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National Minimum Wage (Oct 2016)

National Minimum Wage rates from 1 October 2016 will be:

  • £6.95 per hour – 21-24 yrs old
  • £5.55 per hour 18 – 20 yrs old
  • £4 per hour – 16-17 yrs old
  • £3.40 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

National Living Wage

There will be no change to £7.20 per hour, implemented from 1 April 2016 for individuals over the age of 25 yrs old

The rate will then change every April starting April 2017

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Budget 2015 – “Post Election”

George Osborne delivered his seventh Budget as chancellor on 8 July 2015

Personal taxation and pay

  • New national living wage will be introduced for all workers aged over 25, starting at £7.20 an hour from April 2016 and set to reach £9 by 2020 – giving an estimated 2.5 million people an average £5,000 rise over five years
  • Low Pay Commission to advise on future changes to rates
  • Inheritance tax threshold to increase to £1m, phased in from 2017, underpinned by a new £325,000 family home allowance
  • Personal allowance, at which people start paying tax, to rise to £11,000 next year (2016-17). The government says the personal allowance will rise to £12,500 by 2020, so that people working 30 hours a week on the minimum wage do not pay income tax
  • The point at which people start paying income tax at the 40p rate to rise from £42,385 to £43,000 next year
  • Mortgage interest relief for buy-to-let homebuyers to be restricted to basic rate of income tax
  • Rent-a-room relief scheme to rise to £7,500

The state of the economy

  • Economy grew by 3% in 2014
  • 2.4% growth forecast in 2015, 0.1% lower than predicted in March, followed by 2.3%, 2.4% and 2.4% in the following years
  • One million extra jobs predicted to be created by 2020

Alcohol, tobacco, gambling and fuel

  • No rise in fuel duty this year with rates continuing to be frozen
  • – Major reform to vehicle excise duties to pay for a new road-building and maintenance fund in England
  • – New VED bands for brand new cars to be introduced from 2017, pegged to emissions for the first year. Subsequently, 95% of car owners will pay a flat fee of £140 a year
  • – Alcohol and tobacco duties not mentioned in statement

Business

  • Corporation tax to be cut to 19% in 2017 and 18% in 2020
  • – Permanent non-dom status to be abolished – from April 2017, anyone who has lived in the UK for 15 of the past 20 years will pay same level of tax as other UK citizens
  • – £7.2bn to be raised from clampdown on tax avoidance and tax evasion with HMRC budget increased by £750m
  • – Bank levy rate to be gradually reduced over the next six years and a new 8% surcharge on bank profits introduced from 2016
  • – Cap on charges imposed by claims management companies and an increase in insurance premium tax to 9.5% from November
  • – New apprenticeship levy for large employers
  • – Climate Change Levy exemption for renewable electricity to be removed
  • – National Insurance employment allowance for small firms to be increased by 50% to £3,000 from 2016
  • – Dividend tax credit to be replaced with a new tax-free allowance of £5,000 on dividend income. Rates of dividend tax to be set at 7.5%, 32.5% and 38.1%.
  • – Annual investment allowance will be fixed permanently at £200,000 from January 2016
  • – A consultation will take place on changing Sunday trading laws
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National Minimum Wage (Oct 2015)

The national minimum wage will increase by 20p an hour to £6.70, the government has announced.

The new rates will be implemented in October 2015.

It is the first time in six years that the rise will be higher than inflation.

The rate for those aged 16 and 17 will rise by 8p to £3.87.

Apprentices will earn an extra 7p an hour, taking their wages to at least £2.80.

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National Minimum Wage (Oct 2014)

The national minimum wage will increase by 19p an hour to £6.50, the government has announced.

The new rates will be implemented in October 2014.

It is the first time in six years that the rise will be higher than inflation.

The rate for those aged 16 and 17 will rise by 7p to £3.79.

Apprentices will earn an extra 5p an hour, taking their wages to at least £2.73.

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Workplace Pension

New legislation on workplace pension will affect every employer with staff working for them in the UK. This brief guide is designed to give an overview of the new duties and spells out how we can help with the process.

What to do first

Find out your ‘Staging Date’

–          Each employer has a ‘Staging Date’, which is the date that the new duties come into force for that business.

–          You can find out your staging date by entering your PAYE reference on the ‘What is my staging date?’ page of The Pensions Regulator website or by contacting us.

–          By now most employers should have received a letter from The Pension Regulator notifying them of their staging date and for each employer to provide a contact person

–          You will also begin receiving correspondence from The Pensions Regulator as your staging date approaches.

Assess workers and enrol them into the pension scheme

Some employees must be ‘automatically enrolled’ into your chosen pension scheme at the staging date, whilst others may have the right to ‘opt-in’ or ‘join’ the scheme. Your duty with regard to each employee is determined by their age and level of earnings, and you will need to perform an ‘assessment’ in order to place each employee into a particular category.

A worker is defined as any individual who:

  • works under a contract of employment (an employee), or
  • has a contract to perform work or services personally and is not undertaking the work as part of their own business.

* This definition is for Workplace Pension

workplace pension earning requirements

* Earnings levels are for the 2015-16 tax year

Employees under 16 or over 75 are excluded from the auto enrolment process.

