Last week we published details of who is, and who is not, entitled to payment at National Minimum Wage rates. This week we have listed the current rates of NMW that apply.
There are currently three aged based national minimum wage rates and an apprentice rate, which are usually updated in October each year. The rates that apply from 1 October 2013 are as follows:
for workers aged 21 years or more: £6.31 per hour
for workers aged 18 to 20 inclusive: £5.03 per hour
for workers aged under 18 (but above compulsory school age): £3.72 per hour
for apprentices aged under 19: £2.68 per hour
for apprentices aged 19 and over, but in the first year of their apprenticeship: £2.68 per hour
Apprentices aged 19 or over who have completed one year of their apprenticeship are entitled to receive the national minimum wage rate applicable to their age.
Note for employers:
Don’t forget that it’s a criminal offence not to pay someone the National Minimum Wage or to falsify payment records. Employers who discover they’ve paid a worker below the minimum wage must pay any arrears immediately.
HMRC officers have the right to carry out checks at any time and ask to see payment records. They can also investigate employers, following a worker’s complaint to them. If HMRC finds that an employer hasn’t been paying the correct rates, any arrears have to be paid back immediately. There will also be a penalty and offenders might be named by the government.
It’s the employer’s responsibility to keep records proving that they are paying the minimum wage – most employers use their payroll records as proof. All records have to be kept for 3 years.
UK businesses should be aware that the Government are consulting on the possible release of data held by public departments, particularly, HMRC. We have reproduced extracts from a recent press release that sets out the scope of the present consultation.
“The data held by the public sector is among the most useful and valuable anywhere. This is why the UK Government is at the forefront in making a step change in the availability of data held by the public sector, with the potential to deliver significant public benefits.
… some of the customs data that HMRC holds has the potential to be used in ways which could generate real public benefits if made more widely available, without compromising the core principle of taxpayer confidentiality. In particular, the ability for HMRC to share and publish certain export data would enable HMRC to more effectively support and contribute to public and private sector initiatives to help UK exporters compete and prosper in the global market place.
This consultation proposes the release by HMRC of a limited set of exporter data alongside similar data that HMRC already makes available in respect of importers. Release of some exporter data would provide a number of potential benefits such as:
greater visibility of UK exporters to new customers in the global market place;
assisting developers to create exporter registers and online shop fronts to advertise and showcase UK exporters and their products;
enabling those who provide export services to more easily identify their customers;
helping importers to locate alternative UK suppliers.
There are likely to be further positive uses which emerge only once the data is available.”
The National Minimum Wage is the minimum pay per hour almost all workers are entitled to by law. It doesn’t matter how small an employer is, they still have to pay the minimum wage.
Who is entitled to the minimum wage?
Workers must be school leaving age (last Friday in June of the school year they turn 16) or over to get the minimum wage. Contracts for payments below the minimum wage are not legally binding. The worker is still entitled to the minimum wage.
Workers are also entitled to the minimum wage if they are:
casual labourers, e.g. someone hired for 1 day
workers and home workers paid by the number of items they make
trainees, workers on probation
Apprentices under 19 or in the first year of a level 2 or 3 apprenticeship get an apprentice rate. All other apprentices are entitled to the National Minimum Wage for their age.
Not entitled to the minimum wage
The following types of workers aren’t entitled to the minimum wage:
self-employed people running their own business
volunteers or voluntary workers
workers on a government employment programme, e.g. the Work Programme
family members of the employer living in the employer’s home
non-family members living in the employer’s home who share in the work and leisure activities, are treated as one of the family and aren’t charged for meals or accommodation (e.g. au pairs)
workers younger than school leaving age (usually 16)
higher and further education students on a work placement up to 1 year
workers on government pre-apprenticeships schemes
people on the following European Union programmes: Leonardo da Vinci, Youth in Action, Erasmus, Comenius
people working on a Jobcentre Plus Work trial for 6 weeks
members of the armed forces
people living and working in a religious community
You won’t get minimum wage if you’re:
a student doing work experience as part of a higher or further education course
of compulsory school age
a volunteer or doing voluntary work
on a government or European programme
Employers should note that HMRC have powers to enforce payment of the NMW in situations where workers have been underpaid.
HMRC are currently consulting with interested parties (the accounting profession and associated professional organisations) to re-vamp the UK’s system for taxing employee benefit in kind and expenses. Changes are planned to simplify this process in accordance with recommendations made by the Office of Tax Simplification.
Consultations commenced 18 June 2014 and due to be completed 9 September 2014.
The four areas of consultation are:
The abolition of the £8,500 threshold. The government believes that this threshold adds unnecessary complexity to the tax system and is consulting on who would be affected and how to mitigate the effects of abolition on vulnerable groups of employees.
Introducing a statutory exemption for trivial benefits in kind. The government believes that a clear and simple statutory exemption will make administering such benefits substantially easier for employers. The government will therefore consult on the design of such an exemption.
