Ensure that you update your workers wages.

National Minimum Wage

The National Minimum Wage is the minimum pay per hour almost all workers are entitled to by law. 

These new rates apply from 1 April 2023.

BREAKING NEWS: Rishi Sunak confirms the SSP Rebate Scheme will be reintroduced from 21 December 2021

The chancellor of the exchequer has confirmed that, due to surging cases of the Omicron variant of coronavirus, more support will be available to businesses.

The support measures include the SSP Rebate Scheme being re-opened. Certain businesses will be eligible from 21 December 2021 and can make retrospective claims from mid-January.

The Home Office has updated its guidance on right to work checks employers must carry out to include information on changes being implemented from 1 July 2021 onwards.

Right to work checks for EEA citizens from 1 July 2021

As of 1 July 2021, EEA citizens and their family members need to have immigration status in the UK. They can no longer use their EEA passport or national identity cards as proof of their right to work within the UK. Instead, it will be necessary for them to provide evidence of their lawful immigration status in the UK, in alignment with the requirements of other foreign nationals.

The majority of EEA citizens will have the option of proving their right to work using the Home Office online right to work service. Anyone who has successfully applied through the EU Settlement Scheme (EUSS) will only be able to demonstrate their right to work in this way. These individuals will provide their date of birth along with their share code to allow employers to check their immigration status online.

Where an individual has been granted ‘Settled Status’, they have a continuous right to work in the UK, but where someone has been given ‘Pre-Settled Status’, this is only for a limited period, and so employers must ensure they carry out follow-up checks at the appropriate time. The online service will state when this follow-up check must take place.

There are certain groups of EEA citizens who will not have status under the EUSS, and they will be required to prove their right to work using alternative documents, which include:

• Frontier Worker Permits
• Service Provider of Switzerland visas
• Outstanding applications to UK EUSS
• Outstanding applications to Crown Dependency EUSS
• EEA citizens with Indefinite Leave to Enter / Remain
• Points-based system visas

Further information on these documents and where they will apply is available within the guidance.

Irish citizens

Irish citizens can prove their right to work using their Irish passport, Irish passport card, or their Irish birth or adoption certificate along with an official document that displays their permanent National Insurance (NI) number and their name. This must have been issued by either a government agency or a former employer.

Irish citizens are also able to apply for a frontier worker permit, which can either be issued digitally or as a physical document. This gives the option of using the Home Office online right to work service to prove their right to work.

EEA citizens employed before 30 June 2021 who have not applied to the EUSS by 30 June 2021

There is a process that employers may follow until 31 December 2021 in relation to EEA citizens who were part of their workforce before 30 June 2021, but who have not applied to the EUSS by 30 June 2021. If they were employed prior to the end of the grace period, on 30 June 2021, then employers are not required to cease their employment but must take the following steps:

1. Advise the individual that they must make an application to the EUSS within 28 days and provide a Certificate of Application (CoA). If this does not happen, the employment must be terminated
2. Once a CoA has been provided, the employer must contact the Home Office Employer Checking Service to confirm the individual has applied
3. Where an application has been made, a Positive Verification Notice (PVN) will be supplied – this should be retained, and will expire after a period of six months
4. Prior to the PVN’s expiry date, a follow-up check must be carried out with the Employer Checking Service. If the individual has been granted status before the PVN expiry date, they can prove their right to work using the Home Office right to work online service
5. If the follow-up check shows the application is pending, a further PVN will be granted for six months, and step four must be repeated. If this follow-up check confirms that the application has been refused, no additional PVN will be issued, and the employment must be terminated
6. Employers must maintain accurate records of the checks it carries out and the subsequent actions they took

HMRC is aware of technical issues with a couple of the calculators that it offers online that help to assist in ensuring certain elements of pay are accurate. HMRC is currently investigating as a matter of urgency and hopes to have the calculators running correctly as soon as possible.

Company Car and Car Fuel Benefit calculator

There is an issue  with the Company Car and Car Fuel Benefit calculator.

