COVID-19 SICK PAY REBATE SCHEME CLOSED IN SEPTEMBER

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The government’s scheme that enables small businesses to recoup statutory sick pay costs caused by COVID-19 closed at the end of September.

Legislation ending the Coronavirus Statutory Sick Pay Rebate Scheme (SSPRS) was laid before parliament on 9 September.

Before the COVID-19 pandemic, employers were obliged to pay Statutory Sick Pay (SSP) to eligible employees unable to work because of sickness. It is paid at a flat rate of £96.35 (at the current rate) for up to 28 weeks. The full cost of SSP is met by the employer.

To support employers during the pandemic, the government legislated to allow certain small and medium size employers to reclaim some, or all, of their SSP costs from HMRC via the SSPRS.

Under the new regulations, employers will not be able to reclaim SSP from 30 September 2021 and any claims relating to periods prior to that date must have been filed by 31 December 2021.

The Institute of Chartered Accountants in England and Wales (ICAEW) said:

‘It would appear that the suspension of the requirement to wait for three days before SSP is paid has not yet been repealed. The three-day rule was suspended temporarily during the peak of the COVID-19 crisis to encourage people to stay at home as soon as they felt ill.’

Internet link: ICAEW website GOV.UK

CHANCELLOR WARNED OF REDUNDANCIES AS FURLOUGH SCHEME ENDS

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The government’s Coronavirus Job Retention Scheme (CJRS) ended on 30 September after supporting millions of workers during the pandemic.

The government said the wages of more than 11 million people were subsidised for at least some of the scheme’s duration at a cost of around £70 billion.

Economists say there is likely to be a rise in unemployment due to new redundancies, despite the fact that some may be able to find work in recovering sectors such as travel and hospitality.

The Federation of Small Businesses (FSB) said the end of the furlough scheme, the scrapping of the small employer sick pay rebate and the closure of the government’s apprenticeship incentive scheme will only add pressure on companies.

Mike Cherry, the FSB’s National Chair, said:

‘It’s potentially a dangerous moment. As the weather turns colder, so too will the operating environment for many firms. With recent economic growth numbers having fallen below expectations, the upcoming festive season may not provide as much of a boost as hoped to many small businesses’ bottom lines.’

Internet link: GOV.UK FSB website

NATIONAL INSURANCE AND DIVIDEND TAX RISES ANNOUNCED FOR SOCIAL CARE REFORM

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From April 2022, the government plans to create a new social care levy which will see UK-wide tax and National Insurance Contribution (NIC) increases.

There will be a 1.25% increase in NICs on earned income, with dividend tax rates also increasing by 1.25%. The money raised will be ringfenced for health and social care costs.

The Levy will be effectively introduced from April 2022, when NIC for working age employees, the self-employed and employers will increase by 1.25% and be added to the existing NHS allocation. The Levy will not apply to Class 2 or 3 NICs.

From April 2023, once HMRC’s systems are updated, the 1.25% Levy will be formally separated out and will also apply to individuals working above State Pension age and NIC rates will return to their 2021/22 levels.

Individuals who receive dividend income will also face a higher tax bill as all rates of dividend tax will increase by 1.25% from April 2022.

The dividend tax is applicable on dividend income above the frozen £2,000 dividend allowance and above the £12,570 personal allowance. Dividends on assets held in ISAs are excluded from the dividend tax.

From the 2022-23 tax year, basic rate dividend tax will be charged at 8.75% instead of 7.5% this year. Higher rate dividend taxpayers will be charged 33.75% instead of 32.5% and additional rate dividend taxpayers will pay 39.35% instead of 38.1% respectively.

Internet links: GOV.UK