Tag Archives: employers

What will the Budget bring for businesses?

With two Budgets in 2015 it does not feel like that long ago since we last had a Budget but the next one is not that far away and will take place on  Wednesday 16 March 2016. Ahead of the Budget the CBI have written to the Chancellor outlining what they would like to see in the Budget proposals.

The CBI emphasise that businesses have suffered sizeable policy costs which impact on their ability to remain competitive. These include the Apprenticeship Levy, the National Living Wage and also pension auto enrolment. They therefore want the government to provide additional tax incentives to promote productivity and the delivery of jobs. Examples would include:

  • new capital allowances for investments in structures and buildings
  • allowing smaller companies claiming research and development tax credits to be able to claim repayments in part payments throughout the year  rather than yearly
  • introducing a payroll incentive to help small firms with the costs of hiring high-skilled staff along the lines of the Employment Allowance.

We will keep you informed of pertinent Budget announcements.

Internet link: CBI

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Holiday pay and overtime update

We have previously reported that in the judgment an Employment Appeal Tribunal (EAT) decided that holiday pay should reflect non-guaranteed overtime.

Under the Working Time Regulations 1998 most workers are entitled to paid statutory annual leave. This is 5.6 weeks (28 days) if the employee works five days a week. A worker is entitled to be paid in respect of any period of annual leave for which they are entitled, at a rate of one week’s pay for each week’s leave.

The EAT considered three cases in which employees were required to work overtime if requested by their employees. The EAT referred to this type of overtime as non-guaranteed overtime. The Tribunal decided in the context of non-guaranteed overtime:

  • overtime payments must be taken into account in the calculation of holiday pay if there is a settled pattern of work
  • if the amount of overtime varies but is regularly paid, overtime payments must also be taken into account on an average basis.

Following fears that employers may face large backdating claims the Government has taken action to reduce potential costs to employers by limiting claims by introducing regulations which will mean that claims to Employment Tribunals on this issue cannot stretch back further than two years.

Employees can still make claims under the existing arrangements for the next six months which will act as a transition period before the new rules come into force. The changes apply to claims made on or after 1 July 2015.

Employers and employees can also contact the Acas helpline for free and confidential advice.

If you would like any help in this area please do get in touch.

Internet links: ACAS guidance  Gov news

Holiday pay and overtime

In the judgment an Employment Appeal Tribunal (EAT) has decided that holiday pay should reflect non-guaranteed overtime.

Under the Working Time Regulations 1998 most workers are entitled to paid statutory annual leave. This is 5.6 weeks (28 days) if the employee works five days a week. A worker is entitled to be paid in respect of any period of annual leave for which they are entitled, at a rate of one week’s pay for each week’s leave.

The EAT considered three cases in which employees were required to work overtime if requested by their employees. The EAT referred to this type of overtime as non-guaranteed overtime. The Tribunal decided in the context of non-guaranteed overtime:

  • overtime payments must be taken into account in the calculation of holiday pay if there is a settled pattern of work
  • if the amount of overtime varies but is regularly paid, overtime payments must also be taken into account on an average basis.

Vince Cable has announced the setting up of a taskforce to assess the possible impact of the Employment Appeal Tribunal ruling on holiday pay.

Business Secretary Vince Cable said:

‘Government will review the judgment in detail as a matter of urgency. To properly understand the financial exposure employers face, we have set up a taskforce of representatives from government and business to discuss how we can limit the impact on business. The group will convene shortly to discuss the judgment.

Employers and employees can also contact the Acas helpline for free and confidential advice.

If you would like any help in this area please do get in touch.

Internet links: Acas guidance  Gov News EAT

P11D deadline approaching

The forms P11D, and where appropriate P9D, which report details of expenses and benefits provided to employees and directors for the year ended 5 April 2014, are due for submission to HMRC by 6 July 2014. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.

Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A National Insurance Contributions at 13.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.

HMRC have updated their expenses and benefits toolkit for 2013/14 and record keeping for 2014/15. The toolkit consists of a checklist which may be used by advisers or employers to check they are completing the forms P11D correctly.

If you would like any help with the completion of the forms or the calculation of the associated Class 1A National Insurance liability please get in touch.

Internet links: http://www.hmrc.gov.uk/payerti/exb/forms.htm

Toolkit

Employers no longer able to reclaim SSP

The Percentage Threshold Scheme (PTS), which allows employers to reclaim Statutory Sick Pay (SSP) in certain circumstances, is abolished from 6 April 2014.

Under PTS employers have been able to reclaim SSP where the SSP paid is more than 13% of the Class 1 NIC due for the month. Employers are not entitled to recover any of the SSP paid to their employees unless they qualify for the reimbursement scheme.

The following example explains how the scheme worked for a tax month:

SSP paid                                                       =          630.00

Gross NI £3,704.29 x 13%                          =          481.56

SSP recoverable: (£630 – £481.56)           =          £148.44

From 6 April 2014 employers are unable to recover SSP however they will continue to be able to recover unclaimed SSP for previous years until 5 April 2016. Do contact us if you think this may apply to your business.

The government has announced that the current PTS funding will be moved into a new scheme to help employees who have been incapacitated for four weeks or more get back to work as part of the government’s Health Work and Wellbeing Initiative.

Internet link: Employer bulletin

RTI and micro employers

HMRC have announced that, although the vast majority of employers are finding PAYE reporting in real time straightforward, a small proportion of micro employers and their agents still need more time to adapt. They have therefore announced that existing employers with nine or fewer employees who need more time to adapt will be able to report PAYE information on or before the last payday in the tax month until April 2016.

HMRC will be encouraging micro businesses to adapt their processes sooner to ensure that they are ready to report all payments each time they pay their employees by April 2016.

End to the current relaxation

The current relaxation which applies to employers with fewer than 50 employees comes to an end in April 2014. Conditions for the current relaxation can be found by visiting the link at the end of the HMRC article.

All employers starting to operate PAYE after 6 April 2014, as well as existing employers with 10 or more employees, will need to report each time they pay their employees from April 2014.

This relaxation is part of a package of measures to help micro employers as they move towards full reporting of PAYE information in real time. The package also includes:

  • guidance such as ‘Situations where employers will not have to report PAYE information ‘on or before’ the time they pay their employee’ which can be found at the end of the HMRC article and
  • ongoing work to develop new ways to report PAYE information on a timely basis, for example using mobile apps.

If you would like any help with payroll issues please do get in touch.

Internet link: HMRC news