When a value is entered into the section of the calculator that queries whether the car is provided via an Optional Remuneration Arrangment (OpRA), and that figure is higher than the cash equivalent of the calculated car benefit, the tool is not replacing the car benefit charge with the higher OpRA figure. This means that the calculator is not currently correctly aligned with OpRA rules.

The relevant section is displayed below:

Director’s Class 1 National Insurance Contributions (NICs) calculator

An issue has been identified with the Director’s Class 1 NICs calculator that those dealing with the pay of directors should be aware of.

An issue arises where the figure included in the total cumulative pay section is above the Secondary Threshold (ST) for tax year 2021-22 of £8,840 per year, but at, or below, the figure of £9,568 per year, which is the Primary Threshold (PT) for tax year 2021-22.

The ST is the point at which an employer begins to pay NICs and the PT is the point at which an employee beings to pay NICs.

When a figure of between £8,840 and £9,568 is entered, the employer’s NICs are not being calculated correctly, so those processing payrolls that may be impacted by this should keep this in mind.

HMRC has confirmed that, unfortunately, the Coronavirus Job Retention Scheme (CJRS) calculator (furlough) contained a software error, but that this has now been rectified.

What this does mean, however, is that anybody who utilised the calculator prior to 21 January 2021 to calculate January 2021 claims for employees who are not on a fixed salary will be required to re-calculate their claims if:

• They used an employee’s pay for January 2019 as reference pay, instead of 2020, and
• Their pay was different in January 2019 to January 2020

Where January 2020 pay was used, there is no need for claimants to take any further action.

HMRC has apologised to anybody who will now be required to re-calculate their claims.

If, upon performing the re-calculation, it is apparent that the claim amount was incorrect, then:

• If a claim for too much has been submitted, this should be amended in the next CJRS claim submission. Alternatively, HMRC should be notified as soon as possible, and a repayment made either online, through HMRC’s card payment service or by bank transfer
  
• If a claim for too little was submitted, then claimants should call the helpline to get this corrected by 1 March 2021

ANOTHER REASON TO USE THE WAGES ROOM!

The Childcare Voucher Scheme is a UK government initiative aimed at helping working parents to benefit from tax efficiencies in order to save money on childcare. The scheme is offered by many employers as a salary sacrifice scheme and implemented through the employer’s payroll. This means that parents who are in the scheme are able to sacrifice part of their salary (Tax and National Insurance free) in order to obtain childcare vouchers of an equal amount up to specified limits.

The employer also saves money because the amount each parent sacrifices from their salary is exempt from employers’ National Insurance Contributions. Employers can offer the scheme themselves or by using one of the voucher companies to do the administration for them. The fees these companies charge should be less than the savings the employer makes on National Insurance. Employers may also benefit from having a happier workforce and seeing a reduction in staff turnover.

Basic rate taxpayers can pay for up to £243 of childcare with vouchers each month. This can lead to an annual Tax and NI saving of up to £930 per parent. Higher rate tax payers can pay up to £121 per month and top rate tax players can pay up to £108 per month. The higher and top rate restrictions only apply to those who joined the scheme on or after 6 April 2011.

These vouchers can be used for any nursery, playgroup, nanny, childcare or au pair who is an Ofsted registered provider. These vouchers can be saved up by parents but are non-refundable.

New Tax-Free Childcare Scheme from Autumn 2015

From Autumn 2015 Tax-Free childcare will be available to nearly 2 million households to help with the cost of childcare, enabling more parents to go out to work. Unlike the childcare voucher scheme the new Tax-Free childcare scheme will not be available to parents who have a stay at home partner. The new Tax-free childcare scheme will give a 20% tax break to cover annual childcare costs of up to £10,000, providing savings of up to £2,000 per child.

Parents will be able to register and open an online account for the new Tax-Free childcare scheme by going to the GOV.UK website. Parents and others can then pay money into their childcare account as and when they like. They will also be able to withdraw money if they want.

