PIXIE PAYROLL Blog
Happy new year! As I write this, we’re half way through January and the fun of Christmas has given way to a gloomy, wet and windy January. But the evenings are starting to draw out and spring isn’t that far away. That means we’re close to April and the end of one tax year and the start of another, which often brings changes to income and taxation.
2020 is no exception as this year, as there are changes due to the National Minimum Wage and the National Living Wage which we have detailed in this blog. We’ve also included an update on the personal allowances although they aren’t changing this April.
Firstly, we thought we’d clarify the difference between the National Minimum Wage and National Living Wage. Put simply, those aged under 25 have to, by law, be paid the minimum wage for their age and those aged 25 and over have to be paid the living wage by law.
You may also have heard of the Real Living Wage. That is a rate – currently £9.30 per hour outside London and £10.75 in London – that the Living Wage Foundation has calculated is needed to live, based on current living costs. Some employers have committed to paying the Real Living Wage, but it is voluntary so as an employee, you can’t insist on it.
In terms of increases in the statutory rates, the National Living Wage was £8.21 per hour in the 2019/20 tax year and from April 2020, it will increase to £8.72 per hour. This means that someone working 40 hours per week will see an increase of just over £1,000 per year in their wages.
The National Minimum Wage for everyone under 25 and apprentices is increasing too.
|Year||21 to 24||18 to 20||Under 18||Apprentice|
|Current rate – 2019/20 tax year||£7.70||£6.15||£4.35||£3.90|
|Rate applicable from April 2020||£8.20||£6.45||£4.55||£4.15|
Personal tax allowances are remaining the same in 2020/21 at £12,500. That means someone can earn up to the threshold before any tax liability kicks in and will, in future, be then indexed with the Consumer Price Index (CPI). The higher rate threshold will be £50,000. Bear in mind these are the current rates for England & Wales, there is a slightly different taxation regime in Scotland which we covered in our September blog here.
Whilst a pay rise is good news for everyone, it does mean employers have to make new calculations and look at how the new results affect their bottom line. Increases in National Living Wage and National Minimum Wage rates often means wage rates for all employees in a business need reviewing, even if they currently earn above the minimum rates, so if you need any help or advice in understanding how the new rates might impact your business planning, get in touch.
Here we are nearly at the end of 2019 and only a couple of weeks until Christmas which is always a time of reflection for me. The year really has gone by in a flash but overall, it’s been a good one.
Possibly the most exciting thing to happen, and a real milestone for Pixie Payroll, was the launch of the new branding and website. The whole process took quite a few months and I was supported by some other great Cornish businesses to get there but in October, everything finally went live. The new brand really reflects where the business is now and where it’s going, and the website now clearly set out the services we offer. There’s been some great feedback on both the branding and the website which we’re really grateful for.
The investment in the new branding and website was partly driven by growth in the business this year. In terms of the numbers of payroll schemes we now manage, we’ve seen growth of 34% in just 8 months. Some of that growth has come from recommendations and existing accountancy clients asking us to take on additional schemes which is always a confidence boost and it’s great that we can manage that level of growth whilst maintaining great customer service; something we will never compromise on.
On a personal level, I’ve also spent quite a bit of 2019 ensuring my skills and knowledge are up to date by attending some training courses. These have included HMRC updates on some construction industry schemes, AAT updates and early next year, I’ll be attending Chartered Institute of Payroll Professionals training on the changes due to payroll for the 2020/21 year. I will, of course, be receiving updates from the various bodies on any further changes that might arise after the general election so will be able to answer any questions my clients may have. I’ve also invested in some training that will enable me to grow the business by offering additional services – watch this space for news on that in the new year!
I’ve also been out and about doing a bit of networking too this year which isn’t something I was looking forward to but groups like Your Partnerships Cornwall have been so welcoming and friendly that I ended up enjoying it! I’m looking forward to doing more of that in 2020. It was also great fun to be able to sponsor the match ball at Mullion Cricket Club in the summer; especially as we were able to enjoy going to the matches as a family.
As the year comes to an end, I’d like to say thank you and Merry Christmas to all my clients and to all the suppliers I have worked with this year. I hope everyone has a great Christmas with time to relax and enjoy family time and I look forward to another great year in 2020.
Merry Christmas and Happy New Year from Kellie.
Christmas is coming and it can be a busy time for businesses. It’s also the time when young people might be looking for some part-time work so as there are some regulations to follow when employing children and young people, we thought it would be useful to outline them in this month’s blog.
The first thing to remember is that you cannot employ a child under the age of 13 in any circumstances unless it is connected to things like acting or modelling. If that is the case, you’ll need to obtain a performance licence from your local authority.
Once a child has reached 13, you can add them to your workforce but there are still rules around employment. If they are aged 13 or 14, it’s probably safe to assume they can only really work for you during the school holidays when they can work a maximum of 5 hours a day and 2 hours on a Sunday. 15- and 16-year olds can work slightly longer hours but the restrictions around term-time working still apply. A young person is not considered a school-leaver until the last Friday of June in the school year they reach 16. So someone who turns 16 in October isn’t officially a school-leaver until the following June.
