The Employment Allowance received a 50% boost in April 2016, taking it to £3,000 for eligible businesses. The Employment Allowance was first introduced in April 2014 and aims to incentivise businesses to retain and take on new staff, by reducing their Class 1 National Insurance Contributions (NICs).
The allowance reduces the amount employers have to pay HMRC each time the payroll is run, until the £3,000 allowance is used, and you can claim the Employment Allowance even if your NICs don’t reach £3000 for the year.
There is however a small change in eligibility. Limited companies where the director is the only employee paid above the Secondary Threshold for NIC will no longer be able to claim Employment Allowance. The Secondary Threshold is set at £156 a week for the 2016 to 2017 tax year.
Employees aged 25 and over are now entitled to the National Living Wage, and it is an offence (punishable by fines and ‘naming and shaming’) to fail to meet this requirement.
For businesses in the horticultural, agricultural and hospitality sectors where seasonal workers often swell the payroll in the summer months, it will be important to make sure that you a) budget for the increase and b) ensure you know exactly who is entitled to the new National living Wage.
Interestingly, the NFU reported recently that 60-80% of seasonal workers in the horticultural sector are aged 25 and over, representing a clear shift in the age profile and a clear challenge for producers already operating on tight margins.
The NLW came into force on 1 April and means that workers aged 25 and over are entitled to a minimum pay of £7.20 an hour – 50p higher than the previous National Minimum Wage. It is expected to reach over £9 an hour by 2020.
Perhaps unsurprisingly, there has been a surge in warning letters issued to businesses that have failed to meet their workplace pension requirements. The Pension Regulator has reported that they have now issued over 800 £400 fines to non-complying businesses. There are approximately 1.8 million small and micro businesses due to have their ‘staging’ date between now and April 2018: if you fall into this category and would appreciate a friendly conversation about the steps you need to be taking, please do give our payroll team a call on 0115 950 3044 or click here to email one of the auto-enrolment specialists at Clayton & Brewill.
Established in 1946, Clayton & Brewill provides accountancy services, tax planning advice, audits and payroll services to owner managed and family owned businesses across the East Midlands. Our accountants include specialists in the farming, GP, and buy-to-let sectors.