Instead of a taxable cash Christmas bonus, why not give your employees a seasonal gift – a turkey or a nice bottle of wine?
In order to provide these gifts – it must be ensured that the gift falls under trivial benefits in kind.
Trivial benefits apply where the benefit:
Accordingly, gifts that cost under the £50 limit would qualify. It is also possible to provide employees with a gift voucher (not a cash voucher) where the limit is £50 or less. They can only be provided as a gesture of goodwill be it at Christmas or other such seasonal occasions.
Employers no longer need to report such trivial benefits on P11ds or PAYE Settlement Agreements (PSA). However, if the gifts have a value in excess of £50 or cannot be counted as trivial benefit, then the gift must be reported on the form P11d and Class 1A NICS may be payable on the value of the gift.
£300 Annual Cap
There is an annual trivial benefits cap of £300 that is applied to directors or other office-holders of “close companies” (close company is a limited company that’s run by 5 or fewer shareholders) and to members of their families or households. The £300 annual cap does not apply to other employees.
Businesses are being advised to prepare early for the changes on 1st April 2016 when the new law becomes law for employees 25 years of age and over.
1. Find out which staff are eligible for new rate
2. Know the correct rate of pay - £7.20 for staff aged 25 and over
3. Update the company payroll for 2016
4. Communicate the changes as soon as possible
The new rates are dependent on age and are as follows:
Workers aged 21 and over: £6.70 an hour
Development rate for workers aged 18-20: £5.30 an hour
Young workers rate for workers aged 16-17: £3.87 an hour
Apprentices under 19, or over 19 and in first year of the apprenticeship: £3.30 an hour
In addition to the above, from April 2016, the government will introduce a new mandatory National Living Wage (NLW) for workers aged 25 and above, initially set at £7.20 – a rise of 70p relative to the current National Minimum Wage (NMW) rate, and 50p above the increase coming into force on 1st October.
The National Minimum Wage will continue to apply from April 2016 for those aged 21 to 24.
It is part of a series of measures announced by Business Secretary Sajid Javid to ensure employers pay the legal minimum rate and further backed up by David Cameron who announced stringent penalties for non compliant employers. These include doubling penalties for non-payment of the NMW, increasing the enforcement budget, and disqualifying those found guilty from being a company director for 15 years.
“This one-nation government is committed to making work pay and making sure hardworking people get the salary they are entitled to,” added Javid.
From next April, firms will have to pay all workers aged over 25 at least £7.20 an hour - compared to £6.50 now. The minimum wage will be increased to £9 by 2020 with Britain having one of the most generous pay guarantees in the world.
“There is no excuse for employers flouting minimum wage rules,” said Javid. “These announcements will ensure those who do try to cheat staff out of pay will feel the full force of the law.”
The new compliance team will investigate the most serious cases of employers failing to pay NMW, including the national living wage, which will be introduced from April 2016. It will have power to issue penalties, pursue prosecutions, and name and shame the most exploitative businesses.
Although the maximum penalty of £20,000 a worker remains, the calculation of penalties on those who fail to comply will increase from 100 per cent of arrears to 200 per cent. However, this will be halved if payment is made within 14 days. This reform is intended to increase compliance and ensure tough consequences for those who break the law.
The government also announced that it will work with payroll providers to ensure their software can check that staff is paid what they are entitled to. It will also improve guidance and support.
Chancellor George Osborne has delivered his emergency budget, setting out the new Conservative government’s plans for the nation’s finances. So here are the key points for payroll.
- A compulsory national living wage for working people aged 25 or over will be introduced in April 2016, set at £7.20 an hour and rising to £9 by 2020.
- The National Insurance Employment Allowance for small firms will be increased by 50% to £3,000 from 2016.
- The tax-free personal allowance will be raised to £11,000 next year. After that, the personal allowance will always rise in line with the National Minimum Wage.
- The higher tax rate threshold will rise to £43,000 next year.
Student maintenance grants will be abolished from 2016, replaced with loans, which people will start to pay back when they earn over £21,000. The maximum value will be increased to £8,200.
Over the last few years, HMRC has been moving away from the use of 0845 numbers to 03 numbers. 03 numbers are non-geographic but are usually charged at the same rates as 01 and 02 numbers and are free with some telephone packages.
