The Apprenticeship Levy

The Apprenticeship Levy is charged on employers’ “paybills” at a rate of 0.5%. The levy is payable through Pay as You Earn (PAYE) and is payable alongside income tax and National Insurance. To keep the process as simple as possible “paybill” will be based on total employee earnings subject to Class 1 secondary NICs.

Each employer receives one annual allowance of £15,000 to offset against their levy payment. There is a connected persons rule, similar to the Employment Allowance connected persons rule, so employers who operate multiple payrolls are only be able to claim one allowance.

1.) If you’re an employer with a pay bill over £3 million each year, you must pay the apprenticeship levy from 6 April 2017. You can find out how to do this here.

You will report and pay your levy to HMRC through the PAYE process.

The levy will not affect the way you fund training for apprentices who started an apprenticeship programme before 1 May 2017. You’ll need to carry on funding training for these apprentices under the terms and conditions that were in place at the time the apprenticeship started.

Detail on how to setup and use your online account can be found here.

2.) If you do not have to pay the levy then you can still receive support to pay your apprentices.

From May 2017, you will pay 10% towards to the cost of apprenticeship training and government will pay the rest (90%), up to the funding band maximum.

If you do not pay the levy, you won’t be able to use the apprenticeship service to pay for apprenticeship training and assessment until at least 2018.

Instead, you’ll need to agree a payment schedule with the provider and pay them directly for the training. The provider must prove that you have paid your contributions as a condition of government paying its contribution.

There are 2 different types of apprenticeships to choose from:

  • apprenticeship standards– each standard covers a specific occupation and sets out the core skills, knowledge and behaviours an apprentice will need; they are developed by employer groups known as ‘trailblazers’
  • apprenticeship frameworks– a series of work-related vocational and professional qualifications, with workplace- and classroom-based training

To choose training:

If you would like to discuss any of this further then please contact us on 0116 2423400

Becky Edwards, Payroll Manager 

Tax Events are due on 19th October 2017

The following Tax Events are due on 19th October 2017:

Business Tax Events

PAYE quarterly payments are due for small employers for the pay periods 6th July 2017 to 5th October 2017.

This deadline is relevant to small employers only. As a small employer with income tax, national insurance and student loan deductions of less than £1,500 a month you are required to make payment to HMRC of the income tax, national insurance and student loan deductions on a quarterly basis.

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 20th October 2017 unless you are able to arrange a ‘Faster Payment’ to clear on or by Sunday 22nd October. In year interest will be charged if payment is made late. Penalties also apply.

PAYE, Student loan and CIS deductions are due for the month to 5th October 2017.

This deadline is relevant to employers who have made PAYE deductions from their employees’ salaries and to contractors who have paid subcontractors under the CIS.

Employers are required to make payment to HMRC of the income tax, national insurance and student loan deductions. Contractors are required to make payment to HMRC of the tax deductions made from subcontractors under the CIS.  

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 20th October 2017 unless you are able to arrange a ‘Faster Payment’ to clear on or by Sunday 22nd October. In year interest will be charged if payment is made late. Penalties also apply.

Tax and NI due under a 2016/17 PAYE Settlement Agreement.

This deadline is relevant for employers who have entered into a PAYE settlement agreement to pay tax and national insurance in respect of benefits in kind for their employees for the year ended 5th April 2017.

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 20th October 2017 unless you are able to arrange a ‘Faster Payment’ to clear on or by Sunday 22nd October.

If you wish to discuss this further then please get in touch 0116 2423400

The Employment Allowance

What is employment allowance?

Employment Allowance is a National Insurance credit that is offset against Class 1 Employer’s NI. The maximum amount that can be claimed in each tax year is £3,000, although you can still claim if you pay less than £3,000. When it was first introduced in 2014 you could claim up to £2,000 but it increased to £3,000 in April 2016.

Eligibility

You can claim if:

  • You are a business, including sole traders and partnerships, or charity paying Employers Class 1 NI.
  • You can claim if you employ a care or support worker.

You can’t claim if:

  • You are a director and the only employee.
  • You employ someone for domestic work e.g. Cleaner or Gardener
  • You are a business that does more than half of your work in the public sector, for example the NHS.
  • If you have more than one employer PAYE reference, you can only claim against one of them.

How to claim Employment Allowance?

You would claim through your Payroll software and tick the box next to the “Eligible for Employment Allowance”. This will then send an EPS (Employer Payment Summary) to HMRC to let them know you’re eligible and to start claiming it.

