How the UK isn’t so united when it comes to tax rates

Whilst the United Kingdom shares many things, the rate at which its residents are taxed is not one of them. There are different taxation regulations for England, Scotland and now Wales which of course means that any payroll calculations for employees in each of the countries will be different.

One piece of good news is that, even though we are based in England, we are able to run payroll for all schemes in the UK so we can help you whether you are based in England, Scotland or Wales.

So, what is the key difference? It largely comes down to who decides the tax rates and the percentage rates at which employees are taxed plus the thresholds at which an employee might move into a higher tax band.

In England, it is relatively simple. Taxation rates are decided by HM Government and everything between £12,501 and £50,000 is taxed at a flat rate of 20%. Earnings over £50,000 are taxed at 40% with the higher rate of 45% being applied for all earnings over £150,000.

The rates in Wales are currently the same but since April this year, the Welsh Assembly has been granted powers to set taxation rates for Welsh residents. The new regime means the UK Government will set the tax rate for a proportion of the deduction and the Welsh Assembly will set it for the rest. For this tax year for basic rate taxpayers, the UK Government has set the rate at 10% and the Welsh Assembly at 10% giving an overall rate of 20% to keep it in line with England. But the Welsh Assembly has the power to vary their rate meaning Wales residents could pay more – or less – tax in future that their English counterparts.

In Scotland, it is a bit more complicated as the Scottish Government has introduced a number of new tax bands with the aim for lower income workers to pay less tax and higher income workers to pay a bit more. The introduction of a starter rate of 19% and an intermediate rate of 21% either side of the basic 20% rate means those on low incomes will pay less tax whereas those on higher incomes will pay marginally more. In addition, the higher rate applies at an earnings level of £43,431 and is slightly higher at 41%. The top rate for those earning over £150,000 is also a bit higher at 46%.

So it might seem like a complicated system with big variations across the UK but we have invested in all the software required so the calculations can be made automatically and accurately each time. We can even easily handle situations where a single company might have employees working under more than one tax regime. If you need any help in running your payroll in England, Wales or Scotland; or even across more than one home nation, just get in touch.

Managing sickness absence in your business

With the government estimating that sickness absence costs employers up to £9 billion a year, managing the balance between supporting individual employees who are unable to work due to illness with keeping levels of sickness absence as low as possible across the whole business is possibly one of the trickiest things to get right.

Over the years, I’ve been able to help quite a few of my clients with queries about sickness and statutory sick pay so I thought a blog post about it might be useful.

There are two aspects to absence that are important to consider; how employees are paid during their illness and how you can help them whilst they are ill.

The payment aspect of sickness is relatively straightforward from a payroll point of view. Statutory Sick Pay (SSP) is paid at the basic rate of up to £94.25 a week and is paid to employees through the payroll in the normal way, with any tax and national insurance deducted. It is paid for a maximum of 28 weeks and starts after the first 4 working days of illness (known as the waiting period). Employers can choose to top up the SSP to bring their employee’s pay up to their usual amount.

Employees will be asked to provide a fit note after 7 days of sickness (including non-working days i.e. weekends) which would normally be written by their GP or hospital doctor.

But there are other ways an employer can help employees through sickness absence before, during and after it happens. The most important thing is to have a written sickness policy in place which makes it clear to everyone what the process is around being unable to work due to illness and how the employer will help the employees. This might cover things like SSP and top ups, what communication is expected and how the return to work will be managed and should also detail the formal process that will happen if the frequency of sickness absence becomes a problem. This kind of information can also be written into an individual employee’s contract if appropriate.

What happens after an employee has called in sick depends of course on the nature of the illness. For relatively short term illnesses or injury such as the flu or broken bones, then the employer can just keep in touch with the employee until they are ready to return.

But for longer term, more serious illnesses such as a cancer diagnosis or mental ill-health, a different approach will be required. Keeping in touch with your employee and their family is important and will most likely be welcomed but discuss with them first about what they feel is an appropriate level of contact during their absence and try not to go over that.

Don’t pressure them into returning to work before they are ready but as soon as it is appropriate, start talking to them about it. See what adjustments can be made for them such as part time working, shorter hours etc or whether a new role or location would be appropriate.

Sickness absence can be very disruptive to a business, especially a small one but having a clear policy in place and good communications can help to mitigate the problems caused. If you need any specific help around sickness absence in your business, just get in touch and I’ll be able to help.

Helping Employees Through The Summer Holidays

As I write this, it is raining for the first time in weeks, which can mean only one thing – the school summer holidays are about to start! And for us here in Cornwall, it also means we are braced and ready to welcome all the holidaymakers who have chosen our lovely county for their annual getaway (the sun’s going to come out tomorrow, we promise!).

