Following recommendations from The Low Pay Commission, the National Minimum Wage increases are set to rise as follows:

For workers aged 21 and over: Rises from £5.93 to £6.08 per hour.

For workers aged 18 to 20: Rises from £4.92 to £4.98 per hour

For workers aged 16 and 17: Rises from £3.64 to £3.68 per hour

Apprenticeship’s National Minimum wage will increase by 10p per hour to £2.60 per hour.

According to The Low Pay Commission, almost a million people will benefit from this rise.

Failing to adhere to the NMW can have serious repercussions for a business, usually resulting in hefty fines.

It is worth reminding employers that consideration needs to be given to the likes of door to door sales people and care workers that may work sleep-ins.

In the case of the door to door sales person, he or she may be employed on a commission basis, however the employee must still be paid at least the NMW per hour over the course of the day, from the time he or she reaches the first client to the time he or she leaves the last client. A lunch break can be deducted from this time.

For a care worker that works sleep-ins, the NMW rules also apply, this is because, although the worker may be sleeping, he or she is at the disposal of the employer during that time, and that is where employers can become un-stuck when NMW disputes go to tribunal.

If in doubt, seek advice from an employment law specialist, it could save a lot of time and money.

The increase in personal allowance is usually set by the retail price index and is therefore based on inflation, currently a 4.6% increase year on year. This should set the personal allowance for 2011/2012 at £6,785, however, the higher increase to the personal allowance for those aged under 65 will contribute to the government’s objective of a fairer tax system by providing support to individuals on low and middle incomes.

The basic rate threshold will be reduced to £35,000 from £37,400, meaning that those on higher incomes will not benefit from the increase to the personal allowance.

It is always worth remembering however, that there is still time for the governemnt to back-track on this decision altogether, I will keep you posted!

Under this new scheme, for a limited period and subject to certain conditions, new businesses may qualify for a reduction of up to £5000 from the Employers NICs that would normally be due for each of the first 10 employees, meaning a potential saving of £50.000

Only businesses that commenced trading between 22/06/2010 and 05/09/2013 are eligible for the scheme, however the scheme itself didn’t start until 06/09/2010 so you can only deduct employers NICs due after that date, but before 05/09/2013.

There are numerous other qualifying conditions that apply such as geographical location, so please visit http://www.hmrc.gov.uk/paye/intro/nics-holiday/eligibility.htm or www.businesslink.gov.uk/nicsholiday for further information and instructions on how to complete the online application form

PAYE (Pay as you earn) can be a minefield. It’s not just a matter of handing over a sum of money to an employee. There are a lot of things you need to take into consideration when operating a PAYE scheme, such as weekly or monthly deductions of Tax and NICs, statutory Sick pay (SSP) and Maternity Pay. Student Loan Deductions and Attachments Of Earnings may also need deducting from certain members of staff. It’s worth remembering that HMRC can issue hefty penalties to those business’ that do not comply.

Outsourcing your Payroll to SW Payroll Services will remove this complex and often time consuming part of your weekly or monthly routine. We can quickly and efficiently register your business for PAYE as soon as you know when you will be paying a member of staff for the first time, then we can operate a weekly or monthly scheme to suit your business needs. All on-line filing will be taken care of and payslips can be sent direct by e mail. Not forgetting that your year-end P35 will also be completed and filed on-line with HMRC. All of this is included in the fixed monthly fee starting from just £10 per month.

Please e mail zara@pahaccounting.com for more details.

• From £5.80 to £5.93 per hour for workers aged 21 and over
• From £4.83 to £4.92 per hour for workers aged 18 — 20
• From £3.57 to £3.64 per hour for workers aged 16 — 17

Please note that the government has extended the adult minimum wage rate to 21 years old from 1^st October 2010, previously, the qualifying age for the adult rate of the NMW was 22.

Almost all workers who work in the UK are entitled to the NMW, it makes no difference if they’re full or part time, agency workers, temporary or casual, the NMW even applies to those on piece rate. There are some people that do not qualify for the NMW, such as Self employed people, apprentices and children of compulsory school age.

HMRC enforces the NMW and will issue penalties to employers that do not comply.

Please contact myself if you need any advice regarding the National Minimum Wage.

Further information can also be found at http://www.hmrc.gov.uk/paye/payroll/day-to-day/nmw.htm

Many of you will have seen/ heard the recent media coverage regarding the PAYE error.

You may get a Tax Calculation (form P800) from HM Revenue and  Customs (HMRC) telling you that you’ve paid too much or too little tax for the tax years 2008-09 and 2009-10. The calculation shows your total income and the allowances that are due to you for each of these years.

Not everyone will get a calculation, only those who have paid too much or too little tax – so don’t worry if you don’t get one.

If you do get a Tax Calculation, you should check the calculation carefully to make sure you agree with all the information given. You should also make sure you read the notes that come with it as these will help you understand what it means. You can read the notes online by going to www.hmrc.gov.uk/P800 .

 So what’s happened?

Typically, the most affected people are those that have started a new job, had two jobs or received company benefits.

Those that have completed tax returns should not be affected as the error will have been picked up on completion of this.

HMRC are trying to recover £2bn that was underpaid in the last two tax years, and also to repay £1.8bn that was overpaid. The remainder of the tax calculations will be sent out by Christmas. The errors were revealed when a new computer system was introduced.

Repayments to 4.3 million people will be worth on average £420 each and will be made via changes to tax codes for the next tax year, 2011-12. Extra tax charges will average £1,380 and the majority of these will also be recovered via changes to next year’s tax codes.

Where the tax charge is more than £2k the taxpayer will, in theory, be asked to pay a lump sum; however, an HMRC spokesman stated those could be staggered in cases of hardship.

Tax experts say that anyone who appears to owe extra tax should first check the facts on their letter to make sure the updated record of employment and income is accurate.

What action should I take?

Take a look through your coding notices and compare them to your payslips to ensure your employer has applied the correct coding. Study the PAYE codes, particularly the last one, and check that all the figures in the code reflect your circumstances. If there has been a mistake somewhere, then get in touch with your tax office and make them aware of this.

If you want to challenge the new calculation, they can simply phone HMRC and ask for a recalculation. In some limited circumstances, it may be possible to ask the authorities to write off the extra money being demanded. A procedure called the extra statutory concession allows HMRC to write off tax, if it was provided with all the relevant information but failed to use it within 12 months of the end of the tax year in which the information was received.

What  if you agree with the calculation?

If you agree with the calculation, you don’t need to do anything – just keep it somewhere you can find it again easily if you need to.

If the amount you owe is under £2000, HMRC will automatically collect the money from your pay during the tax year 2011-12. This spreads repayment throughout the year, but you can ask to pay it back over a longer period of time if you need to.

If the amount you owe HMRC is £2000 or more, HMRC will write to you and ask for direct payment. You can ask to pay the money back in instalments, rather than all in one go.

You can contact HMRC by phone on 0845 3000 627.

If you want any help or advice please contact Zara Radford here at SW Payroll