Many businesses have had to adapt to survive in this pandemic that has led to so many rules and restrictions being created. It is important to prepare for any future possibilities as it can make the development into a less-restricted 2021 easier.
Small businesses should be aware of these potential changes for paying employees:
Although the government’s newly released roadmap has outlined that lockdown restrictions will be lifted on the 21st of June, the furlough scheme has been extended until September. As many SMEs will struggle to return to their previous level of business, the extended support will assist them as they rebuild their customer base.
As a business, you need to be prepared to pay your employee’s salaries. You can anticipate for this by assessing how likely you are going to be able to generate the sufficient revenue to break even. Accounting software can help provide real-time data and projections to help you make the best decisions for when furlough finishes.
When running your own business, being self-employed, or being a freelancer, you will likely know of ‘off-payroll working’ (IR35). This legislation is in place to allow HMRC to collect tax at source where a contractor is an employee in all but name. This has been in place since 2000 but will be changing this April (2021).
This change dictates the responsibility of determining whether hired contractors should be taxed at the same level as permanent employees; under off-payroll workers (IR35). This was previously a task for the contractors themselves.
A way to prepare for this, as an employee, is by assessing whether you would exist as part of the IR35 or not. Or, if you’re an employer, you can create an audit to determine whether your contractors are part of the IR35 or not. Discovering this can help promote communication and avoid any future confusion. There are many digital tools, or advisers that can assist you with this and save you time processing these changes.
It is important to note that HMRC will not be changing for any penalties for the first 12 months unless there’s evidence of a deliberate non-compliance.
Accounting for new ways of working
There will be continued changes over the next year, trying to predict these, alongside having funds put aside for future salaries, will put yourself in a secure position to always be able to afford the unexpected changes. With high quality predictions and forecasting, any changes to legislation can make less of a negative effect to the day to day running of your business.
There are also likely to be new regulations for sick pay, as well as changes to a newer flexible working attitude, job sharing and an increase in people working from different locations and countries. As the next working chapter is beginning, the changes that do happen to legislation and rules will likely be intense but will soon settle to be the new normal.
Seeking council, or using a software, can help to simplify compliance and reporting to HMRC. Additionally, it is possible to utilise software to calculate tax, pension, and leave for employees. This is a popular utensil as many services can help strengthen relationships with employees by allowing them to access their own payslips as well as request leave.
Being open and honest to your employees will pay off. Understanding your employees’ standpoint as well as keeping open communication can help to increase mutual respect and prepare both parties for possible outcomes. Fusion’s team of experts can advise you and stay informed about all changes to legislation and tax. Our personalised service aims to help optimise your financial situation and employee relationships.
Are you up to speed on all changes required to ensure you continue to operate and trade robustly?
Fusion Consulting can help.