According to HMRC, travel from an employee’s home to their main office is not eligible for tax relief.

As the adoption of hybrid working models increases among office-based employees, there has been a significant discourse around whether trips to the office should be considered as ‘journeys in the performance of the duties of employment’.

Typically, travel expenses that are necessary for performing one’s job are eligible for tax relief.

However, HMRC maintains that commuting to and from the workplace, unless it is a temporary place of work, does not qualify for tax relief.

The rationale provided is that choosing to live at a particular location is a personal decision, and thus the costs associated with commuting from home to work are deemed personal expenses, not essential job requirements.

Nevertheless, HMRC has specified that if an employee performs substantial duties from home, as often seen in predominantly remote contracts, they may be entitled to tax relief for travel costs to the office.

This applies if such travel is necessary for the performance of their duties or is stipulated by their contract.

For those eligible, tax relief can be claimed at the following rates:

• 45p for cars and vans for the first ten thousand miles in each tax year
• 25p for cars and vans for each mile over ten thousand miles
• 24p for motorcycles
• 20p for bicycles

HMRC also offers a convenient online tool to help determine if individuals can claim relief on expenses incurred while performing their duties.

For further guidance on claiming tax relief on work-related expenses and to check your eligibility, please consult our expert team today.

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If you a business owner and are contemplating redundancies as a strategy for cost-cutting and restructuring, then you will need to understand the implications of these regulatory changes on your redundancy procedures.

What is the current legal framework?

Up until 5 April 2024, employees on maternity, adoption, or shared parental leave benefit from a ‘protected period’.

During this time, should they face redundancy, they have the right to receive offers of alternative employment ahead of other employees also at risk.

This alternative position must be suitable and must not be inferior in regards to their current role.

If you fail to offer such priority to your employees, the dismissal can be deemed automatically unfair.

You need to offer these priority positions even if you consider other candidates as more fitting for the role.

However, if the prioritised employee declines your offer, or if more than one vacancy exists, you may then extend the offer to other staff, provided you have reached an agreement with those in the priority group.

Are there any upcoming changes?

The extent of these regulations will widen from 6 April to include pregnant employees from the moment they inform their employer of their pregnancy.

Additionally, the protection period for individuals on maternity, shared parental, or adoption leave will extend to 18 months after the expected birth or adoption of the child.

It is important to note that this extended protection applies only if at least six weeks of the shared parental leave is taken.

How to implement redundancies under the new legislation

When you implement redundancies, it is crucial you prioritise those eligible for alternative positions correctly.

Redundancy consultation representatives must be aware of employees who have recently returned from maternity, shared parental, or adoption leave – this included the dates these leaves were taken, as well as any pregnant employees facing redundancy.

Once prioritised individuals have been considered for alternative roles, any remaining positions can be offered to other employees.

Is statutory redundancy pay changing?

You, as an employer, must ensure your employees who are not offered or refuse suitable alternative roles without just cause receive redundancy payments – this is provided they have been employed for a minimum of two years.

According to Government guidelines, redundancy payments should be calculated as follows:

• Half a week’s salary for each full year of service below 22 years of age
• A full week’s salary for each full year of service at 22 years of age or older
• One and a half week’s salary for each full year of service at 41 years of age or older, with a service cap of 20 years

Employees who decline these offered suitable positions, without a legitimate reason, forfeit their right to statutory redundancy pay.

If you would like guidance on business restructuring, reduction of cost, or the redundancy process, please get in touch with a member of our team today.

The post How will redundancy regulations for new parents change from 6 April? appeared first on Grunberg & Co.

As well as the added administrative duties to ensure you are paying the correct wage, the significant rises in the rates of pay are likely to impact your cash flow position.

Balancing the need for compliance and protecting your business from increased costs requires careful consideration.

We recommend seeking our advice to effectively evaluate your current business systems to identify the most-effective ways to manage an increase in costs.

What are the changes?

From 1 April, the National Living Wage (NLW) will expand to include those who are 21 years old.

Any employees affected by this change will need to be moved onto the NLW when necessary.

Here is a reminder of the new rates:

As well as an increase in the minimum wage, there will also be an increase in Statutory Sick Pay – the pay will rise from 6 April, increasing from £109.40 to £116.75.

The increase in these rates could also affect your payroll so you need to know what to do to avoid these risks.

The new rates of pay will take effect from 1 April for NLW and NMW, and 6 April for SSP – it is important you know how to protect your business before these dates.

For example, an inefficient payroll might lead to the underpayment of staff which could lead to reduced productivity and a loss in staff overall.