But the school summer holidays can be a tricky time for parents trying to juggle work, managing holiday days and keeping up with admin at the same time as having the children home from work. It can be an expensive time too, with extra activities to pay for and even for some families, the cost of extra meals can have a significant impact on the family budget.

But there are ways employers can help their employees navigate the school holidays and have a summer to remember.

Tax-free childcare is a government scheme that allows working parents with children aged 0-11 to apply for up to £2,000 per child per year to spend on qualifying childcare. The money doesn’t have to be spent on everyday childcare costs; it can be put towards holiday clubs, summer camps and play schemes. It is not paid through the payroll but has to be claimed directly and then spent with providers who are registered on the scheme. Not everyone who is entitled to tax-free childcare is currently claiming it so it is worth mentioning it to your employees if you think it’s something they might find beneficial.

In our May blog, we wrote about how everyone, even temporary seasonal workers, are entitled to holiday pay. Part of our payroll work with our clients means we ensure they are all complying with the legislation and pay the correct amount of holiday pay to their employees but do ask us if you are unsure that your payroll is correct. While it’s great that more employees and workers will be able to enjoy some time off with their families, it does present a challenge to employers in managing rotas. Try to plan your rotas as early as possible and aim to be as flexible as you can when dealing with holiday requests. There’s also a bank holiday to account for before the schools go back, so it would be worth planning for that now if your business can get busy over the long weekends.

The summer is a busy time for a lot of our clients but here at Pixie Payroll we will be on hand throughout to help them ensure there is no interruption to the regular payroll and that everything is calculated correctly. We’ll also be working with them as they add seasonal staff to the payroll and manage weekly or monthly variations in the amounts paid.

But once all that’s done, you’ll find us on the beach!

Making Managing Seasonal Recruitment Easy

The summer holiday season is just getting underway here in Cornwall and many local businesses will be thinking about adding extra employees to their payroll, even if it’s only on a temporary basis until the season ends.

Although it’s early yet, thinking now about your staff needs over the busiest months will pay dividends both for you and your new employees. We don’t yet know how the holiday season will go this year but news this week from Thomas Cook that suggests people are postponing decisions about travelling overseas on holiday could result in a boost for domestic destinations. We can, of course, do nothing but hope for another summer of spectacular weather like last year!

In many ways, seasonal workers are administered in exactly the same way as all other employees from a payroll point of view, whether they have a fixed term contract or an open ended one. Similarly, brand new employees or those who are returning for another year are treated the same. Legally, you also can’t deviate from the minimum wage rates for seasonal employees, although for now the lower rate for younger employees still applies. Seasonal workers are also entitled to holiday pay and they will generate 7.2 minutes of holiday for every hour they work so this will need to be accounted for. Pension auto-enrolment doesn’t need to be a concern though as you can postpone new starter assessment for up to 3 months.

Seasonal or temporary employees may be on a zero-hour contract or don’t have regular hours. In which case, it will be important to put in place a simple process for capturing hours worked so the information is recorded efficiently and the correct amount is paid to each employee each week or month. The summer is your busiest time so you won’t want to be wasting it counting up hours or chasing people for timesheets each week.

Even if someone is only going to be with you for a few months, good training is still essential. Training makes employees feel valued and confident which will, in turn, benefit your business, especially if the employees are customer facing. Ensuring everyone knows the ins and outs of your business and understands the key processes will make for a smooth summer with less headaches for you sorting out problems.

Finally, make sure you keep in touch with your summer team during the off-season as that will make them more likely to want to return next year. Good employees will be in demand so if you can secure their services early then you’ll be able to tick that off your to-do list as well as possibly getting ahead of your competition.

Here at Pixie Payroll, we make adding employees to your payroll and administering seasonal staff as easy as possible. We just need a few bits of information about the employee such as their home address and NI number. It’s great if they have a recent P45 from a previous employer but if not, we’ll ask for an HMRC new starter form, so they start off on the correct tax code. They can then be included on the regular payroll at the first opportunity.

About Me

My name is Kellie Burslem T/A Pixie Payroll Services, I am a local Payroll Bureau based near Helston, Cornwall. I provide a reliable, professional service at a competitive price.

Contact Form

Website Crafted by AC90 Websites and Powered by Cornwall IT

Professional Indemnity Insurer: Address: Trafalgar Risk Management Ltd, 68 Lombard Street, Greater London, London, EC3V 9LI. Telephone Number: 0333 8000 000. Email Address: info@trafalgarinsuracne.co.uk. Territorial Coverage is for the UK only.