Welcome to the Summer 2018 Sigma Chartered Accountants Bulletin.
National Living and Minimum Wage Increases
On 6 April 2018 the legal National Living Wage increased by 4.4%, from £7.50 to £7.83. From 6 April, those aged:
- 25 and over are entitled to at least £7.83 per hour (previously £7.50 per hour)
- 21 to 24 are entitled to at least £7.38 per hour (previously £7.05 per hour)
- 18 to 20 are entitled to at least £5.90 per hour (previously £5.60 per hour)
- Under 18 are entitled to at least £4.20 per hour (previously £4.05 per hour)
Apprentices are entitled to the Apprentice rate of £3.70 per hour
- (previously £3.50 per hour) if they are:
- Aged under 19
- Aged 19 or over and in the first year of their apprenticeship.
- Apprentices aged 19 or over who have completed the first year of apprenticeship are also entitled to the age-related minimum wage:
- 19 to 20-year olds are entitled to at least £5.90 per hour
- 21 to 24-year olds are entitled to at least £7.38 per hour
- 25-year-old and over are entitled to at least £7.83 per hour.
The government introduced automatic enrolment in 2012 to help employees get the retirement they want. Since then, millions of employees, and their employers, have begun saving into a workplace pension.
It works by putting a percentage of the employees pay into a pension scheme automatically every payday. The employer also contributes a percentage. The employee gets a tax relief as the pension contribution is deducted before tax is calculated.
Increase in Contributions percentages
From 6 April 2018 minimum pensions contributions for employers and their staff increased from 2% to 5% and will then increase to 8% in April next year.
Telling your staff about the increase
You should let your staff know about the increases. An example letter template which you can amend can be found at the following link: http://www.thepensionsregulator.gov.uk/en/employers/phasing-what-do-i-need-to-do-to-set-up-these-increase.aspx
Online Personal Tax Accounts (PTA) – Help your employees to self serve to reduce payroll queries
- Online Personal Tax Accounts (PTA) have been available for all PAYE employees since December 2015; 15 million people are already using theirs.
- The accounts are a secure and simple way for your employees to manage their tax affairs online.
What can employees do with an Online Personal Tax Account (PTA)
- Print proof of their National Insurance number (handy for new employees completing new starter checklists)
- View and print a copy of the pay and tax details for the last 4 tax years, which may be required for mortgage or loan applications or tax credit applications
- Claim tax relief on business expenses, whether that’s for cleaning their uniform or replacing their tools
- Update the information HMRC hold on the benefits they receive, such as company car or medical cover
- Check their state pension situation – explore when they can start to receive it and how much they are likely to get
- Claim a tax repayment; if a customer has received a letter from HMRC advising that they’ve paid too much tax over the course of the year they can claim their rebate online. The full refund will be paid into their bank account within five working days
- For tax credits, they can check their payments, update HMRC with their current circumstances and complete their renewals.
To get started with PTA ask your employees to visit the following link: https://www.gov.uk/personal-tax-account
High Income Child Benefit Tax Charge
You may have to pay a tax charge, known as the ‘High Income Child Benefit Charge’, if you have an individual income over £50,000 and either:
- you or your partner get Child Benefit
- someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep
- It doesn’t matter if the child living with you is not your own child.
If you are already getting child benefit and the above applies you can
- stop getting Child Benefit – sometimes known as ‘opting out’
- carry on getting Child Benefit and pay any tax charge at the end of each tax year
If you choose option B you will need to file a self assessment tax return. If you don’t usually send a tax return, you need to register by 5 October following the tax year you need to pay the tax charge.
We hope you found the information in the bulletin useful and if you would like further information please feel free to call us on 0121 783 5392 or get in touch.