Sage Business Cloud Payroll. Sage University. Sage Advice blog. Page updated: 04 March 2021 ©Sage Group plc 2021: General Data Protection Regulation. Sage One Payroll software is perfect for start-up businesses, it's very quick and easy to get started and is perfect for beginners. Sage Business Cloud Payroll. Sage University. Sage Advice blog. Page updated: 04 March 2021 ©Sage Group plc 2021: General Data Protection Regulation. Why did we rename Sage One and Sage One Payroll? Sage Business Cloud offers everything for managing accounting, payroll, payments and your people. You no longer have to worry about finding the right product. Merely choose the capabilities you require. This video will give you a quick overview of Sage One Payroll, simple online payroll software for small businesses. It’s always up to date with legislation i.
UPDATED 16 April 2021
This explains how to furlough and pay your employees under the scheme
- Use the criteria set out by the government to decide which employees can be furloughed.
- For employees that meet the criteria and you want to place on furlough, confirm this to them in writing.
Establish the employee’s reference salary.
Calculate 80% of reference salary (capped at £2,500 per month).
Work out their usual hours and furloughed hours.
Calculate furlough payments for hours not worked.
Latest information from Government
Variable paid employees
HMRC have updated details in regards to the method for calculating the reverence salary for employees on variable pay, also known as 'Calendar look back method'. For some employees, the reference salary should be calculated using the amount paid in March and April 2019 and not March and April 2020. Further details can be found here https://www.gov.uk/guidance/steps-to-take-before-calculating-your-claim-using-the-coronavirus-job-retention-scheme#usual-hours
Other Govt. information
Whilst every effort has been made to keep this topic up to date, we advice you to check the official government website to keep up to date with the latest changes to the financial support relating to Coronavirus available from the Government and for useful tools.
Furlough your employees
The criteria for which employees can be furloughed is set out by the government here: https://www.gov.uk/guidance/check-which-employees-you-can-put-on-furlough-to-use-the-coronavirus-job-retention-scheme
If an employee meets the criteria and agrees to be furloughed, you must confirm this to them in writing.
For help with this, a template letter can be found on ACAS website ACAS furlough letter template.
Calculate your employees pay
Work out the reference salary
Work out a reference salary for each employee. From November, you can claim back 80% of this, capped at £2500.
Gta 5 dropapk. The amount you should use when calculating 80% of your employees’ wages for hours not worked, is made up of the regular payments you are obliged to make.
What can be included in the reference salaryInclude Do not include - regular wages you paid to employees
- non-discretionary payments for hours worked, including overtime
- non-discretionary fees
- non-discretionary commission payments
- piece rate payments
- payments made at the discretion of the employer or a client - where the employer or client was under no contractual obligation to pay, including:
- any tips, including those distributed through troncs
- discretionary bonuses
- discretionary commission payments
- non-cash payments
- non-monetary benefits like benefits in kind (such as a company car) and benefits received under salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay
See the Government website for full details of what can and can't be included in the reference salary here Steps to take before calculating your claim using the Coronavirus Job Retention Scheme
- You can choose to top-up the amount paid to furloughed workers to make up to their normal salary, but you can't reclaim this from the government.
- You cannot claim for any additional employer costs, such as employer National Insurance Contributions or pension contributions.
The reference salary is calculated differently depending on whether employees were previously eligible for the scheme.
Employees who were previously eligible for furloughThis includes employees who have not been furloughed before.
If your employee was furloughed before 30th October 2020, use the same calculations for working out reference pay and usual hours.
If they were not furloughed but were eligible to be furloughed you must calculate the value of the claim using the same method as used for staff who were furloughed.
To have been furloughed previously, each employee must have been working for you on or before 19th March.
Salaried employees
These are employees who get the same fixed salary each period.
Use their actual salary from the last full pay period before 19th March 2020.
- For monthly paid employees this could have been their February pay.
- For weekly paid employees, this could have been their pay for the first week in March 2020.
Where to find this
Check the payslip for the relevant period.
Find this from the Pay Runs option on the main menu and open the payslip for the relevant employees. Open the relevant pay run and select the payslip.
Variable paid employees
These are employees who get paid a different amount each pay period.
- For employees employed for a full 12 month period use whichever is the higher
the same month’s earning from the previous year.
- the average monthly earnings from the 2019-20 tax year
- If the employee has been employed for less than a year, use the average of their monthly earnings since they started work.
Where to find this
Find this information in payroll from the following places
Average Earnings and Working Hours report shows a breakdown of the average earnings and hours worked by all employees over the period you run the report.
Find this under the Reports option on the main menu. See The Average Earnings & Working Hours report
The detailed report for each pay run will show you what each employee was paid for a given period.
Find this under the Pay Run, open the relevant pay run, then select the Open detailed report link.
