Category Archives: afhpayroll

Pay in lieu of Notice – When does tax apply?

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Making a payment in lieu of notice (PILON) is a way of ending an employment contract with immediate effect meaning that the employee will not work a notice period. An employer will make a payment of the amount that an employee would normally have been paid if they had worked the notice period.

Whether tax is payable on the PILON all depends on the contractual agreement between the employer and the employee and whether it is usual

practice for the employer to make this type of payment.

If under the terms of the contract, the employer has the right to make a payment in lieu of notice then the payment is made as part of the contract and taxable.  The same would apply if it was customary for the employer to make payments in lieu of notice when terminating an employee’s employment regardless of which party chose to give notice to end the contract.

If however, PILON is not covered in the employee’s contract of employment nor customary practice for the employer to make this type of payment, then PILON would be treated as damages for a breach of contract on the part of the employer and so would not be taxable.

Other payments made at the time of leaving such as holiday pay will be taxable as they are a contractual payment.

For more information on PILON please see: http://www.acas.org.uk/index.aspx?articleid=4540

Court ruling that Overtime should count in Holiday Pay

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What does this mean for your business?

In November 2014, a landmark Employment Appeal Tribunal case ruled that employees have the right to claim for overtime to be included in their holiday pay if the overtime is regular or compulsory. The Tribunal has not clarified whether this could also benefit staff who work voluntary overtime.

The ruling was based on the supposition that UK had incorrectly interpreted the EU Wide working time directive, which was implemented into law as the Working Time Regulations in the UK in 1988. The current legislation in the UK states that holiday should be paid at the basic rate.  This has now changed as a result of these test cases.

It is anticipated that due to the impact this ruling could have on business that an Appeal on this ruling is likely.  If the ruling stands or is appealed unsuccessfully, then employers must include overtime when calculating workers’ holiday pay.  Employers need to consider how they will apply the ruling until any appeal process which may take a considerable length of time, has been completed

The judgement has created a time limit on how far back employees can backdate claims of overtime on their holiday pay, which means employees must make a claim within 3 months of taking their holiday or they lose their right to make a claim.

ACAS have produced useful guidance on overtime, commission and other payments to be considered when calculating holiday pay for employees.

http://www.acas.org.uk/index.aspx?articleid=4109

Changes to HMRC requirements for employment Intermediaries take effect on 6 April 2015

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The HMRC are responding to increased false self employment on the part of employment intermediaries acting on behalf of self employed workers who should legally be regarded as employed, and therefore attract the same rates of Tax and National Insurance as an employed person would do.

From 6 April 2015, Employment Intermediates must send details of workers they place with clients who are not:

  • Direct employees or,
  • Being treated as employees.

The HMRC has published Draft Reporting Regulations for which the consultation period has just ended (25 November 2014).

For more information about this change and the possible impact it might have to your business see the HMRC website

New penalties for late submission of payroll information

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What you need to know

The HMRC has introduced penalties for employers who report their payroll information late.  These apply from:

  • 6th October 2014 for employers with more than 50 employees
  • 6th March for employers with less than 50 employees

A penalty can be charged if:

HMRC will not charge a penalty if you are a new employee and you have sent your first FPS within 30 days of paying an employee or if it’s the first failure within the tax year to submit your report on time.  This also will not apply to employers with fewer than 50 employees for the Tax year 2014-15.

For more information about how to avoid penalties for late submission see the HMRC website

Thinking of hiring an Apprentice? Here’s some advice to get you started

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If you are a business the buzz around apprenticeships won’t have escaped you.  There are a lot of good news stories in circulation which show how apprenticeships are benefitting businesses, particularly SME’s, and providing young people with the opportunity to learn new skills.  Providing young people with a real route to a career through the Apprenticeship scheme is good news for everyone.

What may be less clear is how to get started if you are interested in taking on an Apprentice.

Funding

Businesses may be able claim up to 5 different grants to cover the initial costs of hiring an Apprentice, which includes £1,500 in the form of an Apprenticeship Grant for Employers of 16-24 year olds.

The funding criteria is due to change in January 2015, so you may wish to look at advice on funding via the Apprenticeships.org.uk website

General Information

An Apprenticeship normally lasts for a minimum of 13 months and can last up to four years.  This is an investment for a business but gives business owners a real opportunity to shape and develop their workforce.

It is worth noting that an Apprentice does become your employee and has full employment rights as would any other employee.

Apprenticeship schemes are facilitated through local colleges and independent training providers, and they can offer more advice and support to get you started. The Apprenticeships Website includes a search facility to help employers locate training providers depending upon the type of apprenticeship being offered.

Shared Parental Leave – Some things businesses should know.

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What is Shared Parental Leave?

New regulations which affect current maternity and paternity leave and pay take affect as of 1st December 2014, and will apply to parents if:

  • Their baby is due on of after 5 April 2015
  • They adopt a child on or after 5 April 2015

Shared Parental Leave (SPL) and the Statutory Shared Parental Pay (ShPP) must be taken between the baby’s birth and their first birthday.

It effectively enables parents to make choices about how and when they take their SPL and gives them the opportunity to share the leave or the pay between them.

