Is Your Business Prepared for the National Living Wage?

April 2016 will see the introduction of the compulsory national living wage.

The new minimum wage of £7.20 per hour is set to become law for all working people aged 25 plus. The National Living Wage (NLW) will have to be paid as a minimum by all employers, and the Government aims for it to rise to £9 per hour by 2020.

The Office for Budget Responsibility (OBR) has said that the estimated cost to businesses will represent 1 per cent of profits. But the costs will be offset with a cut in corporation tax in 2017 to 19 per cent, and further down to 18 per cent in 2020. National insurance contributions for smaller companies will also be cut in an attempt to balance the wage rise.

“From 2016, our new Employment Allowance, will now be increased by 50% to £3,000,” announced the Chancellor George Osborne. “That means a firm will be able to employ four people full time on the new national living wage and pay no national insurance at all.”

The national minimum wage rose to £6.70 in October 2015, and the over 25s will see a 50p per hour pay rise from April 2016. That is a hike of 11 per cent for employers.

The Living Wage Foundation set a rate of £7.85 as the figure they deem appropriate, and the rate of £7.20 would seem a step closer. However, Rhys Moore, director of the Living Wage Foundation, said it was “delighted” that more than 2.5 million workers will receive a much needed pay rise, but then asked, “Is this really a living wage?

What Business Organisations Think

John Cridland, director-general of the Confederation of British Industry, said: “This is a double-edged budget for business. Firms will welcome measures to balance the books and boost investment, but they will be concerned by legislating for wage increases they may not be able to deliver.”

Chief economist for the Chartered Institute of Personnel and Development Mark Beatson said, “This policy will only deliver higher pay without significant job losses if it is accompanied by a drive to increase productivity in low pay sectors such as retail, hairdressing, hospitality and the care sector – and that will need more than delivery of apprenticeship numbers or employment subsidies via the national insurance contributions system.”

If you are concerned as to how the new National Living Wage will affect your cashflow and profit, don’t delay in discussing it with your bookkeepers who will be able to put you in the picture with forecasts and practical advice.

Tax Changes Affecting Buy to Let Investors

Back in August we reported on how the landlord fair wear andtear allowance was to be scrapped as of April this year, and how tax relief on buy to let mortgages was also set to be decreased down to the basic rate by 2019.

Then there was the news that landlords would face a change to the way tax is paid when a buy-to-let property is sold. From April 2019 capital gains tax will be due within 30 days of selling a property, rather than at the end of the tax year.

Stamp Duty Changes 2016

Now we hear that stamp duty changes will also be introduced in April this year, applying to anyone purchasing additional residential property.

Buy a second home or investment property after 1 April and you will be paying an extra 3 per cent on properties over £40,000. So on a currently zero-rated property costing from £40,000.01 to £125,000 you will pay 3 per cent on the full purchase price; on a property from £125,000.01 to £250,000 it will be 5 per cent rather than the current 2 per cent; from £250,000.01 to £925,000 the rate will be 8 per cent and up to £1.5 million 13 per cent. Over this amount, stamp duty will be charged at 15 per cent.

Investors with 15 or more properties, however, will not have to pay the additional percentage, and there may be further potential exemptions for larger and corporate investors.

However, there could be a glimmer of light in the shape of offsetting purchase costs against any eventual capital gains tax – including stamp duty. So whilst there will be a large bill to pay on purchase, if the property is eventually sold at profit, the stamp duty can be claimed back later against CGT.

With the many changes on the horizon, it makes sense for buy to let investors to take advice as soon as possible. If you are an investor looking to add to your portfolio then you may be wise to do so sooner rather than later, but speaking to your bookkeepers for cash flow planning guidance is a good first move.

What you Need to Know About Gender Pay Gap Reporting

Early this year, draft Regulations will be published by the Government that will call for larger employers to publish information detailing any differences in gender pay. Information about variations in pay between men and women will have to be provided and this will need to include a single annual figure setting out the gender pay gap and the method by which the calculations have been made.

There is also likely to be a second reporting tier which will outline the gender bonus gap. Employers will have the opportunity to include commentary on the factors that contribute to their gender pay gap, and any measures being taken to close the gap.

Who Will Gender Pay Gap Reporting Affect?

All private, public and voluntary sector employers in England, Wales and Scotland that employ 250 or more personnel will be affected by the Regulations. Businesses on the borderline with employee numbers will need to take note of the Regulations so that they are ready to comply when the time comes. Smaller businesses may also wish to take note of the information being published, as it could well affect them at a point in the future, and may influence their pay structures.

When Will Gender Pay Gap Reporting Start?

Watch this space. There is no precise date as yet and it is likely the reporting requirement will be phased in, starting with larger employers.

What Does ‘Gender Pay Gap’ Mean?

