We have all been hearing a lot recently about the new National Living Wage, becoming law as from the 1^st April 2016. But what is it and are you, as employer, affected?

If your business employs workers, who are at least a school leaving age then yes, this legislation affects you. All workers are covered, regardless of whether they are full time, part time, temporary, casual, probationary, apprentices, trainees, disabled, agency, pieceworkers, foreign, agriculture, seafarers, offshore workers. All employers, regardless of size need to comply.

The National Living Wage covers workers of 25 years of age and older (but not in the first year of apprenticeship) and currently (from 01/04/16) stands at £7.20 per hour.
If you’re an employer, you’ll need to make sure you’re paying your staff correctly from 1^st April 2016, as the National Living Wage will be enforced as strongly as the current National Minimum Wage.

Workers under the age of 25 are also covered by the National Minimum Wage, which came in force on the 01/10/2015. Current hourly rates are:

Apprentice: £3.30
Under 18s: £3.87
18 to 20 year olds: £5.30
21 and over: £6.70

Who is not entitled to National Minimum Wage? Anyone who is Self-employed, Company Director or a Volunteer is not affected .
The Government has provided a National Minimum Wage calculator: https://www.gov.uk/am-i-getting-minimum-wage/ so you can check whether you are paying at the right rates.
Employers and employees can also call the ACAS Helpline on: 0300 123 1100 for further information.

Record Keeping
As ever, you, as an employer have to keep records for at least 6 years, which is the maximum amount of time a claim can be submitted to Court. The records keeping requirement covers payroll records, calculations of numbers of hours worked (timesheets, clock cards, electronic records) and any deductions made.

What do you, as employer, need to do?
Check the age of your workers
Inform your staff of the changes
Update payroll records

What happens in case of non-compliance?
If you have underpaid your workers you need to pay any arrears due immediately. It’s a criminal offence for employers not to pay someone the National Minimum Wage or to falsify payment records. HMRC will also enforce penalties, and, in future, “name and shame” non-compliant employers by making the records available to the public, where the business’ customers, suppliers and potential employees can view it. So now is the time to review those employment contracts and amounts paid to ensure you stay within the law!

Please contact us for further advice. At S P Accountancy we offer a fully HMRC compliant payroll software to ensure your employees are paid the right amounts and your business stays within the law.

 

Chancellor George Osborne’s budget, announced on the 16^th March this year has been described as: putting stability first” and offering “long-term solutions to long-term problems”.

The Headline-Grabbers are:

Changes to tax free personal allowance:
From April next year, the amount that can be earned before basic rate tax is paid will rise to £11,500, while the threshold for higher rate tax will be increased to £45,000 (from £42,385).

Cuts in capital gains tax:
Capital gains tax for higher rate taxpayers will fall to 20% from 28%, while for basic rate taxpayers the rate will be cut from 18% to 10%.

The introduction of the Lifetime ISA for the under-40s:
The Chancellor also announced that the amount that can be paid into an ISA will rise in April 2017 to £20,000, while also introducing the Lifetime ISA. In this scheme the government will pay in 20% of the sum paid in, the upper limit for payment being £4,000 a year. Mr Osborne described this as a tax-free way of saving for a pension.
Savers will receive the government bonus added to their Lifetime ISA until they reach 50. The saver can use their Lifetime ISA to buy their first home any time from 12 months after opening the account.
The government expects the Lifetime ISA to be welcomed by the self-employed as a way to save for their retirement, and able to withdraw funds when needed from 60.

Other highlights include:

The economy:
Set to grow by 2% next year, down from 2.4% Growth Forecast as per 2015 Autumn Statement.

Public spending:
The Chancellor said the government’s efficiency drive will continue, with the aim of saving a further £3.5 billion by 2019-2020. In the public sector, employer’s pension contributions are set to increase.
Tax avoidance/evasion: The government is set to crackdown on the use of personal service companies – which will raise £12bn – and disguised remuneration schemes.

Inflation:
Expected to raise from .7% in 2016 to 1.6% in 2017.

The corporate world:
By April 2020, the corporation tax rate will have fallen to 17% from the current 20%. The Chancellor also announced a crackdown on tax evasion, with overborrowing, the hybrid mismatch rules and the use of royalty payments all to come under HMRC scrutiny.