Here’s how you can maintain a successful payroll amongst rising rates of pay:

• Conduct an audit – it is important to conduct a full audit as it will assess your current process and identify opportunities where you can implement more effective procedures.
• Improve communication – catch-up with your payroll staff to ensure they are completing tasks on time and accurately or if they need more support.
• Check your data – sometimes these errors can occur due to incorrect employee onboarding information; make sure your employees regularly update their details in case their circumstances affect payroll.
• Train your employees – if you have an in-house payroll team, make sure they are full trained and are updated annually with any changes to legislation. You might choose to outsource your payroll instead which can help to free up valuable time, reduce ongoing costs and provide you with the knowledge your payroll will be accurate and timely – get in touch with our payroll experts for more
• Invest in payroll software – human errors are unavoidable so using payroll software will help to both prevent and identify errors. The software will make your payroll process more efficient and compliant whilst also reducing human input and overall increasing accuracy.

An efficient payroll allows you to pay your employees correctly and on time, all the time – seeking the advice of our experts will help to combat these potential challenges.

How can I protect my business against the changes?

The rising rates of payment for workers might present you with the challenge of balancing compliance with your tax obligations and profitability for your business.

Before the new rates come into effect from April, you should manage and minimise your costs through strategic planning.

Strategies you might consider include:

• Optimising staffing efficiency – you should analyse your peak and off-peak times to adjust your staffing levels accordingly. This will ensure you have sufficient workers to cope with any busy periods you encounter whilst not underpaying your staff during slow periods.
• Upskilling your employees – invest in your current team as this will enhance productivity and retain employees whilst increasing your employees’ capability. This will further increase the satisfaction of your customers and reduce recruitment costs – you need to implement technology to automate your mundane tasks (like processing orders or managing your inventory) as this will reduce manual labour costs and increase efficiency.
• Strategically adjusting your prices – any and all price increases must be clearly communicated and justified to customers to avoid deterring them.

It is important you comply with the new NMW rates as you risk financial penalties as well making possible back payments to your employees.

The changes made to these rates of pay might affect your employees – it is crucial you know how the changes will affect your business and what you can do to implement them before they come into effect.

Our experts can offer you tailored advice on how to adjust to the changes and minimise your costs to ensure compliance.

If you would like to know more about how the new rates of minimum wage and sick pay with affect you, please contact us today.

The post How will the rising National Minimum Wage and Statutory Sick Pay impact your business? appeared first on Grunberg & Co.

It does so by allowing a reduction in National Insurance Contributions (NICs), which helps to prevent cash flow challenges.  

Understanding Employment Allowance 

The Employment Allowance is a Government initiative designed to lower the annual employer NIC liability for eligible businesses. 

Currently, it allows a reduction in NICs of up to £5,000. Employers may claim this reduction in Class 1 NICs with each payroll cycle until they reach the full allowance or the tax year ends.  

Eligibility for Employment Allowance 

Eligibility for claiming the Employment Allowance is specific to certain businesses.  

Your business must incur some level of Class 1 National Insurance to qualify, excluding sole traders from eligibility.  

Eligible entities include businesses, charities, or community sports clubs that: 

• Employ staff and pay Class 1 NICs on their earnings 
• Have annual Class 1 NICs under £100,000 
• Belong to a group with combined Class 1 NICs below £100,000  

Notably, certain payments, such as those to contractors classified as ‘deemed payments’, do not contribute to the £100,000 threshold.  

Even if your total NIC bill falls below £5,000, you may still claim the allowance up to the total of your NIC bill.  

For businesses in Northern Ireland dealing in goods manufacturing or sales, it is important to ensure compliance with the ‘de minimis state aid’ allowance.  

How to claim Employment Allowance 

The process for claiming Employment Allowance depends on your payroll system.  

Users of the Basic PAYE Tools from HM Revenue & Customs (HMRC) can apply by selecting the ‘Employment Allowance indicator’ option when submitting their Employer Payment Summary (EPS).  

Those using alternative software should adhere to their provider’s prescribed process.  

Can I backdate Employment Allowance claims? 

Businesses have the opportunity to claim Employment Allowance for previous tax years up to a specified limit.  

Presently, claims can extend back to the four preceding tax years, starting from the 2018/19 tax year, with allowances applicable at the rates set for each respective year.  

The Employment Allowance was set at £3,000 annually for the period from 2016/17 to the 2019/20 financial years, before increasing to £4,000 for the 2020/21 and 2021/22 financial years.  

For the 2018/19 and 2019/2020 tax years, businesses are permitted to claim Employment Allowance regardless of the total amount of their Class 1 NICs or the level of de minimis state aid received.  