According to the Equal Pay Portal, the gender pay gap is ‘a calculation of the difference in the average earnings of the women and men in any given population’. Basically it is the difference in average hourly earnings of male and female full time employees.

The Office for National Statistics has published figures stating that women in the UK earn on average 19 per cent less than men. The new Regulations aim to eliminate gender inequality and take down the barriers that are in the way of women’s success.

It has been illegal for more than four decades to pay women and men varying rates of pay for equal or similar work. The Government says the pay gap exists mainly amongst older workings and reflects ‘the types of jobs that women tend to enter, and the levels of seniority they progress to’.

How Should I Prepare for Gender Pay Gap Reporting?

Ahead of the Regulations being introduced, it is a good idea to conduct an equal pay audit on an informal basis. This will help you identify potential issues in advance, and will give you time to take steps to address the issues.

As soon as the Regulations are introduced and there is clearer information about employers’ requirements, we’ll let you know. In the meantime, talking to your bookkeepers will help you with your equal pay audit.

Data Protection Law to see Biggest Change in 20 Years

An agreement was reached on the draft EU General Data Protection Regulation (GDPR) at the end of 2015, and it signifies the dawn of momentous changes to privacy law: the biggest changes in two decades.

Data protection seems never to be out of the news, and it is certainly an area where new legislation is being introduced on a regular basis. It is important however to take good note of this latest Regulation, because it is set to have a huge impact for any business that operates in the financial services, transport, energy and water or health sectors. Search engines, cloud computing providers and internet payment operators will also be affected.

Now is the time to start preparing if your business falls under any of these categories, because there is much to do. Risk assessments will need to be adjusted to accommodate the new rules and, as head of data privacy at PricewaterhouseCoopers Stewart Room says, “Most companies will be shocked at the scale of the new rules and the work that needs to be done before the laws take effect in two years – it is not much time for the magnitude of the internal changes that will be required.”

There are still fine details to be confirmed, but in the meantime, you should make yourself aware of the following key points of the GDPR:

• If your company breaches data rules in a serious way then you will need to report the incident to regulators within 72 hours.
• If your business if found to be in breach of the GDPR then it will be fined up to 4 per cent of its global turnover.
• If you handle significant amounts of data then you will be required to appoint a data protection officer within your business.
• Consumers will have the right to request that their data is transferred from one company to another, so that their preferences and order history are made available to them through their new supplier.
• A consumer’s right to be forgotten will no longer be limited to search engines. It will now extend into their entire web history, allowing permission to request total removal from any online platform and its history trail.

The GDPR is likely to become EU law in the early part of 2016. A two year grace period will precede enforcement. Even if your business does not fall into one of the GDPR governed categories, it is still vitally important that you are fully aware of all the legislation that applies to your business, especially considering the new powers held by the InformationCommissioner’s Office (ICO) concerning the use of data in telemarketingcampaigns.

Your Handy Business Travel Checklist

You’re off on a business trip. Amongst all the meeting preparation, getting your presentation ready and making sure your laptop is charged, there is still your packing to do. Overlook this at your peril, however, because there will always be something vital you’ll wish you never left behind. Whilst you’re probably not likely to omit to pack your passport, boarding pass and currency, there are things you really could do with not forgetting.

If you’re packing in a hurry for a business trip, use this at-a-glance guide to make sure you don’t miss anything essential.

Essential item 1: Health Cover. If you’re travelling within Europe, make sure you have a valid European Health Insurance Card (EHIC). It’s free of charge and will allow you access to free or discounted healthcare across the EU. This includes pre-existing conditions. You should also make sure you have adequate travel insurance that covers you for emergency treatment and repatriation.

Essential item 2: Chargers and Adapters. You won’t get very far if you can’t charge your smartphone, tablet or laptop. As well as your chargers, you’re going to need the appropriate power adapters. Make sure you have the right ones, because at very least they won’t work. At worst, they could actually damage your devices, or even cause a fire (it has been known!). Also bear in mind that hotel rooms are never overly generous when it comes to power sockets, so it could pay to pack a multi-socket adapter.

Essential item 3: Internet Access. Your hotel may say it offers Wi-Fi, but just how reliable it is could be anyone’s guess. Tethering from your mobile could cost you dear when you are roaming, so if you are going to be dependent on internet access during your trip, and let’s face it, we’re all pretty much internet dependent any time of the day, reassure yourself by getting yourself a Wi-Fi dongle or by pre-loading an international mobile hotspot with credit.

Essential item 4: Pen and Paper. Yes, we said pen and paper! What happens if your device battery runs out and you are left with nothing on which to take notes or write down something essential, like the details of a potentially lucrative new contact? Pack a pen and notebook and you’ll have a back-up.