Replacing the current system of dispensations for reporting non-taxable expenses with an exemption for expenses paid or reimbursed by employers. The government believes that an exemption would be simpler, more transparent, consistent and easier to use for employers than the current system. This consultation will cover the design features of such an exemption and its administration.
Introducing a system of voluntary payrolling for benefits in kind. The government believes that payrolling benefits in kind instead of submitting forms P11D can offer substantial administrative savings for some employers and wishes to create a system that will enable employers to do so if they wish. The government will consult on the design and scope of a payrolling model and is also interested to hear from employers who are already payrolling benefits on an informal basis.
Exchequer Secretary to the Treasury, David Gauke, said:
“Following the valuable work the Office of Tax Simplification has carried out in reviewing employee benefits and expenses, the government is now consulting on changes that will deliver real improvements for businesses and individual and their experience of the tax system.
“We want to make sure we get the structure and detail absolutely right and each consultation will allow us to engage with and learn from those who will be directly affected.”
If you dispose of a dwelling house (which can include a house, flat, houseboat or fixed caravan) which is your home, or part of a dwelling house which is your home, or• part of the garden attached to your home , you would normally have to pay Capital Gains Tax (CGT) on any gain you make.
However, you will be entitled to full relief from any capital gains tax liability where all the following conditions are met:
the dwelling house has been your only or main residence throughout your period of ownership, and
you have not been absent, other than for an allowed period of absence or because you have been living in job-related accommodation, during your period of ownership
the garden or grounds including the buildings on them are not greater than a specified area, and
no part of your home has been used exclusively for business purposes during your period of ownership.
If you meet all of these conditions, you will not have to pay CGT on the disposal.
Consideration of the tax position if you own more than one property which you have occupied in a tax year, or if the above conditions are only partly met, will need to be considered in some detail.
Relief for the disposal of a private residence can also be complicated when owners marry, divorce or permanently separate.
Skills and Enterprise Minister Matthew Hancock announced a new range of apprenticeships that will be developed by employers under the Trailblazer scheme on 27 June 2014. He also called for expressions of interest from groups of employers to become part of the third phase of Trailblazers.
The Apprenticeship Trailblazers, launched in October 2013, have gone from strength to strength. The first phase of Trailblazer sectors includes energy & utilities, digital industries, financial services, life sciences and industrial sciences. Businesses from each sector worked together and produced new concise employer-led standards for key apprenticeship roles in their industry. These were launched in March 2014 and the first apprenticeships under the new standards will be delivered in 2014/15.
Building on their success, the businesses involved will now work on standards for more occupations that they see as crucial to developing their workforce and that will provide new opportunities for young people. The new range of occupations includes:
laboratory and healthcare science
Skills and Enterprise Minister Matthew Hancock said:
The apprenticeship Trailblazers have already made great strides in developing a simpler and more rigorous system which works for employers and apprentices. Their commitment to develop more apprenticeship standards demonstrates the support our reforms have from employers.
Equipping all young people with the skills they need to begin prosperous and productive careers is a vital part of our long-term economic plan. Apprenticeships give young people the chance to fulfil their potential while helping to drive business growth.
We want to give more employers in more sectors the chance to lead the development of apprenticeship standards for their industries. That is why we will launch a third phase of Trailblazers later this year and I would encourage groups of employers to step forward and take this opportunity.
Please call if you would like to discuss the possibility of developing an apprenticeship scheme for your business.
The State Pension is part of a pensioner’s taxable income. The problem is, it is paid gross, without deduction of tax.
If your sole source of income is the State Pension then this should cause no problem as the State Pension is usually below the annual tax-free personal allowance. What can, and does, cause a problem is if you have other sources of income that combined with your State Pension exceed your personal tax-free allowance.
The assumption most pensioners make is that they can spend their State Pension. Unfortunately, this can lead to cash flow problems if a tax bill drops through your door. This should only happen if you have other income sources and any tax stopped on those additional income streams is insufficient to cover your total tax liabilities: based on all your income including State Pension receipts.
If you have additional income and receive a State Pension, it is necessary to crunch the numbers and see if you should be saving to meet a future tax bill. Readers concerned about their position should talk to the tax office or their professional tax advisor.
This reminder will affect landlords of unfurnished let property who are considering the replacement of standalone white goods (fridges etc) and similar items.
Following the withdrawal of a tax concession from April 2013, there is effectively no tax relief for the replacement of defective, free-standing white goods in unfurnished properties.
In some respects this absence of relief is difficult to justify but HMRC are clear that, at present, expenditure to replace free standing white goods etc from April 2013 will not be tax deductible.
However, if a fridge is incorporated into a fitted kitchen, any replacement of defective white goods will be allowed as a repair. The distinction is that a fitted fridge is only part of the overall fitted kitchen, whereas a free standing fridge is an item in its own right.
A genuine repair to keep an item in a working or usable condition will, of course, still be tax deductible.
Replacement of white goods in furnished property is covered by the annual 10% “wear and tear” allowance.