In Sage 50 Payroll:

  • Go to “Company” on the left hand menu.
  • Then “Settings”.
  • Tick the box as shown.

If you use HMRC’s Basic PAYE tools:

  • Select the relevant Employer in the menu on the homepage.
  • Then select “Change employer details”.
  • Tick “Yes” in the “Employment Allowance indicator”.
  • Send an EPS as normal.

Stopping your claim:

You only need to stop your Employment Allowance claim if you stop being eligible. You do not need to stop your claim manually if you reach the £3,000 limit before the end of the tax year, this doesn’t make you ineligible. If you do stop this claim before the end of the tax year, any credit you have already been given will be removed and you will have to pay any Class 1 NI due.

When to claim?

You can claim at any time in the tax year. If you claim late and you don’t use your Employment Allowance against Class 1 National Insurance you have already paid to HMRC you can ask them to offset it against other liabilities e.g. Corporation Tax and VAT. If you have no outstanding liabilities you can also ask them to refund it directly to you.

If you were eligible, you can claim unused Employment Allowance for up to 4 previous years. Currently you can claim back the allowance from when it was first introduced in 2014.

If you need any further guidance HMRC’s employer guide to Employment Allowance is a very useful resource https://www.gov.uk/government/publications/employment-allowance

If you have any questions on the above or would like any more information, please feel free to contact us on 0116 242 3400.

Polly Dennis, Payroll Apprentice

The Right to work in the UK

Do you know how to carry out a ‘right to work in the UK check?

The Immigration, Asylum and Nationality Act 2006 places a duty on employers to carry out checks to confirm someone’s right to work in the UK before employing them.

Punishments for employing an illegal worker are:

  • £20,000 for each illegal worker employed
  • Up to five years imprisonment for knowingly employing an illegal worker

Some employers may not know the specific checks and check-ups that must be used when employing a new worker:

The ‘Right to work Check’

Employers must carry out a ‘Right to work check’ on a worker before the employment begins to ensure that he or she is legally allowed to work in the UK and do the work in question. This check should be carried out on all employees to maintain accuracy and avoid any discrimination.

The ‘Right to work check’ means that an employer must check that a document, provided by the worker, is acceptable for showing the employee’s permission to work in the UK. There are three key steps to determine the check:

  1. Obtain the original version of one or more of the permitted documents
  2. Check the validity in the presence of the holder (worker)
  3. Take and retain a clear copy of the document in an un-editable format, e.g. PDF / JPEG, and record the date of the check.

These copies must be kept until 2 years after the employment ends.

List A and List B

HMRC provides two lists that show the documents required to prove a worker has the right to work in the UK. List A gives the documents that show the holder has an ongoing right to work in the UK. If an employer checks these correctly, they have an excuse against payment of a civil fine for the duration of that person’s employment.

Alternatively, List B gives documents that show the holder has the right to work in the UK for a limited time only. If an employer checks these correctly, they have an excuse against a civil penalty for a limited time. To retain a statutory excuse, another check must be carried out towards the end of this period.

HMRC’s employers guide to acceptable right to work documents explains list A and list B:

https://www.gov.uk/government/publications/acceptable-right-to-work-documents-an-employers-guide

HMRC also provide an online interactive tool on checking somebodies right to work in the UK. This should be used when carrying out the checking of documents, if extra clarification is needed:

If you have any questions on the above or would like any more information, please feel free to contact us on 0116 2423400.

Zahra Bates, Payroll Assistant 

Construction Industry – Subcontractor verification changes from 6 April 2017

Construction Industry – subcontractor verification’s

HMRC have confirmed in the latest Employer Bulletin that changes will be made to the verification of subcontractors in the construction Industry Scheme (CIS) from 6 April 2017.

From 6 April 2017, contractors must use an approved method of electronic communication to verify their subcontractors. So from 6 April 2017 HMRC will no longer accept any telephone calls to verify subcontractors and from then contractors must verify subcontractors using:

  • the free HMRC CIS online service, or
  • commercial CIS software.

This change is one of a series made to CIS to increase HMRC efficiency and accuracy, and to reduce administration. HMRC are also reminding contractors that they have also introduced additional features of the online system including the ability to amend returns online, and the addition of an online message/alert service.