All HMRC helplines now have 03 numbers and the majority of calls are made using those numbers. Since December 2014 taxpayers using 0845 numbers to call HMRC helplines will have heard a message letting them know that the 0845 line will be closing. This was put in place to help create a smooth transition to the new 03 numbers.
From 30 June 2015, all 0845 helpline telephone numbers will be decommissioned and taxpayers dialling those numbers will hear a dead line tone. Callers will have to redial using the correct 03 number to contact the relevant department. A list of all 03 helpline telephone number is available on the GOV.UK HMRC contact us page. It is now Government and Ofcom policy to use 03 numbers.
Income Tax - 0300 200 3300
National Insurance enquiries - 0300 200 3300
Employer General enquiries - 0300 200 3200
Queen’s Speech announces doubling of Childcare subsidy from 15 to 30 hours a week.
Plans to double state-subsidised childcare for three- and four-year-olds to 30 hours a week were set out in the Queen’s Speech to the new parliament, this week.
Already, children of this age in England are entitled to 570 hours of free early education or childcare a year. This works out at 15 hours a week for 38 weeks of the year.
Legislation was also announced to ensure that increases to the Income Tax personal allowance would reflect changes to the national minimum wage. In future, people working 30 hours a week on the minimum wage will not pay Income Tax.
Other plans announced include ensuring there are no rises in Income Tax, VAT or National Insurance for the next five years, reform to strike laws and reducing “red tape” on small businesses.
On 8 April 2015, HMRC updated its Starter Checklist.
An employer can use this Starter Checklist to gather the information they need to operate PAYE for a new employee. The checklist will help an employer to complete the necessary information related to a starter that must be shown on the first Full Payment Submission submitted covering a starter’s first payment of wages.
Where a starter does not have a form P45 issued by a previous employer to give their new employer before their first payday, the starter’s information given in the Starter Checklist will inform the new employer what PAYE tax code they should use for the starter’s first payday. The Starter Checklist replaces form P46 (no longer in use) which a starter was obliged to complete in the absence of a P45 from a previous employer.
The starter checklist can be completed online and then the finished form can be downloaded, saved, and printed out. Alternatively, a black and white copy of the Starter Checklist can be printed from the online Checklist. This could then be given the starter to fill out.
Do not send a printed copy of the starter checklist to HMRC; it’s for the employer’s internal use only. Where a Starter Checklist is completed, employers are advised to keep the form for the current and previous three tax years.
Important note: Employers are supposed to verify the information provided on a P45 or Starter Checklist. A birth certificate, photo driving license, passport, and utility bills, can all be used as part of verifying an employee’s name, date of birth, current gender, address, NI number, etc.
Monday 6 April 02:00 – 18:00
Due to a scheduled upgrade you will experience a delay in receiving your online acknowledgement to PAYE End of Year submissions made using HMRC and commercial software between 02:00 and 18:00 on Monday 6 April. Your acknowledgement will be sent once the service is restored. Please do not attempt to resubmit your submission. HMRC apologises for any inconvenience this may cause.
Fit for Work provides people on sick leave with help to return to work by providing an occupational health assessment when they have been, or are expected to be, off work for 4 weeks. After the assessment, which GPs have been told should be the default option after four weeks’ sickness; they will receive a return-to-work plan with recommendations to help them get back to work more quickly. a return to work plan (RtW) can be accepted as evidence for payment of SSP in the same way as a fit note.
Employers, even those without HR and occupational health teams in-house can also ask for an assessment if the GP has not done so. All referrals will be based on the informed consent of the employee. The government has set out the following deadlines for the referral service which has yet to go live:
- the first assessment will be within two working days of receipt of referral
- if the employee is not expected to return to work, a review date will be set as part of the case management
- further (phone) assessment will take place within two working days
- face to face assessment (either initial or further) will take place within five working days
- the return to work plan is sent to the employee and, subject to consent, to the employer and GP within two working days (the employer may be contacted to develop the plan)
- out of hours queries to the advice service are responded to within one working day of receipt
A tax exemption of up to £500 a year per employee on medical treatments recommended by Fit for Work or an employer-arranged occupational health service was also introduced from 1st January 2015