Small business:
Micro- entrepreneurs who rent out their homes. Mr Osborne said: There will be no forms to fill in, no tax to pay – it’s a tax break for the digital age and at least half a million people will benefit.
Individuals who rent out their rooms with incomes below the allowance will no longer need to declare or pay tax on that income, while those with incomes above £1,000 will deduct the allowance.
Small business rate relief (SBBR) will be doubled from 50% to 100% for businesses with a property with a rateable value of £12,000 and below. Businesses with a property with a rateable value between £12,000 and £15,000 will receive tapered relief, meaning 6,000 small businesses paying no rates at all. A further 250,000 will see their rates cuts. This will represent a tax cut of £7bn for the UK’s small firms, the Chancellor claimed in a “Budget for small businesses”.

Stamp duty:
To raise £500m a year, from Thursday 17 March commercial stamp duty on properties up to £150,000 will be zero. The rate will be 2% on the next £200,000 with a top rate of 5% on £250,000.

Self Employed:
Class 2 National Insurance contributions (NICs) will be consigned to the history books from April 2018. “This will reduce the NICs paid by 3.4 million self-employed individuals by an average of £134 a year”.

Miscellaneous:
Tax relief on financial advice is to be introduced.
Insurance Premium Tax to be raised to 10% from 9.5%, with the extra £700m raised being used to improve flood defences in the north of England. In the transport infrastructure sector, investment will be made in HS3 (Manchester–Leeds), Crossrail 2 (London) and other road and rail projects, mainly in the north of England.
In the health sector, a ‘sugar tax’ will be levied on the soft drinks industry (from 2018). The £520m this measure is expected to raise will be used to fund more sport in schools. In education, all students will study mathematics up to the age of 18.

Indirect taxation:
There will be no increase in fuel duty or excise duty on beer, cider or whisky. Other alcohol duties will rise in line with inflation, with cigarettes rising at inflation plus 2%. Tolls on the Severn Crossing to be halved by 2018.

 

Written by Vanessa Ugatti – Author of International Amazon Bestseller “True Worth”. Vanessa is a Coach, Trainer, Speaker, Author and also a Finalist of 2014 Venus Awards – Influential Woman of the Year.

Understanding your value in business starts with how you value yourself. This is because before you’re a business owner, you are first and foremost a human being – and so are your clients. It’s so easy to get caught up in facts, figures and processes and forget that when you provide a service, the human element is probably by far the greatest reason why your clients use you, no matter what service you offer.

It’s the old adage of people buying from people who they know, like and trust. This is borne out by my own findings too: I work with accountants, lawyers, financial advisers and consultants. The ones who are most successful are not necessarily those who are the most technically competent; it’s actually those who have the best ‘bedside manner.’ Of course, I’m not suggesting for one moment that you don’t need technical competence; you do naturally need to be at a certain level. However, the human touch is what most clients really value. If you can combine the two, you’ll be dynamite!

A great example of this is a family lawyer who I worked with. He’s a really nice guy and I can understand why clients would be comfortable working with him. However, he really didn’t understand his own value at all. He was discounting fees for no apparent reason and doing extra work without charging – two of the classic behaviours that service providers can easily fall into if they don’t work on understanding their value. One of the biggest light bulb moments he had was when I helped him understand that part of what he gives his clients is actually emotional support. By taking on their “problem”, whether it be divorce, sorting out finances or child-related, he is shouldering the burden on their behalf. He had never given that any thought whatsoever. So now, when he reflects on the value he’s creating by doing a particular piece of work for a client, he includes the emotional element in the mix.

To access a complimentary copy of True Worth, How to Charge What You’re Worth and Get It, go to: www.thetrueworthexpert.com.

Written by Vanessa Ugatti, The True Worth Expert & Author of Amazon Best-Seller, True Worth

Tel: 01202 743961

Mobile: 07957 672335

Find Vanessa on:

LinkedIn: http://uk.linkedin.com/in/vanessaugatti

Facebook: www.facebook.com/thetrueworthexpert

Follow Vanessa on twitter: VanessaUgatti@trueworthexpert

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