There are also restrictions on the kind of work a young person can do for you. For example, they can’t work in a commercial kitchen, collect waste, deliver milk or sell alcohol. They also can’t work in a care home unless they are supervised by a responsible adult. A full list of prohibited occupations for young people can be found on the Cornwall Council website here.
If you plan on employing a young person under 16, you’ll need to obtain a work permit from the council which the parent or guardian and the child’s school headteacher must sign before you register with the council.
The UK minimum wage rates only apply for those who are over school leaving age so how much you pay your young employees will be up to you. We always recommend including the child’s parents in any discussion on pay so everyone agrees. Once you’ve done that, just let us know and we’ll add them to the regular payroll and they’ll be paid in the same way as everyone else.
You also don’t have to worry about pension auto-enrolment as anyone under 22 isn’t auto-enrolled although they can request to be included in your scheme.
Once a young person is officially a school leaver then slightly different rules apply. There are no restrictions on the hours they can work even if they are still studying but it would still be worth considering their school or college commitments before allocating work to them.
They can, of course, at this stage be embarking on their chosen career so may come to you as an apprentice. Minimum wage rules apply to apprentices under 19 but it is also complicated by how long they have been an apprentice, so if you are unsure as to which would be the correct rate, just ask us for help.
Things have come a long way since children in Ebenezer Scrooge’s London were forced to work all hours. Having a job can be a real learning opportunity for a young person today but if you do employ young people, always be sure to adhere to the rules. As always, you can just ask us for help if you need it.
One thing I do quite regularly is attend workshops and training courses to make sure my knowledge is always up to date. I recently spent a Saturday at an Employment Law workshop and it was a really helpful refresher for the kinds of things employers need to know when employing people.
We have split it down into the things you need to do by law and things that are good practice in order to help build a happy and efficient workforce.
- All your employees should be issued with a contract of employment within the first 8 weeks of their employment. But I would suggest that you do not let your employees start working for you until they have signed their contract. That will ensure that everyone agrees to the terms of the contract before work starts and also means you won’t forget to get the signed document back from them. It’s worth noting that from April 2020, all employees need a contract of employment from day 1. It’s not a legal requirement but a comprehensive job description should go hand in hand with the contract, although remember to allow both you and your employee some flexibility about what their role will cover.
- All employees must be paid at least the National Minimum Wage or National Living Wage, depending on their age. Information on the current rates can be found here
- It is your legal responsibility as an employer to ensure that your employees have the right to work in the UK. This will be especially important after we leave the EU as an individual’s status may no longer be clear. To do this, you need to check their passport (and any visa) and take a black and white copy for their file; make a note of when the passport or visa runs out so you can keep the files up to date. Fines for non-compliance are £20,000 per employee.
- Depending on the nature of your business, you must also have a DBS (Disclosure and Barring Service) check on each employee. You can ask an employee to provide a basic DBS certificate or you can apply for a standard or enhanced check on them if their role requires it. Information on DBS checks and how to apply for them can be found here
- You also now have to auto-enrol your employee into a workplace pension. This could be one organised by the government or one you have organised yourself through a qualified financial advisor. Speak to us if you have any questions about pension auto-enrolment.
- Employers’ Liability Insurance protects your employees if they get injured or become unwell as a direct result of the work they do while in your employment. If you employ anyone, even on a part time or voluntary basis, you’re legally obliged to hold Employers’ Liability Insurance. You must have a policy that covers you for at least £5million and the fines are big too – you can be penalised £2,500 for every day you are not properly insured. You should speak to a reputable company or broker about buying a policy but government information can be found here.
Employer best practice:
- Offer each new employee a proper induction so they are fully up to speed on emergency procedures and usual business information. If appropriate, allocate them a ‘buddy’ for the first few days as they get to know the job and the people.
- Complete a personal details record which should include personal details of the employee, next of kin, any medical conditions and their bank account information for payroll purposes. You can also use this to record their DBS check and, if they drive as part of their role, a copy of their driving licence, which you should request every 3 months. Remember to keep this information secure under GDPR regulations.
- If appropriate, ask employees to sign a 48 Hour Working Time Directive Opt Out. This means you can ask employees to work for more than 48 hours in a week if required.
- You may also need to check an employee’s professional qualifications so ensure you have copies of their certificates and make sure you know when they run out as you may have a legal responsibility to ensure an employee is appropriately qualified for the job they do e.g. food hygiene or forklift driving qualifications.
- Appoint an appropriately trained dedicated first aider and keep their training up to date. Ensure everyone is trained on fire procedures should the worst happen and nominate a fire warden for each working area.
Taking on your first employee or growing your workforce can be daunting but having a robust process in place from the start will help make everything more straightforward. If you have any questions at all about being an employer, just give us a call and we’d be happy to help.
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.
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