Employees who were not previously eligible for furloughIf you're new to the job retention scheme, or are furloughing employees who have started with you since 19th march 2020 (i.e they were not reported to HMRC as employed), use the following rules to calculate your reference salary.
Salaried employees
These are employees who get the same fixed salary each period.
Use their actual salary from their last full pay period on or before 30 October 2020.
Where to find this
Check the payslip for the relevant period.
Find this from the Pay Runs option on the main menu and open the payslip for the relevant employees. Open the relevant pay run and select the payslip.
Variable paid employees
These are employees who get paid a different amount each pay period.
- Work out the average the employee was paid between the start date of their employment or 6th April 2020 (whichever is later) and the day before their furlough period starts.
- For hourly paid employees, work out the salary from the average number of hours they worked between 6th April 2020 and the day before their furlough period starts.
Where to find this
Find this information in payroll from the following places
Average Earnings and Working Hours report shows a breakdown of the average earnings and hours worked by all employees over the period you run the report.
Find this under the Reports option on the main menu.
The detailed report for each pay run will show you what each employee was paid for a given period.
Find this under Pay Runs, open the relevant pay run, then select the Open detailed report link.
Work out the furlough payment
From November 2020, pay your employees, the lower of 80% of their reference salary or £2500 per month.
The HMRC also provides a Job Retention Scheme calculator which you can use to help with working out employees furlough pay.
Always make a note of your calculations and payments to aid later queries.
Furlough payments for previous periods.
June 2020: The government paid 80% of the reference salary, capped at £2,500. It also paid employer National Insurance and pension contributions. Employers didn't have to pay anything.
July 2020: The government paid 80% of the reference salary, capped at £2,500. It also paid employer National Insurance and pension contributions. Employers didn’t have to pay anything.
August 2020: The government paid 80% of the reference salary, capped at £2,500. Employers have to pay for employer National Insurance and pension contributions.
September 2020: The government paid 70% of the reference salary, capped at £2,187.50. Employers paid for employer National Insurance and pension contributions, and 10% of wages to make up the minimum employee salary of 80% of the reference salary, capped at £2,500.
October 2020: The government paid 60% of the reference salary, capped at £1875. Employers paid for employer National Insurance and pension contributions, and 20% of wages to make up the minimum employee salary of 80% of the reference salary, capped at £2,500.
November 2020: The government pays 80% of the reference salary, capped at £2,500. Employers have to pay for employer National Insurance and pension contributions.
July 2021: The government pays 70% of the reference salary, capped at £2,500. Employers have to pay 10% and for employer National Insurance and pension contributions.
August 2021: The government pays 60% of the reference salary, capped at £2,500. Employers have to pay 20% and for employer National Insurance and pension contributions.
Once you've found the reference salary for an employee,
Monthly paid employees
- Identify the reference salary using the calculations detailed above
Work out 80% of this value.
- Is this greater than £2500 per month?
- Yes - £2500 is the new furlough salary.
- No - use the 80% value as the new furlough salary.
Weekly paid employees
- Identify the weekly reference salary using the calculations detailed above.
Work out 80% of this new average weekly pay
- Is this value greater than £576.92 (the weekly equivalent of £2500 pm)?
- Yes - £576.92 is the new weekly furlough pay.
- No - use the 80% value as the new weekly furlough pay.
Pay your employees
This the first time I've furloughed my employees
Create new payment types
Create a new payment type to be used to process the furlough part of your employees pay. This is the part you can reclaim from the government.
If you're planning to make top-up payments, then create a new payment type for this also. We recommend that you call it something obvious such as Salary Top Up.
Use existing payment types if you have them for non-reclaimable items such as discretionary commission and bonuses.
- From the Settings tab, select Payment & Deduction Settings.
- Choose Payments, then Create New Payment.
Enter the details of the new payment:
Payment Category Salary Payment Type Other Salary Payment Name Furloughed Pay Description Furlough payments to employees Include in Calculation of Select both Pension Earnings and Qualifying Earnings
- Click Save.
The payment now appears in the payments list in the Payments tab. If you created the payment while processing pay, the new payment is applied to the employee’s pay.
Process pay using the furlough payment only
Follow these steps if you are only paying the furlough amount to your employees, with no top ups. This will be 80% of their pay, (or £2500 per month, 576.92 per week).
Run pay run for the period
- For each furloughed employee, add the new Furloughed Pay payment type.
- Enter their furlough salary amount.
- Repeat this process for all the affected employees.
- Process the rest of the pay run as normal.
Pay your employees and submit your full payment submission (FPS).
Process pay using the furlough payment plus top up payments
Follow these steps, if you are paying the furlough amount to your employees plus any additional payments.
Run the pay run for the period,
- For each furloughed employee, add the new Furloughed Pay payment
- Enter their furlough salary amount.
- For any top-up payments, add the payment type for Salary Top Up.
- Enter the agreed top up pay.
