Gender Pay Gap Reporting obligations

The full details of which organisations are required to report on gender pay gap data are published by the Government Equalities Office. The latest statutory guidance was updated 9 January 2024.

An abstract of the definitions of who needs to report is set out in statutory guidance at https://www.gov.uk/government/publications/gender-pay-gap-reporting-guidance-for-employers/who-needs-to-report.

The opening summary is reproduced below:

“Any employer with 250 or more employees on a specific date each year (the ‘snapshot date’) must report their gender pay gap data.

If you have to report, you must report and publish your gender pay gap information within a year of your snapshot date. The snapshot date is 31 March for most public authority employers, and 5 April for everybody else.

You must do this for:

  • each year that you have 250 or more employees on your snapshot date; and
  • each separate ‘legal entity’, if you are part of an organisation or group with more than one legal entity.

If you have fewer than 250 employees on your snapshot date, you can still report if you would like to.

This guidance does not apply to Scottish or Welsh public authorities – there are different regulations for Scotland and Wales.

Your ‘headcount’ is of the number of individual employees you have, not full-time equivalents.

You must include these types of employees when calculating your headcount:

  • people with a contract of employment with you, including if they work part-time, job-share or are on leave;
  • some self-employed people, if they must perform the work themselves – that is, they are not permitted to subcontract any part of the work or employ their own staff to do it; and
  • partners on a salary, or limited liability partnership (LLP) members who you treat as employees for payroll purposes.

Include part-time workers and people job-sharing in your headcount and your gender pay gap calculations.

Each part-time worker counts as one employee when working out your headcount.

Every employee within a job-share counts as one employee. For example, if 2 people job-share, they count as 2 employees in your headcount.

If an employee has more than one job with you, you can count them either as one employee or according to how many employment contracts they have.

Choose the best approach for your organisation, but your data will be more accurate if you are consistent.”

Competitive disadvantages

The new Economic Crime and Corporate Transparency Act mandates that small companies and micro-entities will have to file at Companies House accounts, that for the first time, will need to include a profit and loss account.

Apparently, there is concern that a registered, smaller concern has not previously been required to file reports that disclose its turnover.

The form and detail of the profit and loss figures that will need to be filed have not yet been published and this change will require secondary legislation.

We will be keeping a close eye on these changes as many of the small company owners we act for may be dismayed by this apparent breach of their financial confidentiality. Allowing public access to profit and loss details may mean that major customers of companies will be able to see how much they contribute to their suppliers turnover. This may provide an opportunity to squeeze prices that will disadvantage the smaller concern.

The profit and loss disclosure may also expose to public view detailed costs including the remuneration of directors.

This particular change is part of a raft of new regulations that will be enacted by Companies House. In a recent announcement the Department for Business and Trade reported:

“The Department for Business and Trade has published a progress report on the implementation and operation of parts 1 to 3 of the Economic Crime and Corporate Transparency Act 2023.

“The act, which received Royal Assent in October 2023, seeks to address the threat of illicit finance while continuing to make it easy for legitimate commerce to do business.

“Parts 1 to 3 of the act cover:

  • reforms of Companies House processes and new statutory functions and objectives for the Registrars of Companies
  • reforms of the laws that apply to limited partnerships
  • new provisions relating to the Register of Overseas Entities, which was introduced by the Economic Crime (Transparency and Enforcement) Act 2022

“Companies House delivered the first phase of reforms on 4 March 2024. This covered the systems, process and organisational change needed to operate the new registrars’ objectives and powers and new legal requirements for companies.

“The Department for Business and Trade will make progress reports to Parliament on the implementation and operation of parts 1 to 3 of the ECCT Act every 12 months until 2030.”

We will post more information on the specific change to profit disclosure as soon as the secondary legislation is published.

Providing living accommodation to employees

If you provide free accommodation to employees the deemed benefit is taxable, and you will have to pay Class 1A NIC based on the value of the benefit provided.

What’s exempt?

You will not have to report the cost to HMRC if any of the following apply:

  1. If it is domestic or personal. Accommodation is exempt if you are an employer who is an individual, for example a sole trader, and you are providing it for someone because they are a close relative – even if they happen to work in your business.

It will not be exempt if either you are a company or partnership or you would be providing the same sort of accommodation to an employee who was not a family member.

  1. If it’s provided by a local council. Accommodation is exempt if a local council provides it on the same terms that it provides housing to non-employees.
  2. If it’s necessary or usually provided for the job. Accommodation at the place of work is exempt if: your employees cannot do their work properly without it, for example agricultural workers living on farms; or an employer is usually expected to provide accommodation for people doing that type of work (for example a manager living above a pub, or a vicar looking after a parish).

If you provide the accommodation to company directors, they have to be either full-time or work for a non-profit or charity organisation and hold less than 5% of the shares.

