From April 2016, the government will introduce a new mandatory national living wage (NLW) for workers aged 25 and above, initially set at £7.20 – a rise of 50p relative to the current National Minimum Wage (NMW) rate. That’s a £910 per annum increase in earnings for a full-time worker on the current NMW.
The adult NMW rate is currently £6.70. From 1 April 2016 the premium will come into effect on top of the NMW, taking the national living wage to £7.20. The NMW will continue to apply for those aged 21 to 24, with the premium added on top for those aged 25 and over, taking the total hourly rate to the national living wage.
Employers with fewer than 50 employees who report their PAYE information late may incur automated in-year penalties from 6 March next year.
Those who employ 50 or more people who file late may incur these penalties from 6 October 2014.
We have made this change because experience from RTI’s rollout has shown that it is best to introduce change in stages, to ensure a smooth transition for customers. We know that those who have had most difficulty adjusting to real time reporting have been small businesses, so this staged approach means they have a little more time to comply with the new arrangements before facing a penalty.
We will begin issuing penalty notices for the new in-year penalties early in 2015.
Employers who believe they have a reasonable excuse for filing late can appeal using the new online appeals system once they have received a penalty notice, which should speed up the appeal process for businesses and HMRC.
In the run-up to March 2015, we will examine other ways to encourage employers to comply with the rules, in addition to financial penalties.
We have sent electronic GNS messages to all employers to confirm when the new in-year penalties apply to them, based on the number of employees shown in our records.
For guidance on what to do if you receive a GNS message go to What to do if you get an online penalty warning message on GOV.UK.
End of Year penalties for 2013-14
The new in-year penalties replace the end of year penalties, which apply up to and including the 2013-14 tax year.
We are issuing end of year penalties in October 2014 for employers who we believe failed to send their final submission for 2013-14 when one was expected and remains outstanding, or where the employer has not yet told us one wasn’t due.
Please note that normal appeal processes will apply to these penalties. The new on-line appeals service may only be used to appeal the new in-year penalties.
PAYE and Universal Credit
We want employers to report their PAYE correctly and on time rather than incur penalties. For the purpose of Universal Credit, reporting PAYE in real time on or before each payment (and the correct use of the ‘hash’ cross reference where this is relevant) improves benefit administration; making it easier for Universal Credit claimants and minimising contact between employees who claim Universal Credit and their employer.
The right to request flexible working will extend to all employees who have been working at an organisation for 26 weeks or more from this month (June 2014). ACAS webpage explains the new requirements for handling requests and provides the Acas Code of Practice on handling requests in a reasonable manner. We also have training events to help explain and explore the changes in more detail.
There are a range of expenses and benefits that can be provided to employee’s tax free. To enable employees to take advantage of the exemption without increasing the cost to the company, consider offering employees salary sacrifice arrangements.
Under a salary sacrifice arrangement the employee gives up cash salary which is liable to tax and employee and employer NIC in return for an exempt benefit. The employee saves tax and NIC and the employer saves employer NIC.
Example:
Tony employs several people in his business. He operates a salary sacrifice scheme to allow employees to take advantage of tax exemptions.
Sandra takes advantage of the scheme. She is a basic rate taxpayer and swaps £2,860 of cash salary for childcare vouchers of £55 per week. The vouchers are exempt from tax and NIC.
She saves tax of £572 and NIC of £343.20 so is £915.20 a year better off. The company saves employer NIC of £394.68. Everyone wins.
For more information on salary sacrifice benefits contact your accountant or ABS on 01924 866020
Handling holiday requests
It’s the time of year when requests for holiday leave can fall as thick and fast as winter snowflakes. Acas has a wealth of guidance on managing holiday requests – if you need a quick answer to your question about holiday entitlement, try our new frequently asked questions tool helpline online. Or if it’s a more complicated issue, you can speak to one of our experienced helpline advisers on the phone. At this time of year, they are used to dealing with questions about time off, including bank holidays.
Having early discussions about holiday leave in the run up to Christmas and New Year can help you plan the period more effectively and prevent last-minute panics. Winter weather – guidance for employers
Often employers are faced with disruption caused by bad weather conditions and issues with employees getting into work. Acas has some helpful guidance which can help you plan ahead, minimise disruptions and better prepare. Managing performance effectively
If you are facing challenges with resources, time and productivity during the holiday period now may be an excellent opportunity to reflect upon your performance management approaches. To some managers this area will come more naturally than to others. Having the right systems in place and communicating them clearly to your staff can help remove potential misunderstandings and inconsistency. Acas has useful templates and checklists to manage staff or you could download for free our guidance on how to manage performance. We also offer training for employers and line managers. View details of upcoming events near you.
New tax incentives for childcare have been announced. To be eligible, families will have to have all parents in work, with each earning less than £150,000 a year and not already receiving support through Tax Credits or Universal Credit.
The relief will be 20% of the costs of childcare up to a total of childcare costs of £6,000 per child per year. The scheme will therefore be worth a maximum of £1,200 per child.
The scheme will be phased in from autumn 2015. For the first year of operation, all children under five will be eligible and the scheme will build up over time to include children under 12.