Please contact us for help with CIS issues. 0116 2423400

National Living/Minimum Wage Changes from 1 April 2017

From 1 April 2017 the National Living/Minimum Wage rates will increase as follows:

  • £7.50 an hour for workers aged 25 and over – previously £7.20
  • £7.05 an hour for workers aged 21 to 24  – previously £6.95
  • £5.60 an hour for workers aged 18 to 20 – previously £5.55
  • £4.05 an hour for workers aged 16 to 17 – previously £4.00
  • £3.50 an hour for apprentices under 19 or in their first year – previously £3.40

If you are paying any employees with reference to the National Living/Minimum Wage you will need to amend the hourly rates accordingly.

If you have any questions on the above, please do not hesitate to contact us 

 

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Spring Budget 2017

I am sure that you have seen the headlines in the papers this morning about the Budget and for a detailed analysis please see the report on our website:

www.torrwaterfield.co.uk/news/budget-report.

The items that have caught my attention and I think are relevant to most people are as follows:

National Insurance for the self-employed

At present, if self-employed, you pay class 2 National Insurance of £145.60 for a complete year, and class 4 at 9% based on your level of profits.  The Government do not think that this is fair as employees pay National Insurance at 12%.  To level this position, class 2 National Insurance will be abolished from 06/04/2018 and the class 4 element will increase to 10% from that date, and to 11% from 06/04/2019, thus bringing the self-employed more in line with the employed.

Dividend changes again …

From 06/04/2016 broadly the first £5,000 of dividend income is taxed at 0 % (Dividend Allowance).  This will continue until 05/04/2018.  However, from 06/04/2018 the Dividend Allowance will reduce to £2,000.  This will mainly affect the family company shareholder and increase their tax liability as follows:

Basic rate taxpayer – additional tax of £225

Higher rate taxpayer – additional tax of £975

Additional rate taxpayer – additional tax of £1,143

Individual Savings Accounts (ISAs)

 The overall limit is increasing from £15,240 to £20,000 on 06/04/2017.

Property and trading income allowances

Although this was mentioned last year it comes into play on 06/04/2017. It is as it says, so if you have property or trading income of £1,000 or less you will no longer need to declare this or pay tax on it.  This could cover small amounts of rent from Air ‘bnb’ activities or trading on ebay. 

New Childcare provisions

 If you are taking out new childcare provisions from 06/04/2017 then, instead of opting for a salary sacrifice scheme and receiving vouchers, for every 80 pence that you contribute the Government will contribute 20 pence. The maximum the Government will contribute will generally be £2,000.

Making Tax Digital

This will be introduced on 06/04/2018 for businesses, the self-employed and landlords who have profits chargeable to Income Tax and pay Class 4 National insurance Contributions where their turnover is in excess of the VAT Threshold, which will be £85,000 from 01/04/2017.

As this is a very new area please contact us for further information.

Salary Sacrifice

 From 06/04/2017 this is changing, but it is still beneficial for both the employer and employee to sacrifice salary in respect of employer provided pensions, childcare vouchers, workplace nurseries and cycle to work schemes. 

Construction Industry

The government are launching a consultation on 20 March 2017 to look at various areas, including the qualifying criteria for Gross Payment Status and options to combat VAT supply chain fraud in supplies of labour.

In addition to the above, certain other changes come into force on 06/04/2017 that have been mentioned in earlier Budgets namely:

Restrictions on residential property interest

Landlords will no longer be able to deduct all of their finance costs from their property income.

Inheritance Tax residence nil rate band

There will be an additional nil rate band for deaths on or after 06/04/2017 where an interest in a main residence passes to direct descendants.

As mentioned above I have only mentioned the areas that I believe will be most relevant to the majority of our clients but other areas can be found on our website.

Please contact us if you have a specific query. 0116 24243400

Julia Harrison, Tax ManagerJulia Harrison April 2012

Shared parental leave – What are you entitled to?

Shared parental leave (SPL) allows employed parents and adopters to share leave and pay with their partner to care for children from birth until their first birthday.

