What happens if my employees have to self-isolate following contact tracing?

Following the launch of the Government’s contact tracing system, employers should be prepared for the possibility of multiple employees being required to self-isolate if one employee from the workplace tests positive for Coronavirus.

This means it is vital that employers are aware of the arrangements concerning Statutory Sick Pay (SSP) and self-isolation.

Changes to the regulations that were implemented after the outbreak hit the UK mean that self-isolating employees are entitled to SSP from the first day of absence, if they cannot work from home.

Employers can claim a grant to cover the cost of SSP resulting from Coronavirus for up to two weeks per employee.

Where a self-isolating employee does not have symptoms, is otherwise fit to work and can work from home, they should continue to do so on full pay.

Changes to notifying an option to tax (VAT) on land and buildings during the Coronavirus pandemic

HM Revenue & Customs (HMRC) has made temporary changes to the time limit and rules for notifying an option to tax (charge VAT on) land and buildings.

Normally, when notifying HMRC of a decision to opt to tax land and buildings, you usually have 30 days to contact the tax authority either by printing and sending a notification, signed by an authorised person within the business or emailing a scanned copy of the notification.

However, due to the social distancing requirements that remain in place to prevent the spread of the Coronavirus, HMRC has changed the time limit provided – extending it to 90 days from the date the decision to opt was made.

This extension applies to decisions made between 15 February and 31 May 2020. You can email notifications to HMRC by contacting optiontotaxnationalunit@hmrc.gov.uk.

If you are a business sending a notification you can do this by submitting a form, which can be found here, with an electronic signature, as long as you can provide proof that the signature is from a person authorised to make the option on behalf of the business.

This evidence could include emailing the form:

  • with an email from the authorised signatory to the sender within the business, giving authority to use the electronic signature
  • from the authorised signatory with their sign off in the email and the form
  • with an email chain or a scan of correspondence showing the authority given by an authorised signatory.

Similar proof will be required from an agent if you ask them to submit this information on your behalf.

Money laundering supervision payment deferrals and deregistration announced by HM Revenue & Customs

Businesses that require money laundering supervision from HM Revenue & Customs (HMRC) can receive a six-month payment deferral or deregistration where an annual fee is due between 1 May and 30 September 2020, it has been announced.

HMRC is the money laundering supervisory authority for:

  • money service businesses not supervised by the Financial Conduct Authority (FCA)
  • high value dealers
  • trust or company service providers not supervised by the FCA or a professional body
  • accountancy service providers not supervised by a professional body
  • estate agency businesses
  • bill payment service providers not supervised by the FCA
  • telecommunications, digital and IT payment service providers not supervised by the FCA
  • art market participants.

Businesses in these sectors must pay an annual renewal fee of £300 in respect of each premises covered.

However, on receipt of the reminder notification from HMRC they can now choose either to pay in the normal way or to pay at any time in the following six months.

Businesses that have closed and stopped all activity, subject to the Money Laundering Regulations, owing to the Coronavirus crisis can opt to deregister for supervision and reregister when they resume. However, Money Service Businesses, Trusts and Company Service Providers cannot trade until the reregistration process is complete.

Tax treatment of expenses and benefits during COVID-19

The Government has updated its guidance on taxable expenses and benefits when they are paid to employees during the Coronavirus crisis and how employers should report them to HM Revenue & Customs (HMRC).

The new guidance provided relates to income tax treatment only and not National Insurance Contributions, which may vary depending on the individual benefit or expense.

To help you understand how these changes may affect how your business provides and reports benefits and expenses, we have summarised the main points below:

Accommodation

If you provide living accommodation for an employee working at a permanent workplace because of Coronavirus, the cost remains taxable, unless an exemption applies, such as where an employee is a warden of a sheltered housing scheme and is living at the premise and they are on-call outside normal working hours.

However, tax relief may be available for your employees who are provided with living accommodation when working at a temporary workplace because of Coronavirus.

You should report the cost of providing the accommodation on a P11D form, even where the value of the benefit is nil.

Where an employee is unable to return home because of Coronavirus you may agree to reimburse their subsistence expenses and lodging expenses. These are taxable and can be reported through a PAYE Settlement Agreement.

Volunteering 

If you are supporting employees to undertake volunteer work you can agree to refund fuel costs or fund the costs of volunteer mileage.

If you are refunding fuel costs for an employee that is using a company vehicle for volunteering you can use the current Advisory Fuel Rate for that vehicle.

