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Have you thought about the National Living Wage?

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There will be a new National Living Wage for workers aged 25 and above, set at £7.20 per hour from April 2016, with the intention that it will reach £9 per hour by 2020.

The new National Living Wage will apply for pay reference periods starting on or after 1st April 2016. The pay reference period is usually the period of time for which a worker will be paid. So, for example, for weekly paid employees working a week in arrears, the first pay period that needs to be paid at the NLW will be for the week 4th to 10th April, payable on 15th April 2016.

With HMRC’s policy of naming and shaming offenders it’s worth bearing in mind that the penalties for non-compliance are high, so please review all your workers age and increase their pay accordingly.

Automatic Enrolment: Are you ready?

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We have talked about this before, but it certainly bears repeating. Up to half a million small and micro employers will reach their staging date in the next 12 months and many will not be ready in time and could risk fines. The Pensions Regulator has written to every employer alerting them to when their auto enrolment duties start and reminding them to act. Despite the message to act early, it is expected that many employers will leave it too late or take no action at all. Don’t let this be you!

If you believe you do not require a workplace pension because you have no employees or have directors only, you must still inform The Pensions Regulator of this. Click here and answer the questions to determine if you need a scheme or not. You will need your letter code issued to you by The Pensions Regulator and your PAYE reference number.

Even if you have only one employee, you must do the following:
* know your staging date
* set up a qualifying pension scheme
* assess your workforce
* communicate with the workers
* enrol appropriate workers
* make contributions
* submit the declaration of compliance

Your first port of call should always be The Pensions Regulator website which will steer you through all your duties.

As a payroll bureau, we can assist our clients with all ongoing pension duties such as the assessing of workers and deducting the necessary contributions through their payroll, but choosing a pension provider, setting up that scheme and completing the declaration of compliance with The Pensions Regulator is the responsibility of the employer.

Auto Enrolment Minimum Contributions: Phasing Date Changing

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The date the Auto enrolment minimum contributions were due to increase has changed in order to align with the tax year. So now, instead of total minimum contributions increasing from 2% to 5% in October 2017, a delay of six months until April 2018 will be applied. Similarly, the planned increase in contributions in October 2018 from 5% to 8% will not be implemented until April 2019.

This is not, however, a delay to automatic enrolment and employers’ staging dates will remain the same. Aligning the contribution increases with the tax year will reduce the amount of admin required and should help employees who are used to seeing changes in their take home pay when the tax year changes.

Christmas Gifts and Parties

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It’s Christmas time again and some employers may be providing their staff with a Christmas bonus, a seasonal gift or a Christmas party.

If a gift is given, you need to consider whether the item can be resold or exchanged for cash by the employee or if it is considered as trivial and therefore tax exempt. There are no set rules for determining which Christmas benefits are trivial, but a value of up to £50.00 is usually considered appropriate. Christmas gifts such as a turkey, bottle of wine or a box of chocolates can be treated as trivial benefits. Cash benefits, benefits with a money’s worth and non-cash vouchers, such as shopping vouchers are not regarded as trivial by HMRC. Cash bonuses count as earnings and are added to the normal employee earnings for tax and National Insurance.

Small third party gifts may also be tax exempt if they are not provided by the employer; it is not in recognition of the service performed by the employee; it is not cash or vouchers that can be converted to cash, and it is does not exceed £250.00.

There are exemptions for employers providing parties for employees as long as they are an annual event; it is open to all employees and the cost per head is not more than £150.00.

2015 National Minimum Wage Rates

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From 1st October 2015 National Minimum Wage rates have increased, so please ensure you are paying your employees correctly. Research suggests nearly a third of small business owners do not know what the National Minimum Wage rate is or forget that it increases every October.

Adults aged 21 and over increases from £6.50 to £6.70 an hour
18 to 20 year olds increase from £5.13 to £5.30 an hour
16 to 17 year olds increase from £3.79 to £3.87 an hour
The apprentice rate for increases from £2.73 to £3.30 an hour

Companies failing to comply with the National Minimum Wage risk being named and shamed, and could be fined up to £20,000 per worker if prosecuted.
You also need to be aware that from April 2016 a new minimum limit called the National Living Wage will come into force for all workers aged 25 and over which is set to begin at £7.20 an hour. This means that employers who pay at the minimum wage will be hit twice in one year. It is predicted that around 6 million people will benefit from the 2016 introduction.