November 11, 2020
The year 2020 has been one of great changes. Businesses have either had to learn to adapt or been pushed out of contention. The bottom line being – survival is indeed for the fittest as businesses struggle neck to neck amid the market demand that is dwindling in a downwards spiral. The remote working has probably experienced its genesis now with the surge in remote working practices as the only means to keep businesses afloat while fresh lockdown measures have been put in place. Uncomfortable and alarming as the situation is, it is also leading us to ponder a fact that we in the corona free economy might have been too blind to see – the power of a distributed workforce can nudge us towards consistent tax savings for businesses.
The power of flexibility
Flexible working has received a new definition. As per research that Lloyds Bank has made it was found that almost more than a quarter of the UK workforce is now working flexibly thanks indirectly to the pandemic and the resulting pandemonium. With employers unsure when operations will resume as usual and employees fearing job redundancies, remote working has become the fastest catching trend. Interestingly the national statistics office had predicted that 50% of the UK workforce would be working from home. It would be no surprise if the number indeed is even more. Furthermore, considering the extension to the furlough scheme, it is but obvious that staff retention is in the news. What employers do not realise however, is that sometimes having a distributed workforce can prove to be a tax saver as well. Tax advisors can easily point out the benefits. For instance, if one is to consider even the present scheme, the furlough grant will include only the wages at 80% of the employee’s usual (under the cap amount) and not the employer’s share of the national insurance contributions or pensions. As per the HMRC, this should account for a mere 5% of employment costs but even 5% in the present scenario should be considered to be a considerable expense.
The remote working policy
Employers have realized that it might not be possible to resume regular working this financial year. However, the show must go on. Thus, since workers cannot go to their offices remote working always the opportunity of the office coming to the worker. This is quite a saver for the employer as well considering the absence of the overhead costs that would otherwise have to be incurred. By having workers doing their work from home the employer no longer has to worry about where to house this staff. Also, the roles of employees have diversified giving employers an idea on how the present staff can live up to more roles. Of course, in the present situation, remote working is more of a necessity than a choice. Still, it helps to know that work will not be at a standstill as the pandemic situation comes under some control.
The current furlough scheme is back to the original with the exception that the employer needs to clear the national insurance and pension bill. It would be more beneficial to employers than the scheme used in October and even September. But in the current changeable scenario it does make sense to have someone looking after the accounting and taxation element. Doshi Accountants can prove of indispensable service here as they can easily process your claims for you leaving you with just paying the employee as per the payslip. It becomes easier to follow the complex compliance rules if you have an expert to see you through. More importantly, the HMRC is investigating previous furlough claims made by employers and there are penalties imposed for filing the wrong claim. Even if you have not deliberately done something wrong you would have to explain to the HMRC how you have arrived at those figures. Therefore, getting them right in the first place would be infinitely better.
A new era of freelancing
Freelancing has been an asset to employers in the past. This does not mean that all employers are used to this concept. But considering the changing times it is important to go with the flow. The same applies to businesses as well because it is not enough to follow traditional methods. Technology and internet connectivity will have to be embraced. With the UK facing another lockdown, employers are fast realising the importance of remote working. Hiring employees per task no longer is an option. Multi-tasking is indeed the new king because with the fall in demand employees too will have to embrace multiple roles. The tax services of a good accountant can help employers here as they will be able to save on unnecessary taxes by keeping less staff on their payroll.