What are the benefits of claiming Employment Allowance? 

Claiming Employment Allowance aligns with HMRC’s objectives to bolster SME growth, offering: 

• Tax savings that can ease budget constraints and safeguard against unforeseen expenses 
• Improved cash flow, facilitating investment in business development or expansion 
• Encouragement for employment, supporting both business growth and workforce development  

We can help you claim Employment Allowance  

While claiming Employment Allowance is relatively straightforward, our team is ready to assist you in navigating the complexities of payroll management and enhancing your business’s tax efficiency.  

We offer support in determining your eligibility for Employment allowance and incorporating these savings into your broader financial strategy.  

Get in touch with our team today for expert advice.  

The post Am I eligible to claim Employment Allowance for my business?  appeared first on Grunberg & Co.

In the spirit of National Apprenticeship Week, we’re sharing how taking on an apprentice can support your business goals.

Improved staff retention

Did you know that 80 per cent of employers have a higher retention rate from offering apprenticeships?

According to St Martin’s Group’s findings, offering apprenticeships can boost staff loyalty, with 92 per cent of employers also seeing an increase in motivation.

Low retention rates are a common obstacle that businesses have to face. So, the fact that apprenticeships can improve loyalty and enhance efficiency makes them a good solution to this barrier to growth.

A diverse workforce

Further education isn’t for everyone and some people don’t thrive in an academic environment. But it’s essential to remember that this isn’t an indicator of intelligence or ability to work within your sector.

By providing an alternative route to employment, you can build a team that reflects the qualities that are important to you and will support your business goals.

You’ll also be creating a team with a diverse range of experiences, ideas and viewpoints, which are crucial for well-rounded decision-making.

Economical training

To reflect the investment of time and resources to train apprentices, the National Minimum Wage for apprentices is lower than other workers.

The National Minimum Wage for apprentices is currently set at £5.28 per hour but will rise to £6.40 per hour from April 2024.

With 77 per cent of first-year apprentices being aged 19 or over, they would need to be paid at least £8.60 per hour from April 2024 if they were in regular employment. For individuals aged 21 and over, they would be paid £11.44 from April.

By offering the opportunity for high-quality training alongside this wage, you can upskill the trainee and have lower labour costs – making the apprenticeship beneficial for both you and the trainee.

However, you must take into account that you can offer more than the apprentice rate, and in a competitive market, you should consider doing so.

Building life-long skills

If you operate in a specialist sector, such as agriculture or engineering, it can be challenging to find recruits with the required skills for your business.

Offering an apprenticeship scheme means you can fill the skills gap, and train apprentices with the know-how of how to succeed in your industry.

Again, this is a more cost-effective method for training a team that can further your business and help you achieve your goals.

Considering taking on an apprentice?

If you are considering taking on an apprentice, you may be eligible for financial support from the Government apprentice funding.

This is designed to support the cost of training and assessment and training.

The Government also supports businesses with apprentices through the Apprenticeship Levy.

If your annual wage bill is less than this £3 million, you will not pay the levy. All businesses with a wage bill over this threshold are required to pay this.

If you are not required to pay the levy, you will only be required to pay five per cent of the cost of training and the Government will pay the remainder, up to the maximum funding amount allocated to that particular band.

You must understand what funding is available to you and how this would impact your business before training an apprentice on.

Contact us for advice on managing your business’s finances to support your apprenticeship scheme.

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It is essential you understand maternity pay and how to successfully incorporate it into your payroll to benefit both you and your employees.

You might feel uncertain about maternity pay and what your obligations are, but we are here to help you navigate the process and ensure you payroll successfully.

Statutory maternity pay

Statutory maternity pay (SMP) is paid to an employee by an employer and is payable for up to 39 weeks.

Your employee, however, is entitled to a maximum of 52 weeks leave.

By using the Payroll Manager software (recognised by HMRC), your employee will quickly know if they are entitled to SMP based on automatic calculations.

If you do not have this software, you should seek expert advice using our friendly team by getting in touch today.

The amount of SMP your employee will get is based on how long they have worked for you and how much they are paid.

Roughly, their average weekly pay should be above £123 (for 2023/24) and they should have worked for you 26 weeks prior to the qualifying week (the qualifying week is 15 weeks prior to the expected birth date).

SMP is payable at 90 per cent of the employee’s average weekly pay for six weeks and then at a rate of £172.48 (for 2023/24) or 90 per cent of the average weekly wage (whichever figure is lower).

It is important your employee informs you of the date they wish their leave to begin and how many weeks maternity leave they wish to take.

They should also provide you with a MAT B1 form; this is medical evidence of their pregnancy and helps you to payroll their maternity pay properly.

