How much is the National Minimum Wage?

Most workers in the UK over school leaving age are entitled to be paid at least the National Minimum Wage (NMW). There are no exemptions for smaller businesses; they should still pay their workers the NMW. The NMW tends to increase in October each year.

Since October 2014, the rates have been:

• ·         £6.50 for workers 21 and over
• ·         £5.13 18 - 20 years
• ·         £3.79 for 16-17 years, who are above school leaving age but under 18
• ·         £2.73 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

But from October 2015, the rates will be as follows:

• ·         £6.70 for workers 21 and over
• ·         £5.30 18 - 20 years
• ·         £3.87 for 16-17 years, who are above school leaving age but under 18
• ·         £3.30 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

It is important to note that these rates, which come into force 1 October 2015, apply to pay reference periods beginning on or after that date.

From April 2016, the national living wage will be £7.20 an hour for workers aged 25 and older. The minimum wage will still apply for workers aged 24 and under.

Does Auto Enrolment apply to my staff?

I employ all part-time staff and as a result, they do not earn very much over the course of a tax year. Could you tell me if I am likely to have anything to do for these new Workplace Pension rules please?

Under the new Workplace Pensions rules, all employers have “duties” towards all of their staff who are:

• ·         working or ordinarily working in the UK
• ·         aged between 16 and 74; and who
• ·         work under a contract of employment (i.e. an “employee”); or
• ·         have a contract to perform work or services personally and are not undertaking the work as part of their own business

“Eligible workers” are aged between 22 and state pension age, and earn over £192 a week (2015/16). If you have staff that meet the definition of an eligible worker, they must be put into a workplace pension scheme and you must pay regular pension contributions for them. You don’t need to ask their permission and therefore we refer to them being “automatically enrolled” into the pension scheme.

If you have no staff to automatically enrol, there is no need to set up a pension scheme immediately. However, while your staff may not be eligible for automatic enrolment, they can still ask to go into a pension scheme. If they do this, your responsibilities will depend on how much they earn:

• If they more than £112 a week (2015/16) they are a so-called “non-eligible jobholder”. You must make contributions to the scheme as well.
• If they earn less than this, they are an “entitled worker” and you may choose whether you wish to contribute or not.

Failure to comply with the Workplace Pensions rules can lead to a fixed penalty of £400 plus escalating penalties starting from £50 per day. Gary can help you ensure your business is compliant. Contact him for more information. 

I have received a cheque from my bank for being mis-sold PPI. Is any of it taxable? 

The tax due will depend on the different components making up your cheque. Typically, it will consist of:

•  a refund of the PPI premiums themselves
•  historic interest (interest paid on the PPI premium because it was added to a loan or credit card)
•  simple interest at a rate of 8% per annum

The simple interest is to compensate you for being deprived during the term of the PPI policy and is taxable- like any normal bank interest is.

Normally, the bank deduct basic rate income tax of 20% before paying you the simple interest. As a result, if once you include the interest in the calculation of your total income you are still a basic rate taxpayer, you should not need to complete a tax return nor have any additional tax to pay on it.

However, if the simple interest is not taxed and exceeds £10,000 or if you are not a basic rate taxpayer, then there could be tax implications and you should confirm with HM Revenue & Customs whether they require a tax return from you. Conversely, if you income is under the personal allowance, you may be due a tax refund.  

If you have any further questions, please give Gary a call or drop him an email and he will be happy to complete your tax return for you.