‘Eligible Jobholders’ are those employees between 22 and State Pension Age earning the equivalent of £10,000 or more per annum. Employees in this category must be automatically enrolled into the pension scheme. The employer must pay contributions into the scheme of these employees.

‘Non-eligible Jobholders’ comprise of 2 groups of employee:

  1. Employees aged between 22 and State Pension Age earning between £5,824 and £10,000 per annum (i.e. their earnings are below the £10,000 ‘trigger’ for auto enrolment)
  2. Employees earning above £5,824 that are either below or above the age bracket to be automatically enrolled (i.e. they are aged 16-21 or above state pension age).

Employees in the above category are not automatically enrolled but have the right to ‘opt-in’ to the pension scheme if they choose. If they do choose to ‘opt-in’ then the employer must pay contributions into the scheme.

‘Entitled Workers’ are those employees aged between 16 and 75 earning below £5,824 per annum. Employees in this category must be offered the opportunity to join a workplace pension scheme, but the employer is not obliged to make contributions to it.

Choose a Pension Provider

When choosing a pension scheme for automatic enrolment you must make sure it meets certain criteria. There are many providers offering pension schemes suitable for auto enrolment. We would recommend that you begin the process of selecting a pension provider well in advance of your staging date.

The Pensions Regulator guide is a good starting point. Alternately you can employ the services of a Financial Advisor.

Calculate and deduct the pension contributions

The amount you must contribute to the pension scheme is determined by your particular scheme’s rules. However, if you’re using the scheme for automatic enrolment there are minimum contributions you must pay. Minimum contributions are shown in the table below – they’re currently a total contribution of 2% with at least 1% employer contribution (some pension schemes refer to ‘ 1 and 1 ‘ levels of contribution, which means that the employee and employer are each contributing 1%).

Minimum contributions are being increased gradually over time.

Date Employer minimum contribution Total minimum contribution
Before *05/04/18 1% 2% (including 1% staff contribution)
*06/04/18 – *05/04/19 2% 5% (including 3% staff contribution)
*06/04/19 onwards 3% 8% (including 5% staff contribution)

*The proposed dates are subject to Parliament approval

The employer can pay more than their minimum contribution (if they want to) and the staff member must pay the difference, to reach the total minimum contribution.

Communicate with each employee

You must write to each member of staff to tell them how automatic enrolment affects them and to inform them of their rights. This is a legal requirement. Following your staging date, employees that are automatically enrolled into your pension scheme (the ‘Eligible Jobholders’) need to be given information about their contributions and their right to ‘opt-out’ of the scheme. ‘Non-Eligible Jobholders’ must be informed of their right to ‘Opt-in’ to the scheme, and so on.

The Pensions Regulator has a useful guide on employee communications, including an interactive tool for selecting the correct letter template to use in various situations.

Complete the automatic enrolment Declaration Of Compliance (‘Registration’) with The Pensions Regulator.

You must provide certain information to The Pensions Regulator about how you’ve complied with the automatic enrolment duties, such as how many people you’ve automatically enrolled and into which pension scheme(s). You must complete your declaration of compliance even if you don’t have anyone to automatically enrol. Declaration is mandatory and you could get fined if you don’t do it in time. Your declaration deadline is five calendar months after your staging date. Declaration provides a snapshot of your workforce on your staging date and you’ll need to account for each person. Automatic enrolment declaration of compliance (registration) is a secure, online service accessed through the Government Gateway.

You must manually log on to the Government Gateway website and enter the relevant details there.

Continually assess your workforce before each pay date

You must continue to assess your workforce before each pay day following your staging date. You’ll need to monitor any changes in the age and earnings of your staff. You may have taken on a new employee who needs to be automatically enrolled, or perhaps one of your existing employees has reached their 22nd birthday or has received a pay rise and so becomes an ‘Eligible Jobholder’. The auto enrolment ‘assessment’ process should therefore become part of your regular payroll routine.

FAQ

I’m the only director of my own company – does workplace pension apply to me?

If you are the sole director and you have no other staff working for you, the company does not have automatic enrolment duties but can opt in.

If you believe you don’t have any automatic enrolment duties you will need to tell us that you’re not an employer.

Does Workplace Pension apply if I employ a carer?

If you directly employ one or more people to provide you with care or personal assistance, you’re an employer and Workplace Pension duties will apply to you.

This will be the case whether you use the money provided by your local council in the form of direct payments or a personal budget to pay the carer, or you use your own money.

If the person who provides you with care or personal assistance is provided by an agency or the council, you’re not an employer and Workplace Pension duties will not apply to you.

Workplace Pension is similar to your employer responsibility to deal with National Insurance and tax.

So, in the same way that you have to pay employer National Insurance in respect of your carer’s earnings and deduct PAYE tax from their pay, depending on the circumstances, you must also put your carer into a pension scheme and pay money into it on their behalf.

Further Information

The Pensions Regulator website gives detailed guidance on all aspects of automatic enrolment. Their website is www.tpr.gov.uk

Contact us and we can help you in achieving your requirements, where required we shall notify you when you require a financial advisor’s help.