Some key points for businesses

  • If a baby is due on or after 5 April 2015 and born early, these new rules will be applied in the current 2014/15 tax year
  • It is the employee’s responsibility to check they are eligible for shared parental leave and/or pay and they must give their employer a written declaration confirming that they are eligible. An employer is not required to check or confirm the information given by the partner to determine whether the employee is eligible for shared parental leave and/or pay.
  • Parents have to meet the eligibility criteria to qualify for SPL and ShPP.  To view the eligibility criteria click here
  • If eligible once the Maternity or Adoption leave and pay are ended early, parents can
    • Take the rest of the 52 weeks of leave (up to a maximum of 50) as SPL
    • Take the rest of the 39 weeks of pay or Maternity Allowance (up to a maximum of 37 weeks) as ShPP.
    • NB the mother must take a minimum of 2 weeks maternity leave following the birth (4 weeks if working in a factory)

There are some formalities in terms of what information the employee must give the employer about their plans to take the SPL.

It is recommended that the employer has early informal discussions about their plans with regards to how they intend to take SLP so they can plan effectively for the period(s) of leave.

An employer cannot refuse a notification for continuous leave request. Each eligible parent can give up to 3 separate notices to book leave or to vary previously agreed leave although an employer may choose to accept more notifications from an employee.

Detailed guidance for employers is available through the ACAS website

 

Employing Under 21 year olds?

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Here is some useful information you need to know

Changes to National Insurance Contributions as of 6 April 2015

Some good news! If you employ anyone under the age of 21 years, Employers Class 1 secondary National Insurance Contributions will change to a rate of 0% up to the equivalent of the new ‘Upper Secondary Threshold’.  At the moment the rate is 13.8% so this is a cost saving that may encourage employers to employ more young people.

We recommend that you check that you have the correct date of birth for your employees stored in your payroll software to ensure that the correct NI rates are used from April 2015.

Useful guide on Employing Staff from the HMRC is available here

Children at work – did you know?

If you are employing a child between the ages of 13 until they are considered as legally having left school, you need to notify the Local Authority, which will be the local County Council or equivalent body.

Each authority publishes guidance on employing young people of school age. As an example to find out what the requirements are for businesses located within East Sussex and when they apply please follow this link to East Sussex County Council guidance.

 

 

 

Focus on Furniture Now!

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AFH Payroll are proud to support this great East Sussex Charity who combine community minded recycling of furniture and clothes to in turn support homeless and unemployed people to get settled and back into employment.

Furniture Now! Was established in 2007 and CEO Petrina Mayson is at the forefront of driving forward the aims and objectives of the organisation.

With premises in Lewes, Eastbourne and Hailsham, the Charity has been rightly applauded for their amazing work locally.

At the recent Women in Business Awards earlier this month, Petrina Mayson was Highly Commended as Overall Business of the Year 2014, and also won Mentor of the Year 2014.

AFH Payroll are sponsoring the Crowborough Chamber of Commerce membership for Furniture Now.

AFH Payroll are a recycling point for Furniture Now! So local businesses can bring their toner cartridges, and mobile phones to us for recycling.

For more information on this excellent charity, please visit and like their Facebook Page: https://www.facebook.com/Furniture.Now.charity?ref=br_tf

You can also follow them on Twitter: @Furniture_Now

Don’t forget – there have been changes in the National Minimum Wage which came into effect this month (October 2014)

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The new National Minimum Wage apply to payroll / salary periods starting on or after 1 October 2014 and are:

  • the main adult rate (for workers aged 21 and over) is £6.50 per hour
  • the rate for workers aged between 18 and 20 is £5.13 per hour
  • the rate for workers aged under 18 is £3.79 per hour
  • the rate for apprentices is £2.73* per hour.

The rates are influenced by age, and apprentices / employees must be the school leaving age to qualify for the above rates.

*The rate for apprentices aged 16 to 18 and those aged 19 or over who are in their first year of an apprenticeship. All other apprentices are entitled to the National Minimum Wage for their age.

Source HMRC

AFH Payroll can assist with your payroll needs, ensuring you naturally comply with any legislative changes affecting your business.  Contact us today if you would like an informal discussion about how we can help.

Useful links:

https://www.gov.uk/government/news/above-inflation-rise-for-national-minimum-wage

https://www.facebook.com/nmwage

http://www.acas.org.uk/index.aspx?articleid=1902

 

 

Eastbourne Youth Radio

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We are very pleased that we are supporting Eastbourne Youth Radio again which is broadcasting 20th to 22nd November 2013.  Most schools in the Eastbourne area are involved and we are very proud to be sponsoring Eastbourne College this year.

The hour that we are sponsoring will be broadcast on 21st November from 7pm until 8pm. During the hour, there is an interview with Petrina Mayson, the CEO of Furniture Now! Charity. Until we heard Petrina speak recently we had no idea of the amount of good work being done by this charity to change peoples lives locally. Please do listen in if you have a chance as there is so much that we can all do to support this charity in addition to donating funds.

To find out more about Eastbourne Youth Radio or to listen to the show online, please click the link below:

http://eyr.org.uk/

 

Alternatively if you are in the Eastbourne area you can listen by tuning into 87.7FM.