The scheme will be available for children up to age of 12 (or children with disabilities up to the age of 17). To qualify parents will have to be in work, earning just over an average of £50 a week and not more than £150,000 per year. Any eligible working family can use the Tax-Free childcare scheme as it does not rely on employers offering it. Unlike the current scheme, self-employed parents can use the Tax-Free childcare scheme.

Parents who sign up to the current childcare voucher scheme will be able to remain in the scheme and will not be disadvantaged by the proposed 2015 changes. However after Autumn 2015 the childcare voucher scheme will no longer be available for new entrants. The new arrangement will not provide any National Insurance savings for employers (currently worth up to 12% for basic-rate taxpayers).

Parents who sign up to the current childcare voucher scheme will be able to remain in the scheme. However, if they move to a new employer after Autumn 2015, they will be considered to have left the current scheme and be forced to switch to the new arrangements.

In general families with high childcare costs will be better off under the Tax-Free childcare scheme while families with low childcare costs will be better off remaining under the Childcare Voucher Scheme.

Changes to the reporting of PAYE in real time have been announced by HMRC.

• a ‘Late reporting reason’ that can be entered on a Full Payment Submission (FPS) that’s late
• being able to make your first 2014-15 PAYE submission any time after 6 March 2014
• providing bank account details on an Employer Payment Summary (EPS) to get quicker repayments
• new fields on an Earlier Year Update (EYU) you’re completing for 2013-14
• a new online appeals facility being introduced in 2014-15
• more about what counts as a reasonable excuse if you don’t report on time
• updated guidance for employers exempt from filing or unable to file online

Here I have laid out the key points from the chancellor’s Autumn statement as they relate to Payroll. There may be some changes to this when the final bill is passed but I shall write a blog for them if there is anything significant.

NIC Exemption for Young Employees
From 6 April 2015 employers will not pay class 1 employer's NICs on the wages of employees aged under 21, where the employee earns less than the upper earnings limit (£813 per week in 2015/16). The employee will pay NICs on their wages as normal, and both employers' and employee's NI will be due on any wages above the upper earnings limit.

Employee Ownership
The government wants to encourage employees to become part-owners of the organisations they work for, and this apparently improves productivity and happiness in the workforce. The following tax reliefs will be introduced in 2014 to smooth transfers of businesses to employee-ownership trusts:

- No CGT will apply on shares transferred which give rise to a controlling interest in the business passing to the employee ownership trust;
- No IHT will apply on shares or assets transferred to the employee-ownership trust; and
- Bonuses of up to £3,600 per employee per year will be tax free where the business is controlled by an employee-ownership trust.

NICs
The primary (employees') and secondary (employers') threshold for class 1 NICs have been aligned at £153 per week from 6 April 2014.

For 2014/15 the main rates and thresholds for NI contributions are:

Employer's class 1 above £153/week not contracted out - 13.8%
Employee's class 1 not contracted out from £153 to £805/week - 12%
Employee's additional class 1 above £805/week - 2%

Sick Support
Currently employers can recover statutory sick pay (SSP) paid to their employees, where the total paid exceeds 13% of the class 1 NICs paid by the employer in the same tax month. This is called the percentage threshold scheme (PTS). Employers cannot reclaim SSP which does not reach the 13% threshold.

The PTS will be abolished from 6 April 2014, so SSP paid on and after that date will be an unrecoverable cost for all employers. However, employers will be able to reclaim SSP paid for periods up to 5 April 2014, if a claim is submitted by 6 April 2016.


Company Cars
Where a company car driver receives free fuel, the taxable benefit is calculated as the percentage of the list price for the car applied to the fuel charge multiplier set at £21,700 for 2014/15 (£21,100 for 2013/14) . The maximum taxable benefit of receiving free road fuel for private use will increase to £7,595 for 2014/15 from £7,385 for 2013/14.

From 6 April 2014 the employee will be taxed on the provision of a car as a benefit when the employer leases a car to the employee. Also from that date if the employee wishes to make payments for the private use of the company car or van to reduce the taxable benefit those payments must be made in the same tax year in which the vehicle is provided for private use. 

