Posts tagged ‘National Insurance Contributions’

May 1960 Pay SlipNew powers to tackle PAYE debtors

HM Revenue and Customs (HMRC) will have new powers to tackle companies which fail to pay their employees’ income tax and national insurance contributions.

Upfront demands

From April, HMRC will be able to demand an upfront security from firms it deems to pose a serious risk of not paying.  In particular, HMRC will be targeting companies which deduct money from their employees’ pay packets but have no intention of paying it to the tax office.

The new measures are an extension of existing powers which HMRC has in respect of VAT, insurance premium tax and  environmental taxes.

It is hard to believe that this a “new” power as without it compliant taxpayers are not being treated fairly.

PenaltyPossible penalties

Businesses failing to provide a security will face a fine of up to £5,000 which will be enforceable by the courts.

HMRC have said that employers facing genuine payment difficulties will not be affected by the change.

Source: Total Investor website.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

 

New businesses excluded from a Government scheme to encourage more start-ups should still ensure they plan ahead to minimise their tax liabilities.

The National Insurance Contributions (NIC) holiday scheme

The scheme was launched on September 6th 2010 and means employers do not have to pay the first £5,000 in NICs for each of the first 10 workers during the first 52 weeks of their employment, provided that year falls within the three-year period up to September 5th 2013.

However, while new firms across the UK are set to benefit from potential tax savings of up to £50,000, those in the East, South East and London regions are being excluded from the scheme.

Another postcode lottery?

Barry Jefferd, Tax Partner at George Hay, said: “This is incredibly unfair on new businesses in the region who will be at a disadvantage compared to their counterparts in other areas.

“However, employers should still give serious thought to tax planning in order to minimise their liabilities and take advantage of any opportunities that might not be available at a later stage.

“While businesses in the East may not be able to enjoy the same tax breaks as others around the country, we can still help them make valuable tax savings, ensuring more of their hard-earned money goes back into those companies rather than the taxman’s pocket.

“Equally, if any new businesses in the area are unsure of their NIC obligations, then we can advise them accordingly.”

 

Further reading: NI holiday scheme slammed by Labour, Accountancy Age 04.01.12 – Administration costs more than savings.

Disclaimer: This article is for general guidance only.  All taxation planning should only be undertaken after appropriate professional advice.  George Hay Chartered Accountants are registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.

 

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If you found this post interesting/useful please share it with your social network and/or bookmark it.  Also, your comments are always valued and will help me to write new posts that are relevant to readers of this blog.

It is a discussion I have had with many of my clients when appraising their progress and looking at how the business is going to grow in the upcoming months.

Once outsourcing has been considered, utilised or perhaps discounted, finding someone to support you and help develop growth has to be the next step, but it is a daunting one. 

 So I have commissioned this post from my good friend, and professional contact Katherine Connolly  of Keeping HR Simple  to help alleviate concerns.


You know you’re too busy….

You know you have a great sales pipeline and you also know that another pair of hands would free up your time.  You want to work on your business as well as in it.  So what’s stopping you from making the leap from business owner to employer?

It doesn’t have to be complicated

Taking on your first employee doesn’t have to be complicated, especially if you prepare for it in advance.  Regardless of the fact that you have a small business, as soon as someone agrees to work for you and you agree to pay them for the work they do, you take on certain responsibilities for them.  That may sound a bit scary but it doesn’t have to be. 

Your obligations

You need to be aware of your obligations, most of which are common sense, and have a plan to meet them. 

 They are as follows:

(i) To pay wages

Sounds pretty obvious, doesn’t it, but what would happen if you had a particularly tough month or if a couple of customers don’t pay their bills on time?  You need to have a contingency plan and informing your employee that you can’t pay their wages that month is not enough!  Do you have enough money in the bank to cover at least 3 months salary for them?  It’s really important to communicate with your employee at all times, especially since they will be relying on their salary to make ends meet.

(ii) Not to make unauthorised deductions

You can’t deduct money from an employee’s wages unfairly or without getting their approval in advance (another reason why it’s essential to have an employment contract!)

You can only make deductions from wages in certain circumstances:

  • if there is legal authority to do so, e.g. by Act of Parliament – income tax, National Insurance Contributions etc;
  • by contract of employment which might provide for deductions to be made in certain specific circumstances, e.g. fines for disciplinary offences;
  • or by individual agreement where an employee might agree for the deduction for union subscriptions or to reimburse their employer for overpayment of wages. 

Remember that you will be paying employer’s national insurance on top of the employee’s salary so you will have to include it in your calculations. 

(iv) To take reasonable care of your employee

This is a wide-ranging duty and covers both physical care and psychiatric care (i.e. not to expose employees to psychiatric harm).  As your business grows, this will encompass policies like a zero tolerance approach to discrimination and bullying but that doesn’t mean you should ignore such things until you reach a certain threshold.  The same goes for health and safety – just because you need 5 employees before the law says you need a written health and safety policy doesn’t mean you should ignore your obligations to provide a safe working environment. 

As an example, have you considered where your new employee will work? You may be quite happy working in your spare room or in a garage conversion on the side of your house but you need to put yourself in their position.  If there isn’t room for them to work comfortably and safely, you need to consider other options.

(v) Not to breach mutual trust and confidence

This obligation refers to your working relationship with your employee.  There are three fundamentals that should govern your behaviour as an employer:

  1. Be fair
  2. Be consistent
  3. Be nice


If you practice these without fail, you will find that you’re in the best position to preempt difficult situations and deal with the majority of problems that may arise. 

Don’t be scared to take on your first employee.  Just be prepared! 


Guest author:   Katherine and her partner Jason are successful growing their professional HR consultancy business, by sticking to their core values and Keeping HR Simple

If you have any questions regarding this post, please leave a comment below or contact Katherine and Jason on 0800 458 6582.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.