically until the 31st January 2021. There is now an additional option if you are unable to make these payments in full by 31 January 2021.
Childminders could set up a “Time to Pay” payment plan of up to 12 months online without needing to phone HMRC. If an individual required a longer period than 12 months to repay their debt, then they need to contact HMRC to set it up.
Job Support Scheme
The Job Support Scheme (JSS) will replace the Coronavirus Job Retention Scheme (CJRS) at the end of October. The JSS will run from the 1 November 2020 for six months until April 2021.
Any business suffering from lower demand over the coming months as a result of ongoing restrictions due to Covid-19. The aim of the scheme is to protect viable jobs that are retained on a reduced work hours basis.
The scheme is not tied to the previous CRJS so neither the employer nor the employee needs to have previously used the furlough scheme. To qualify the employee must be on the employers PAYE payroll on or before 23 September 2020 and a Real Time Information (RTI) submission sent to HMRC on or before 23 September 2020, will qualify.
How to qualify for the scheme
Employees must work at least 33% of their usual hours to qualify and paid their normal contracted wage for the hours worked. The employer must also pay the employee a third of the hours not worked and the government will also pay a third of the hours not worked by the employee.
The employee will earn a minimum of 77% of their normal wage. The government will pay 22% from the scheme in comparison to the more generous CJRS.
The grant will not cover Class 1 employer NICs or pension contributions, these will remain payable by the employer.
HMRC has stated that employers will not be able to top up their employees wages above the two-thirds contribution to hours not worked at their own expense.
When is the grant payable
The grants will be paid in arrears from December 2020 on a monthly basis following payment of wages to the employees and the RTI submissions sent to HMRC. The grants can only be used as reimbursement for wage costs actually incurred.
Employee normally works five days per week usually earning £250 per week. under the JSS, the employer puts this employee on a reduced-hours working arrangement working two days a week (40% of the usual hours).
The employer will need to pay the employee £100 per week for the two days actually worked.
For the hours not worked (three days or 60%), the employee will be entitled to 2/3 of the usual wage related to these hours.
This is calculated as:-
Step 1 – £250 x 3/5 = £150 (related to hours not worked)
Step 2 – £150 x 2/3 = £100 (additional entitlement for hours not worked).
The total earnings for this employee is £200
The £100 amount due for the hours not worked is funded by the government grant and the employer, each contributing 1/3rd of the step 2 calculation above.