Any refunds are considered a benefit and you can settle any tax and National Insurance Contributions on your employee’s behalf by reporting through a PAYE Settlement Agreement.

You can also agree to fund the cost of fuel for volunteer mileage related to Coronavirus. Volunteer mileage should not be taken into account for the car fuel benefit charge for company cars.

Again, any tax and National Insurance Contributions must be reported through a PAYE Settlement Agreement as a Coronavirus related benefit.

You can also refund mileage costs where an employee uses their own car to volunteer up to the level of the approved mileage allowance rate.

This is taxable and should be reported through a PAYE Settlement Agreement as a Coronavirus related benefit.

If you pay your employee less than the approved mileage allowance rate, they cannot claim mileage allowance relief.

Transport

Where you agree to pay for, or refund, an employee’s cost of transport to and from work, this is considered to be a benefit as it is a private journey.

However, there is an exemption from paying tax on this benefit if all of the following conditions are met:

  • the employee has to work later than usual and until at least 9pm
  • this happens irregularly
  • by the time the employee finishes work, either:
    • public transport has stopped
    • it would not be reasonable to expect them to use public transport
  • the transport is by taxi or similar road transport.

Where car sharing agreements have had to stop because of the current crisis and you provide transport or reimbursement of the expense of transport from your employee’s home to the workplace, this may also be exempt.

Please be aware that the total number of exempt journeys cannot exceed 60 in a tax year.

Where these requirements are not met, free or subsidised transport is taxable and should be reported through a PAYE Settlement Agreement.

Meals

You do not have to report the supply of meals to your employees or pay tax and National Insurance if you offer all your employees:

  • free or subsidised meals of a reasonable value at a workplace canteen
  • vouchers that cover the cost of buying these meals.

However, this does not cover meals that are:

  • not on a reasonable scale, for example, elaborate meals with fine wines
  • provided off-site but not at a canteen, for example at a restaurant
  • not available to all staff, for example, meals for directors only
  • provided under a salary sacrifice or flexible remuneration arrangement.

If you provide cash allowances or employee accounts, this counts as earnings and as such you must:

  • add the amount to your employee’s other earnings
  • deduct and pay PAYE tax and Class 1 National Insurance through payroll

If the meals or vouchers you provide are not exempt, you need to report them to HMRC and deduct and pay tax and National Insurance on the costs.

Company cars 

HMRC has confirmed that where an employee is furloughed or working from home due to the pandemic, and owns a company car, it should be treated as being made ‘available for private use’ during this period even if your employee is:

  • instructed to not use the car
  • asked to take and keep a photographic image of the mileage both before and after a period of furlough
  • unable to physically to return the car or the car cannot be collected from the employee.

The return of keys means that a car cannot be driven in any circumstances even if it is still in the possession of your employee.

HMRC understands that the Coronavirus restrictions mean it may take some time to collect cars where contracts have been terminated.

As long as an employee cannot access the keys until the car is collected from them, HMRC will still regard the car as being unavailable.

Employee Car Ownership Schemes (ECOS)

Employees using an ECOS arrangement, including loans from third parties, may be required to return the vehicle at the end of the loan period for its value to be assessed as a final settlement of the loan.

This may not be possible due to the Coronavirus restrictions and there may, therefore, be an income tax charge on the amount of the loan still outstanding.

If the loan period was less than four years, it may be possible to arrange an extension with the loan provider.

If this is done, HMRC will accept that the arrangements do not give rise to the income tax charge. However, where the loan is extended beyond four years, an income tax charge will arise.

Salary sacrifice

HMRC has confirmed that the Coronavirus pandemic may lead to an acceptable lifestyle change that allows salary sacrifice arrangements to be reviewed.

If you or your employee wishes to amend a salary sacrifice arrangement because of the current situation, you must make sure the change is reflected in the terms and conditions of their employment.

Loans

Loans made to help an employee with hardship during the pandemic counts as an employment-related loan. However, loans provided with a value of less than £10,000 in a tax year are non-taxable.

Reporting expenses and benefits to HMRC 

Coronavirus-related expenses or benefits can be reported via a PAYE Settlement Agreement. Where you are already payrolling benefits in kind you can continue to report expenses and benefits through your payroll as long as you registered with HMRC before the start of the current tax year.

Employers can also report expenses and benefits through P11D returns. These returns must be completed online by 6 July 2020 for the tax year 2019-20. HMRC has confirmed that paper options are available for employers that are unable to file online.

Here to Help

If you need advice or support with benefits and expenses during this crisis, please speak to our team.

