Summer Budget Summary

The Chancellor’s summer budget means several changes that will affect employers from April 2016.

1. Introduction of a new compulsory National Living Wage for workers aged 25 and above. Currently, the National Minimum Wage for employees that are 21 years old and over is £6.50 an hour, increasing to £6.70 in October 2015. For those 25 years old and over, this will mean a further increase to £7.20 in April 2016.

2. To assist employers with this additional cost, the new wage will be offset by an increase to the Employment Allowance from £2000 to £3000 per year and Corporation Tax being cut to 18%, a 2% reduction on the current rate.

3. Personal Allowance will increase from £10,600 to £11,000 in April 2016 and to £11,200 in April 2017.

4. The basic rate limit will increase from £31,785 to £32,000 in April 2016 and to £32,400 in April 2017.

5. The higher rate threshold will increase from £42,385 to £43,000 in April 2016 and to £43,600 in April 2017.

6. From April 2016 companies where the director is the sole employee will no longer be able to claim the Employment Allowance.

Auto enrolment: It’s the Law!

I recently read a scary statistic from an auto-enrolment survey which said 1 in 10 SMEs plan to ignore auto-enrolment completely whilst 11% of small business owners are still unaware of what auto-enrolment even is. Please do not let this be you. If you have somehow managed to miss all the national TV and radio advertising, billboards or official letters from The Pensions Regulator telling you of your duties, or forgot about it, thinking you don’t need to do anything, you could be running the risk of leaving it too late and receiving some nasty penalties for breaking the law.

We urge you to act on any letter you receive from The Pensions Regulator informing you of your ‘Staging Date’ and what your responsibilities are as an employer and what you must do and when. You must think about this now if you haven’t already and allow yourself at least 6 months to get everything in place in time.

This guide will help you get started.

If you do not already have a pension scheme in place, you must first choose a pension scheme. Once you have a suitable scheme in place you must inform your payroll provider.
For our clients we will provide the following assistance:

* Assess all workers each time we process the payroll
* Auto-enrol them into the pension scheme if and when they are eligible
* Make the necessary deductions from the payroll
* Provide pension reports
* Provide the required payroll file to submit to the pension provider
* Provide correspondence letters for new joiners

We cannot stress enough how important it is for you to think about your workplace pension duties as an employer now. It’s the law!

Auto enrolment for Directors?

Since Automatic enrolment will affect many more small employers in the next couple of years, there is some confusion regarding those companies with only one or two directors. We recently spoke to The Pensions Regulator who gave us their clarification on this.

The Pensions Regulator will write to ALL employers informing them of their staging date at least 12-18 months before that date. They will expect employers to start planning and getting a pension scheme in place for their workers and to register that pension scheme within 5 months of the Staging date to avoid penalties and breaking the law. If there are only directors in the company, none of whom are workers for the purposes of automatic enrolment, then you can inform The Pensions Regulator by emailing customersupport@autoenrol.tpr.gov.uk stating the following:

1. Confirm your company is not an employer for the purposes of automatic enrolment for one of the following reasons:
* There is only one director and there are no other staff working for the company
* The only people working for the company are directors and none of them has an employment contract
* The only people working for the company are directors and only one of them has an employment contract
* The company has ceased trading (include date ceased)
* If you believe there is another reason why you believe you do not have any automatic enrolment duties, provide a brief explanation

2. The letter code for the company. This is a 10 digit number found on all letters sent from The Pensions Regulator
3. The PAYE scheme number
4. The companies house number
5. The name, email address, address and telephone number of contact at the company

If the company’s circumstances change so that there are at least two people working for the company under contracts of employment then you will need to inform The Pensions Regulator as soon as possible.

Under 21’s National Insurance

From 6th April 2015, a new NI band called the Upper Secondary Threshold (UST) has been created to facilitate the abolition of employer National Insurance contributions for employees under the age of 21. The Upper Secondary Threshold is £815 per week. Earnings above this threshold will remain subject to secondary Class 1 National Insurance Contributions. There are four new National Insurance category letters for these employees; M,Z, I and K. M will be used for not-contracted our standard rate contributions for under 21 year olds, so you will need to make sure your payroll software will apply these new NIC letters accordingly. Once the employee is 21 they are to be changed and calculated using the appropriate normal NI letter.