  1. If it’s needed for security. If you need to provide accommodation to protect an employee because the type of work they do means there’s a special threat to their security, this is exempt.

If the supply of accommodation is not exempt

If the supply of accommodation is not exempt employers will need to submit a P11D form disclosing the value of the benefit provided. These could include the following as well as the direct cost of the accommodation itself:

  • Council tax
  • Water and sewage charges
  • Heating, lighting and cleaning
  • Repairs, maintenance and decoration
  • Furniture for daily use
  • Staff for upkeep of accommodation, for example gardeners and cleaner

Consumers have new online protection

The Digital Markets, Competition and Consumers Act has become law after receiving Royal Assent.

The Act paves the way to give consumers rights across the UK, with greater control and clarity over online purchases.

It does this by requiring businesses to provide clearer information to consumers before they enter a subscription contract, remind consumers that their free trial or low-cost trial is coming to an end, and ensure consumers can easily exit a contract.

Unavoidable hidden fees will also need to be included in the initial cost or clearly illustrated at the start of the purchasing journey. This will ensure consumers are clear from the offset about what they’re spending.

The Digital Markets, Competition and Consumers Act will also give new tools to the Competition and Markets Authority (CMA) to address the challenges to competition in digital markets.

These tools will allow the competition regulator to set tailored ‘conduct requirements’ which require a powerful tech company to change the way it operates if it is not treating users fairly. These rules could give consumers the room to freely choose the services they use or stop companies from withholding information consumers need to make good decisions.

The Act also gives the regulator powers to intervene and direct a firm to change its behaviour to boost competition – whether that is to benefit people using smartphones or businesses dependent on cloud services.

The Act will also give new powers to the CMA to closely monitor road fuel prices and report any sign of malpractice to the government.

Only a handful of the most powerful global technology companies will be subject to these new rules if, following an investigation, they are deemed to hold ‘strategic market status’.

If companies fail to comply with decisions made by the CMA, they could be subject to fines reaching tens of billions of pounds. These fines and other measures will be balanced by rigorous checks and balances.

Out of interest

Usury is defined as the practice of making loans that are unfairly enriching the lender. And we must take comfort that most lenders in the UK are limited by legislation to keep rates charged at a reasonable level; unless, of course, you are a loan shark.

 

Banks are the biggest lenders, and you may have noticed that they always charge more for lending funds than they are willing to pay you if you deposit funds with them.

This spread on rates paid and charged provides a major contribution to lenders’ profits.

How this “interesting” topic can impact your own financial and business arrangements is the subject of this short article today. The comments made are generalities and before seeking to act on any suggestions made, please take professional advice.

Credit cards

Most credit card providers charge interest on unpaid balances at high rates. According to Which magazine the average APR on a credit card is 35.1% with the best low-rate option charging 10.9%.

Tips re management of credit cards:

  • You will need to check the T&Cs for your card(s), but most card providers will give you a set number of days to fully pay balances on your card account for the previous month, and as long as you do this, no interest becomes payable.

In which case, you could restore a little liquidity into your household or business finances by paying for your household or business costs by card in this way. Note you must pay the full balance owing by the deadline date otherwise interest charges will be added. The best way to organise payment is to authorise monthly settlement of outstanding balances by direct debit.

  • If you have credit card accounts where there are outstanding balances and interest is being added, and you have savings, you could consider clearing some or all of the debt by reducing savings. You would then reduce or perhaps eliminate the cost of the interest spread (difference between interest charged on cards and interest received on savings).

Savings

Aside from the interest rate spread issue described above, interest paid to you on savings will form part of your taxable income unless you can claim various reliefs that would exempt you from a tax charge.

Unfortunately, the interest cost of maintaining an unpaid balance on a personal credit card account would not be a qualifying deduction for tax purposes – unless the account was a business card qualifying as an allowable business cost.

Generally, it is worth considering reducing savings if you can apply the funds to reducing credit card debt.

Mortgage debt

A couple of observations:

  • If you can afford to pay off more than you are requested to pay, these additional monthly payments, if made consistently, will act to reduce both the total interest charged on your mortgage account and create an earlier settlement date.
  • If your parents are hale and hearty and have spare funds that will be your inheritance at some future date, they could gift you a sum to reduce your mortgage and as long as they live for seven years after the gift was made, no Inheritance Tax would be payable.

If you need help based on the comments made above, please call so we can help you consider your options.

Tax Diary June/July 2024

1 June 2024 – Due date for corporation tax due for the year ended 31 August 2023.

19 June 2024 – PAYE and NIC deductions due for month ended 5 June 2024. (If you pay your tax electronically the due date is 22 June 2024).