Essential item 5: USB Drive. Worst case scenario, your laptop fails. Your presentation is stored on it. What to do? If you have a back-up copy on a flash drive, you can borrow, hire or even buy another device, and you’re ready to go.

Essential item 6: Ear Plugs. You have to be up at the crack of dawn to deliver your presentation. But your hotel room neighbours are making the most of their holiday, or there’s some sort of fiesta going on right below your balcony. Cue the ear plugs: pop them in and enjoy a restful night’s sleep, so you are primed and ready for your big day.

Business travel can be stressful, but if you go well-equipped, you’ll have a very different and far more positive experience.

Statutory Pay Freeze for 2016

The Government has announced that there will be no annual increase in various types of statutory pay in 2016.

Statutory maternity and paternity pay, shared parental pay and adoption pay will see no rise from the current rate of £139.58 or 90% of an employee’s average weekly earnings if this amount is less than the statutory rate. The rate of statutory sick pay has also been frozen at the current weekly rate of £88.45.

There is no statutory requirement to increase statutory pay rates annually, but they do normally go up every April so that they rise alongside the consumer price index (CPI). However, the fact that the CPI actually dropped in the year leading up to September 2015 by 0.1 per cent prompted the freeze for the 2017-2017 period.

Employers are usually able to claim back 92 per cent of employees’ statutory maternity pay, paternity pay, adoption pay and shared parental pay.

To be entitled to statutory payments, an employee’s average earnings must be equal to or more than the lower earnings limit, which has also been frozen at £112.

Useful Statutory Pay Guides for Employers

You may find the following Government guides to statutory pay useful:

Statutory Sick Pay: 

https://www.gov.uk/employers-sick-pay/overview

Maternity Pay & Leave:

https://www.gov.uk/employers-maternity-pay-leave/entitlement

Paternity Pay & Leave:

https://www.gov.uk/employers-paternity-pay-leave/entitlement

Adoption Pay & Leave:

https://www.gov.uk/employers-adoption-pay-leave/entitlement

Shared Parental Leave & Pay:

https://www.gov.uk/shared-parental-leave-and-pay-employer-guide/overview

Additional Parental Pay & Leave:

https://www.gov.uk/employers-additional-paternity-pay-leave

If you are in need of any advice, you should talk to your bookkeepers. They will be able to guide you through how statutory pay works, and will help you forecast ahead if you have staff taking leave in the near future.

Crucial Christmas Considerations for Employers

It’s that time of year when as an employer, you are faced with a raft of trials and tribulations. Christmas always tends to throw up all sorts of issues where annual leave, discipline and discrimination are concerned. Here are some of our top tips on what you should be doing in order to deal with these issues effectively, so that your workplace Christmas can be a peaceful one.

Be Clear on Policy

Your seasonal policies should be well documented and managers and supervisors should be familiar with them. Make sure you have policies in place covering everything from annual leave to social events.

It is vital to have policies in place covering social events because as an employer you have a duty of care towards your personnel, plus there’s the issue of the Equality Act 2010 that makes you liable when it comes to discrimination, victimisation and harassment. You need to be able to demonstrate that you have taken practicable steps to prevent anything along these lines taking place.

Beware Discrimination

Religious discrimination is something that causes employers a great deal of worry at Christmas. Will your festive party offend those who do not celebrate Christmas? Hopefully not, because staff parties should be focused on morale boosting rather than any sort of religious observation.

It is wise in any case to be mindful of all the religious festivals that fall throughout the year, and ensure you are balanced in your approach.

You may also come across problems with Christian employees refusing to work on bank holidays that have religious significance. Again the Equality Act 2010 applies, which means you cannot treat staff any differently to others because of their religion. Workers do not have a right to time off in order to observe religious occasions, but if you do refuse them, it could constitute religious discrimination. Putting a policy in place is essential.

Know the Rules on Annual Leave

Employees do not have a right to take holidays during the festive period and unless there is an agreement to the contrary, notice equating to twice the length of the holiday they wish to take must be given.

If taking leave is not acceptable to you at this time of year, then you can give counter notice stating that the leave cannot be taken, providing this notice equates to the length of the leave requested, and that you are not stopping the employee taking the leave they are entitled to for that holiday year. On refusing leave that falls within allowable parameters, you must always be able to state valid business reasons.

Bear in mind that actions taken against employees who fail to attend work without permission should be reasonable. There have been cases where employees have been dismissed for this reason, and later the dismissal has been found to be unfair by the Employment Tribunal.

It is also worth noting that unless a contract states otherwise, employees are not entitled to bank holidays off, neither are they entitled to any additional pay when working them.

Confused about Christmas as an employer? Chat your concerns through with your bookkeepers in the first instance and they’ll point you in the right direction as to the advice you need to get things right.