- Repeat this process for all the affected employees.
- Process the rest of the pay run as normal.
- Pay your employees and submit your Full Payment Submission (FPS).
Sage Payroll Software
I've furloughed my employees before
Process pay using the furlough payment only
Follow these steps if you are only paying the furlough amount to your employees, with no top ups. This will be 80% of their normal pay, (or £2500 per month, 576.92 per week)
Run pay run for the period
- For each furloughed employee, using the new Furloughed Pay payment type.
- Enter their furlough salary amount.
- Add any other relevant payments such as commission or bonuses.
- Repeat this process for all the affected employees.
- Process the rest of the pay run as normal.
Pay your employees and submit your full payment submission (FPS).
Process pay using the furlough payment plus top up payments
Follow these steps, if you are paying the furlough amount to your employees plus any additional payments.
Run the pay run for the period,
- For each furloughed employee, add the new Furloughed Pay payment
- Enter their furlough salary amount.
- For any top-up payments, add the payment type for Salary Top Up.
- Enter the agreed top up pay.
- Repeat this process for all the affected employees.
- Process the rest of the pay run as normal.
- Pay your employees and submit your Full Payment Submission (FPS).
What's next?
Disclaimer
This article provides general rather than specific guidance to assist all of our customers. We always do our best to make sure that the information is correct but as it's general guidance, no guarantees can be made concerning its suitability for your particular needs. The information is valid at the time of publishing and is provided without any warranty of any kind, express or implied. You should take professional advice if you require specific guidance on your individual circumstances, for example to ensure that the results obtained from using our software comply with statutory or regulatory requirements.
From April 2020, HMRC are introducing new rules and processes for claiming the employment allowance.
What’s changing?
From 6 April 2020, employment allowance for eligible businesses is increasing from £3,000 to £4,000.00 per year.
If your company's national insurance (NI) bill was £100,000 or more in the previous tax year, your company can no longer claim employment allowance.
Employment allowance is now considered a type of State Aid. This is because it’s essentially placing some businesses in an advantageous position over others which could potentially distort competition and trade.
If you don’t qualify, just record No on the EPS when asked Eligible for NI Employment Allowance.
What does this mean?
The change effectively withdraws the employment allowance for medium to large sized companies, with approximately 100,000 employers affected by the change. However over 99% of micro-businesses and 93% of small businesses will still be eligible for the allowance.
Regardless of the size of your company, you can’t claim the employment allowance if:
- You’re the director and the only employee that’s paid above the secondary threshold.
- You employ someone for personal, household or domestic work, unless they’re a care or support worker.
- You’re a public body or business doing more than half of your work in the public sector, unless you’re a charity.
- You’re a service company working under IR35 rules and your only income is the earnings of the intermediary.
From April 2020 employment allowance falls under the de minimis state aid rules. For most businesses these rules place a €200,000 ceiling on the amount of aid a business can receive over a rolling 3 year period. You need to make sure any employment allowance claim you make doesn't push your business above this limit.
More information about employment allowance changes is available from the government website.
Smart Pensions
What do I need to do?
We recommend you submit your application for Employment Allowance as soon as you start the new tax year.
To apply for Employment Allowance for the new tax year:
From the Summary tab, click Record Claim.
Enter the details of your employment allowance claim:
Note:You must choose an industry sector before submitting your claim. If you are not sure what sector applies to your business, contact HMRC.
Industry Sector* Agriculture
Fisheries and Aquaculture
Road Transport
Industrial
State Aid Rules Do Not Apply
Select the industry sector that applies to your business.
If none of the named sectors applies to you, either select:
Industrial - if the state aid rules apply to your business
or Jeannette walls eric goldberg.
State Aid Rules Do Not Apply - If your business does not fall under state aid rules.
State Aid Claimed € 0.00 For the 2020/2021 tax year, you do not need to enter this value. HMRC will check this for you.
The value is listed in Euros because the thresholds are set by the European Commission.
- Click Next.
- Confirm the details you're submitting to HMRC then click Submit.
You can view the status of your claim from the Summary tab:
HMRC then have 5 working days to send you a letter or email confirming whether your application has been approved.
Update the EPS for each completed reporting period
- From the Summary tab, click Record Payment / EPS.
- Change the Eligible for small employer's relief drop-down menu as required.
- Complete the P32 payment as normal.
The option you selected in the Eligible for small employer's relief drop-down is automatically selected for the remaining payments you submit in the current tax year.
How to revert an Employment Allowance claim
Sage One Payroll Uk
If you need to revert a previous claim for Employment Allowance and have submitted an EAC via the new feature:
Sage One Payroll Help
- From the Summary tab, click Record Payment / EPS.
- Change the Eligible for small employer's relief drop-down menu to No.
- Complete the P32 payment as normal.
This change in status is then transmitted to HMRC and the summary page in Accounting is updated to show that you are not eligible.