Vans
The taxable benefit for the private use of a company van from 6 April 2014 increases to £3,090. The taxable benefit when fuel is provided for private use in a company van will rise from £564 for 2013/14 to £581 in 2014/15.

Share Schemes
HMRC approved share schemes have strict limits on the value of shares which can be transferred to employees each year, and these limits have not been changed for some time. From 6 April 2014 the following limits are increased:

- monthly limit for employees who save to acquire shares through a SAYE scheme increases from £250 to £500;
- annual value of free shares given to employees in a Share Incentive Plan (SIP) increases from £3,000 to £3,600;
- annual value of partnership shares granted under a SIP increases from £1,500 to £1,800.

Income Tax Allowances
The standard personal allowance will increase to £10,000 from 6 April 2014, but the age allowances for those born before 6 April 1948 are frozen.

Allowances for 2014/15 are...

Personal allowance (born after 5 April 1948): £10,000
Personal allowance (born between 6 April 1938 and 5 April 1948): £10,500
Personal allowance (born before 6 April 1938): £10,660
Minimum married couples allowance*: £3,140
Maximum married couples allowance*: £8,165
Blind person's allowance: £2,230
Income limit for allowances for age related allowances: £27,000
Income limit for standard allowances: £100,000

* given where one partner was born before 6 /4/1935, as 10% reduction in tax due.

Tax Rates and Thresholds
The income tax bands for 2014/15 are:

Savings rate* (10%) - 0 to £2,880
Basic rate (20%) - 0 to £31,865
Higher rate (40%) - £31,866 to £150,000
Additional rate (45%) - over £150,000

*The savings rate of 10% only applies if the individual's net non-savings income does not exceed the savings rate limit. The higher rate and basic rate thresholds can be increased by paying personal pension contributions or gift aid donations.

State Pension Age
The State Pension Age (SPA) is currently being aligned at 65 for men and women who are reaching that age in the next few years. The SPA will then rise for both men and women to 66, and increase to 67 for those that reach that age between 2034 and 2036. The government is reviewing how quickly the state pension age should be changed. It is likely to accelerate the SPA to age 67, 68 and then to 69 for people who are currently in their early 30's.

Dual Employment Contracts
Where a person has an overseas domicile (usually because he was not born in the UK), and works overseas for part of their employment, it has been common practice to set up two parallel employment contracts for that person (dual contracts). One contract would deal with earnings taxable in the UK, the other contract would deal with overseas earnings. From 6 April 2014 HMRC will apply UK tax on earnings under both contracts, unless a higher amount of tax has been paid on the overseas earnings than would be paid in the UK.

Don’t forget that if you would like to use our payroll service you can call me on 020 8361 5500

National Insurance Contributions (Class 1)

Do you use a Payroll Bureau? Are you happy with the service that is provided?

If not then why not try us? We offer our clients a personal and professional service, ensuring that your payroll is prepared accurately and that the Tax Office requirements are met.

You can ring David on 020 8361 5500 or go to our quote page for a free online quote. We are offering a 10% discount for the first 6 months payroll fees, for all businesses signing up to our service in October 2013, so RING NOW!

UK MINIMUM WAGE RATES CHANGE FROM 1ST OCTOBER 2013

It has been confirmed that the new NMW rates which take effect from 1^st October 2013 will be as follows:

The adult rate will increase by 12p to £6.31 per hour.

The rate for 18-20 year olds will increase by 5p to £5.03 per hour.

The rate for 16-17 year olds will increase by 4p to £3.72 per hour.

The apprentice rate will increase by 3p to £2.68 per hour.

The accommodation offset increases from £4.82 to £4.91

Payslips are quite complex so if you are an employer or an employee and struggling to understand all of the categories here is a very useful tool, from the Chartered Institute of Payroll Professionals, for finding out what it is all about. 
http://www.cipp.org.uk/en/cippnews/cipp-payslip-tool.cfm