Temporary tax freeze on home office expenditure announced

The Government has announced a temporary tax and National Insurance Contribution (NIC) exemption that ensures that home office equipment purchased by employees, where reimbursed by the employer, does not attract tax or NICs.

Jesse Norman, financial secretary to the Treasury, announced in a statement to the House of Commons that the temporary exemption will affect expenses from 16 March 2020 (the day the Government asked that employees work from home where they could) until the end of the 2020/21 tax year.

To be eligible for relief the equipment must:

  • have been bought for the sole purpose of enabling the employee to work from home as a result of the Coronavirus outbreak
  • be exempt from income tax if it had been provided directly to the employee by or on behalf of the employer.

The move should ensure employees are not financially penalised as a result of changes in working arrangements during the pandemic.

Existing Tax relief for employees working from home

Employers can reimburse costs tax-free where there is a ‘homeworking arrangement’ between an employer and an employee and the employee must work at home under the terms of these arrangements.

A notable exception here is costs that are unaffected by whether or not an employee is working from home, like mortgage repayments or rental payments.

Similarly, the cost of existing broadband connections cannot be reimbursed tax-free, although new connections can be, where the employee does not already have a broadband connection.

From 6 April 2020, an employer can pay employees up to £6 a week (£26 a month) to cover additional costs if they have to work from home. For previous tax years, the rate is £4 a week (£18 a month).

In circumstances where the employer does not meet the additional costs of an employee working from home – such as heating, water and electricity – but requires the employee to work from home, it may be possible for the employee to claim tax relief in respect of these costs.

Expenses for both personal and business use are not eligible for tax relief.

Employees can use HMRC’s online tool to determine whether particular expenses would be eligible for tax relief. The tool can be viewed here.

If you require assistance with reclaiming the cost of staff working from home, speak to our tax team to see what options are available.

Maximum Government-backed loan amount for larger businesses increased to £200 million

The Government has announced an increase in the maximum amount that larger businesses can borrow under the Coronavirus Large Business Interruption Loan Scheme (CLBILS) from £50 million to £200 million.

CLBILS loans are offered on normal commercial terms, but are backed by a Government guarantee worth 80 per cent of the amount borrowed. They can be accessed through the 12 accredited lenders for the scheme by the British Business Bank.

The increase will come into effect from Tuesday 26 May 2020 and will mean that larger businesses can borrow up to 25 per cent of turnover, subject to a maximum of £200 million.

At the same time, the Government has introduced restrictions on dividends, share buybacks and executive pay for firms benefiting from CLBILS loans of more than £50 million.

The restrictions will also apply to large businesses accessing the Bank of England’s Covid Corporate Financing Facility (CCFF).

More details about these restrictions are expected to be set out by the British Business Bank on 26 May 2020.

Coronavirus Statutory Sick Pay Rebate Scheme set to open for claims

The Coronavirus Statutory Sick Pay Rebate Scheme (CSSPRS), announced by the Chancellor at the Budget, is set to open for claims from Tuesday 26 May 2020, HM Revenue & Customs (HMRC) has said.

The scheme enables employers with up to 250 employees to claim the cost of Statutory Sick Pay (SSP) related to Coronavirus, as long as they had a PAYE payroll scheme created and started on or before 28 February 2020.

The payment will cover the cost of up to two weeks’ SSP where an employee has been unable to work because they:

  • have/had Coronavirus; or
  • are self-isolating and unable to work from home; or
  • are shielding because they have been advised that they are at a high risk of severe illness from Coronavirus.

The scheme applies to periods of sickness from 13 March 2020 in respect of employees with Coronavirus or to those who have been self-isolating because someone they live with has symptoms.

For employees who have been shielding, the scheme applies from 16 April 2020.

Two different weekly rates apply to claims. For those dating from before 6 April 2020, a rate of £94.25 will be paid, while claims from that date will be paid at a rate of £95.85 a week.

To make a claim, employers will need:

  • Their employer PAYE scheme reference number
  • Contact name and phone number for queries
  • UK bank or building society details of an account that can accept a Bacs payment
  • The total amount of Coronavirus SSP paid to employees
  • The number of employees concerned
  • The start and end date of the claim period.

Also, employers must keep records of the following for three years after the date they receive payment from HMRC:

  • The dates the employee was off sick
  • Which of those dates were qualifying dates
  • The reason they were off sick
  • The employee’s National Insurance number.

Employers can claim from both the CSSPRS and the Coronavirus Job Retention Scheme (CJRS) in respect of the same employee. However, claims cannot be for the same period.