Jack and Darren write with an update on the support available to individuals and businesses affected by the pandemic which comes to an end on 30th September. We also write in connection with the Government’s recent announcement that employees, employers and the self-employed, in England, will all pay 1.25p more in the pound for National Insurance (NI) from April 2022. This also affects directors too who draw dividends from their companies.
CJRS – (“furlough”) – FINAL MONTH
- As widely publicised, the furlough scheme is coming to an end this month…but claims can still be submitted until 14 October.
- For businesses still claiming, then the scheme now pays (since August) 60% of employees’ usual wages for the hours not worked, up to a cap of £1,875.
- You will need to pay the 20% difference in July so that you continue to pay your furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month.
SEISS (“Self-employment income support scheme”)
- The fifth and final self-employment grant is currently live and is now based on the reduction in turnover (not profits) between April 2020 and April 2021 (the is distinctly different from the previous method of calculation).
- This final grant covers May to September 2021. Those whose turnover has fallen by 30% or more will receive the full grant worth 80%, capped at £7,500. Those whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850.
- Before you make a claim, you must decide if the impact on your business will cause a significant reduction in your trading profits for the tax year you report them in.
- The final cut off for claiming this last grant is 30 September 2021.
Important tax update
From April 2022, there will be a hike in National Insurance (NI) for employees, employers, directors and the self-employed in England.
- This will mean employees will pay extra NI on their wages, taking the rate from 12% to 13.25%
- Employers will also pay extra NI contributions for staff taking the rate from 13.8% to 15.05
- The self-employed pay this additional class 4 NI on their profits
- Tax on directors dividends will increase as well by 1.25%.
- But from April 2023, National Insurance will return to its current rate, and the extra tax will be collected as a new Health and Social Care Levy.
- Unlike National Insurance, this levy will also be paid by state pensioners who are still working.
Below is a helpful table, as published by the BBC, of how much this would cost a typical employee:
As always, you should always feel free to contact us at Leon and Company for advice relating to this, or other support available, during these uncertain times. We are always here to help.