The current system of employer supported childcare will continue to be available for current members if they wish to remain in it or they can switch to the new scheme. Employer supported childcare will continue to be open to new joiners until the new scheme is available.
The Government will consult on the detail of the new scheme but it is expected that parents will be able to open an online voucher account with a voucher provider and have their payments topped up by the Government. Parents will be able to use the vouchers for any Ofsted regulated childcare in England and the equivalent bodies in Scotland, Wales and Northern Ireland.
The existing system of employer supported childcare is offered by less than 5% of employers and used by around 450,000 families. It provides an income tax and national insurance contributions (NIC) relief. The maximum relief is an exemption from income tax and NIC on £55 a week. This relief is per employee so if both parents are in employment the maximum exemption is £110 per week. In the new scheme the limit is per child.
In April 2013, employers must start sending PAYE information to HMRC in real time. This means sending details to HMRC every time you pay an employee, at the time you pay them.
By providing this information in real time, HMRC will be able to tell you how much you should pay each month. This will make it easier for you to pay the right amount each time and help you to avoid making late payments and incurring penalties.
This checklist will help you to start sending your PAYE information to HMRC in real time from 6 April 2013. Start preparing your business by doing these things now, ticking them off as you go.
From 6 April
You need to change some of the ways you report PAYE, including:
• providing new information in your payroll records, such as hours worked
• completing employee information for temporary and casual workers and employees paid below the National Insurance Lower Earnings Limit
• letting HMRC know whenever you change a payroll ID – otherwise HMRC will treat the change as a new employment, which will result in duplicate employment and incorrect tax codes
• how you tell HMRC about starters and leavers.
If you use an agent, payroll bureau or payroll service provider, you must talk to them now about the service they will provide for you in future, and ask what you need to do to get ready for RTI.
If you pay by Bacs using your own Service User Number, you need to speak to your solution supplier or bureau.
If you run your own payroll system, you need payroll software that is ready for RTI in order to send your PAYE information to HMRC online, every time you pay an employee. You can do this in three ways:
1. Using commercial payroll software, upgrading your existing software if necessary (your provider can advise on this).
2. Using a payroll service provider, such as an accountant or a payroll bureau, who will do it for you.
You need to get prepared by making sure you hold accurate and up-to-date information about all your employees (name, date of birth, gender, address and valid National Insurance number).
If you are planning to send your returns yourself, you need to register for PAYE Online to get your PAYE login details (if you have not done so already).
HMRC
Have recorded a webinar (online presentation) which will take you through the changes and help you get ready for Real Time PAYE. You can watch our webinar whenever it suits you – it is available 24 hours a day.
It is easy to view the webinar
All you need to do is follow the link below to the HMRC YouTube channel.
Get ready to operate PAYE in real time.
This webinar will help you to prepare for reporting PAYE information to HMRC in real time. It concentrates on the key actions you need to take to get ready for the changes coming in. It also explains about the different types of submission that will be made in real time.
After viewing the recording you can take part in a Q&A session at the time shown below. This is a live session with HMRC staff and they will give you the opportunity to ask any questions you may have. Simply follow the link below to take part in this live session.
Under this scheme, for a limited period and subject to meeting certain conditions, new businesses may qualify for a deduction of up to £5,000 from the employer NICs that would normally be due – for each of the first ten employees they take on.
The NICs you are entitled to withhold under the scheme does not have to be repaid at a later date.
The NICs holiday is voluntary – you do not have to take advantage of the scheme. If you decide not to apply or you do not meet the qualifying conditions, you must simply calculate Class 1 employer NICs in the normal way and pay them to HM Revenue & Customs (HMRC) with your monthly/quarterly payment.
Business location – why it’s important
You can only apply for the NICs holiday if your principal place of business is located within designated areas of the UK at the time your business starts up. The included countries and regions are:
•Northern Ireland
•Scotland
•Wales
•East Midlands
•North East
•North West
•South West
•West Midlands
•Yorkshire and Humber
The NICs holiday is available to new businesses that start up during the period from 22 June 2010 to 5 September 2013.
If you are unsure whether your business falls within a qualifying region, you can check by reading more about this in the guide on checking your business location.
From October 2012, National Minimum Wage rates will rise for apprentices and for workers over the age of 20.
About the National Minimum Wage
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New rates from October
The new rates will come into force on 1 October 2012, as follows:
£6.19 per hour for workers aged 21 and over – a rise of 11p
£4.98 per hour for 18-20 year olds – no change
£3.68 per hour for workers above school leaving age but under 18 – no change
£2.65 per hour for apprentices – a rise of 5p
If your employer provides you with accommodation, they can count some of its value towards your NMW pay. This is called the accommodation offset. From October, the maximum that employers can count towards NMW pay will be £4.82 – a rise of 9p.
Real Time Information (RTI) is being introduced to improve the operation of PAYE. It will make the PAYE system easier for employers and HM Revenue & Customs (HMRC) to operate, and employees will receive information more quickly. It will also help support the introduction of Universal Credits.
The fundamentals of PAYE are unchanged, for example, use of codes, employers deducting tax and National Insurance. What RTI does change is how and when employers and pension providers report information to HMRC.
If you process your own payroll it is important you are up to speed follow the link for more information.
ABS & Co Accountants 