  • Only employees can take SPL; they must have a partner (separated partners still qualify if sharing responsibility for care of child at the time of birth)
  • SPL allows mothers (or adopters) to shorten their maternity leave (and pay) to share the leave (and pay) with their partner in order to care for children in their first year; it is the mother’s choice whether to share leave
  • The mother can only share with one person; it is her choice provided her partner satisfies the qualifying conditions
  • Even if only one parent is entitled to SPL and/or ShPP (e.g. one is self-employed or not entitled to ShPP), the other partner may still  be entitled to SPL/ShPP if both satisfy the qualifying conditions
  • The employee taking SPL must have been employed 26 weeks by the 15th week before the expected week of childbirth and remain employed in the week before the start of SPL. Their partner must also satisfy an employment and earnings test
  • At least 8 weeks’ written notice must be given to end maternity leave and start of SPL
  • SPL can only be taken a week at a time but can start mid-week. SPLIT days can be used to work part-time by agreement with employer
  • SPL can be taken by both parents at the same time or at separate times; they must decide how to take it. The mother can remain on maternity leave while the partner is on SPL
  • SPL can be taken in up to three separate blocks (unlike maternity leave) or more if the employer agrees
  • There are detailed notice provisions which must be followed
  • Employees can work for up to 20 days during SPL (SPLIT days), as well as 10 days during maternity leave (KIT days). These must be agreed with employer.

 SHARED PARENTAL PAY (ShPP) 

Can pay be transferred as well as leave?

Yes.  Statutory maternity pay (SMP) is available to female employees from the 11th week before the expected week of birth or the actual birth if earlier.  It is paid for 39 weeks (the maternity pay period – MPP) with the first 6 weeks being at 90% of pay (and then either the flat rate of £139.58 or 90 per cent if this is lower for the remaining 33 weeks.  But, only 37 weeks is available for ShPP as the mother must take the first 2 weeks after the birth. Women who do not qualify for SMP will often qualify for maternity allowance which is paid at £139.58 or 90 per cent of average earnings if this is lower.

If you wish to discuss any of this in more detail please contact us 0116 2423400 

Becky Edwards, Payroll Manager 

The New Marriage Allowance

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The marriage allowance allows you transfer £1,100 of your Personal Allowance to your husband, wife or civil partner – if they earn more than you.

This reduces their tax by up to £220 in the tax year (6 April to 5 April the next year).

In order to benefit as a couple, you (as the lower earner) must have an income of £11,000 or less.

If you are eligible for marriage allowance in the 2015/2016 tax year, you can backdate your claim to 6 April 2015 and reduce the tax paid by up to £432.

Who can apply?

You can get marriage allowance if all the following apply:

  • You are married or in a civil partnership
  • You don’t earn anything, or your income is under £11,000
  • Your Partner’s income is between £11,001 and £43,000

You can also apply for marriage allowance if you or your partner:

  • Are currently receiving a pension
  • Live abroad – as long as you get a Personal Allowance

If you or your Partner were born before 6 April 1935, you might benefit more as a couple by applying for Married Couple’s Allowance instead.

If you would like to discuss this please get in touch. 

Paula McIntosh, Administration  

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Tax Reminder

The following Tax Events are due on 19th October 2016:

Business Tax Events

PAYE quarterly payments are due for small employers for the pay periods 6th July 2016 to 5th October 2016

This deadline is relevant to small employers only. As a small employer with income tax, national insurance and student loan deductions of less than £1,500 a month you are required to make payment to HMRC of the income tax, national insurance and student loan deductions on a quarterly basis.

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 21st October 2016 unless you are able to arrange a ‘Faster Payment’ to clear on or by Saturday 22nd October. In year interest will be charged if payment is made late. Penalties also apply.

PAYE, Student loan and CIS deductions are due for the month to 5th October 2016

This deadline is relevant to employers who have made PAYE deductions from their employees’ salaries and to contractors who have paid subcontractors under the CIS.

Employers are required to make payment to HMRC of the income tax, national insurance and student loan deductions. Contractors are required to make payment to HMRC of the tax deductions made from subcontractors under the CIS.

Where the payment is made electronically the deadline for receipt of cleared payment is Friday 21st October 2016 unless you are able to arrange a ‘Faster Payment’ to clear on or by 22nd October 2016. In year interest will be charged if payment is made late. Penalties also apply.

Tax and NI due under a 2015/16 PAYE Settlement Agreement

This deadline is relevant for employers who have entered into a PAYE settlement agreement to pay tax and national insurance in respect of benefits in kind for their employees for the year ended 5th April 2016.

Where the payment is made electronically the deadline for cleared receipt of cleared payment is Friday 21st October 2016 unless you are able to arrange a ‘Faster Payment’ to clear on or by Saturday 22nd October 2016.

If you would like to discuss this in more detail then please get in touch here.