19 June 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2024.

19 June 2024 – CIS tax deducted for the month ended 5 June 2024 is payable by today.

1 July 2024 – Due date for corporation tax due for the year ended 30 September 2023.

6 July 2024 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2024 – Pay Class 1A NICs (by the 22 July 2024 if paid electronically).

19 July 2024 – PAYE and NIC deductions due for month ended 5 July 2024. (If you pay your tax electronically the due date is 22 July 2024).

19 July 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2024.

19 July 2024 – CIS tax deducted for the month ended 5 July 2024 is payable by today.

Changes to Companies House fees

There have been a number of significant changes in Companies House fees. These changes took effect on 1 May 2024. The last significant change in fees occurred in April 2016.

The new fees have been calculated on a ‘cost recovery’ basis meaning that the fees are calculated based on what it costs to provide the services in question. Companies House state that they do not make a profit on their fees.

Companies House guidance entitled Companies House fees has been updated to reflect all the changes. Companies House have said that the new fees will help ensure adequate funding going forward to recover costs incurred as well as to help fund the cost of new powers introduced as part of The Economic Crime and Corporate Transparency (ECCT) Bill.

Prices shown below are some of the main changes that took effect from 1 May 2024:

Transaction

New fee

Old fee

Incorporation Digital

£50

£12

Incorporation (same day) Software

£78

£30

Incorporation Software

£50

£10

Incorporation Paper

£71

£40

Confirmation statement Digital

£34

£13

Confirmation statement Paper

£62

£40

Change of name Paper

£30

£10

Change of name (same day) Digital

£83

£30

Change of name Digital

£20

£8

Registration of a charge Paper

£24

£23

Registration of a charge Digital

£15

£15

Voluntary strike off Paper

£44

£10

Voluntary strike off Digital

£33

£8

Registration of an overseas entity Digital

£234

£100

The full list of changes can be found in the guidance mentioned above at https://www.gov.uk/government/publications/companies-house-fees/companies-house-fees

Register an overseas company

An overseas company must register with Companies House if they want to set up a place of business in the UK. This would mean that the overseas company has a physical presence in the UK through which it carries on business.

If an overseas company does not have a physical presence in the UK, they are not usually required to register with Companies House. For example, an independent agent who conducts business on behalf of an overseas company is not seen as the overseas company having a physical presence in the UK, neither is an occasional location such as a hotel where a director of an overseas company may conduct business during periodic visits to the UK.

If the overseas company is required to register, they must submit a completed OS IN01 form and pay a registration fee of £71 to Companies House. If the company is registering its first UK establishment, it must also send Companies House a certified copy of the company’s constitutional documents and a copy of the company’s latest set of accounts (with a certified translation in English if prepared in another language).

The overseas company can be registered using its corporate name (its name under the law of the country of incorporation), or an alternative name under which it proposes to carry on business in the UK.

Time to renew tax credits

HMRC is currently sending the annual tax credit renewal packs to the 730,000 tax credit claimants and is encouraging recipients to renew their tax credits claim online. HMRC started writing to taxpayers on 2 May and expects all packs to be with recipients by the 19 June 2024.

Renewal packs with a black stripe across the front page are automatically renewed. However, taxpayers must inform HMRC of any changes in circumstances that are not reported during the year, such as new working hours, different childcare costs or changes in pay.

A renewal is required if the pack has a red stripe across the first page and it says, 'reply now'. Families and individuals that receive tax credits should ensure that they renew their tax credit claims by 31 July 2024. Claimants who do not renew on-time may have their payments stopped. Around 10,000 taxpayers are expected to receive the packs with a red stripe and can renew their tax credits via GOV.UK or by using HMRC’s app.

Universal Credit is expected to fully replace tax credits and other legacy benefits (including Income-Related Employment and Support Allowance, Income-Based Jobseeker’s Allowance) by 5 April 2025. This means that claimants who receive tax credits will receive a letter from the Department for Work and Pensions (DWP) or the Department for Communities if they live in Northern Ireland telling them about the move to Universal Credit. This letter is called a Migration Notice and taxpayers are urged not to ignore it.

New law on tipping

Millions of UK workers will take home an estimated £200 million more of their hard-earned cash, as employers are banned from withholding tips under the Employment (Allocation of Tips) Act 2023. The act received Royal Assent 2 May 2023.

Many hospitality workers rely on tips to top up their pay and are often left powerless if businesses don’t pass on service charges from customers to their staff.

This Bill makes it unlawful for businesses to hold back service charges from their employees, ensuring staff receive the tips they have earned. The measures are expected to come into force in 2024, following a consultation and secondary legislation.

This overhaul of tipping practices is set to benefit more than 2 million UK workers across the hospitality, leisure and services sectors helping to ease cost of living pressures and give them peace of mind that they will keep their hard-earned money.