Employment Tax

Struggling businesses ― how to ease employment costs

Produced by Tolley
  • 18 Oct 2021 13:16

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Struggling businesses ― how to ease employment costs
  • PAYE deferral and time to pay (TTP) arrangements
  • Mitigating the cost of employment via furlough or the termination of employment
  • Termination payments
  • CJRS and termination payments
  • Returning NHS and local authority staff
  • Cost management ― expenses
  • PAYE Settlement Agreement (PSA)
  • Travel
  • Cost management ― salary sacrifice and flexible benefits
  • More...

Struggling businesses ― how to ease employment costs

Due to the current global pandemic, many businesses are struggling financially. This guidance note addresses specific considerations businesses may make in relation to employment in order to keep the business going through a difficult period.

For struggling businesses, looking at employment costs is often high priority as they are a large part of total business expenditure. However, it can be very difficult to effectively manage costs down without looking at cutting staff number as the biggest cost is payroll and employees need to be paid. This guidance note looks at some of the areas a business may consider to help reduce or defer costs in relation to employment tax through a short-term period of difficulty which might help to avoid cutting staff, and also addresses the position where those difficult decisions are being made.

The options considered here are all likely to have an affect on the working environment and employees individually. If any changes are communicated well, engaged employees are likely to be motivated to help reduce costs in order to keep a business going in the short term in order to protect jobs in the longer term. Where communication does not go well, there is a high risk of employees becoming disengaged affecting productivity and the success of the business even further. It is therefore important to keep in mind all the effects on the business and not only the tax and cost implications. In addition, there are likely to be employment law aspects to many of these changes and relevant advice should be sought.

PAYE deferral and time to pay (TTP) arrangements

Where a business is unable to pay its PAYE liabilities as a result of coronavirus, at present, HMRC will consider deferring payment. In the first instance, it is possible that HMRC will offer a one-off three-month deferral of the liability. Any such deferral must be agreed in advance of the due date for payment. However, HMRC

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