Enhanced maternity pay

As well as offering SMP, you might also offer your employees ‘enhanced’ or ‘contractual’ maternity pay.

For example, your employee might get 26 weeks of full pay followed by 13 weeks of SMP.

As their employer, you need to ensure your employees’ contract reflects the conditions of enhanced maternity pay.

These include:

• If your employee is entitled to enhanced maternity pay
• The amount of pay they will get
• How long they get it for

If you choose, you can pay more to your employees but you need to make sure your payroll reflects this.

Offering your employee enhanced maternity pay might mean they have to repay some or all of the enhanced amount (which is anything more than SMP).

Reasons might include:

• If they do not return to work
• If they leave shortly after maternity leave

It is important you set out these regulations to your employee as this could have a significant impact on your payroll if you don’t.

Employer pension contributions whilst on maternity leave

Your employee could be a member of a workplace pension scheme, which can add challenges to your payroll.

As their employer, you should still pay pension contributions based on their pensionable earnings before they go on their maternity leave.

Make sure you seek advice to pay your obligations successfully as this could impact both your payroll and your employee.

You must gain a clear understanding of how to correctly payroll maternity pay to ensure a period of rest and development is available for your employees.

Every situation is unique and so you must seek tailored financial advice to ensure there is specialised financial support for your employees.

If you would like to discuss maternity pay with an expert, contact us now.

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In short, if you are running an apprenticeship scheme (employing apprentices), you need to understand how much to pay them and the extra measures your payroll department should undertake.

They’re not like regular employees. They are often – though not always – younger members of your team, so have their own rights under employment law and must be accounted for slightly differently.

Apprentices vs regular employees

There are major differences between employing apprentices vs regular employees.

Apprenticeships are structured training programmes designed to provide individuals with skills and qualifications specific to their chosen industry.

You may be receiving financial incentives and Government support for hiring apprentices, which is often a bonus for your business (more on this later).

When it comes to pay, apprentices typically receive a lower minimum wage, but this increases as they progress through their training.

Regular employees, on the other hand, are hired under standard employment contracts and receive the National Minimum Wage (NMW) or higher, depending on their age and experience.

Here are the wages (per hour) you are legally obligated to maintain from 1 April 2024:

• Aged 21 or over (National Living Wage (NLW)) = £11.44
• Aged 18 to 20 (NMW) = £8.60
• Under 18 = £6.40
• Apprentice = £6.40

As you can see, an apprentice is entitled to the same pay as an individual under the age of 18 but is not entitled to the full NMW or the NLW.

Can you pay an apprentice more than the minimum?

Yes.

Often companies will do this to make their apprenticeship scheme more competitive and to promote loyalty amongst their workers.

So long as their wage is £6.40 per hour, or above, you are within your right to pay your apprentice as much or as little as you like.

How does payroll differ for apprentices?

Your requirements under payroll differ slightly from when dealing with regular employees.

At first, the apprentice is entitled to the apprentice wage (£6.40), but this increases when the apprentice has completed their first year and is over the age of 19.

At this point, they are entitled to either the NMW (between 19 and 20 years old) or the NLW (21 and over).

So, if you are employing an older apprentice, this is something to consider.

If you are employing an apprentice you will need to establish a formal apprenticeship agreement with apprentices, outlining the terms and conditions of their training.

This is separate from the standard employment contract.

Additionally, apprentices are required to dedicate a portion of their time to off-the-job training or education, which the employer must facilitate and cover the costs for.

Larger employers may be subject to the Apprenticeship Levy, contributing to the funding of apprenticeship training nationwide.

What does the Government say about apprenticeships?

The Government states that apprenticeships must last at least a year but can take up to five years depending on the level being studied.

You are responsible for ensuring your apprentice(s) learns ‘job-specific’ skills, gets time off during their working week to complete out-of-work training, and that they work with an experienced staff member.

The Government does offer financial support for apprenticeship training.

You may be eligible for payments of £1,000 based on the apprentice that you hire.

The amount of funding you can receive depends on whether your business is subject to the Apprenticeship Levy or not.

If you don’t pay the Apprenticeship Levy, you must contribute five per cent towards training costs, agree on a payment schedule with the training provider, and pay them directly for training.

The Government covers the remaining 95 per cent, up to the funding band maximum.

For apprentices who began before 1 April 2019, employers contribute 10 per cent, and the Government covers 90 per cent until the apprentice completes their training.

If an employer pays the Apprenticeship Levy, they receive funds for training and assessment, with an additional 10 per cent contribution from the Government.

Who pays the Apprenticeship Levy?

As an employer, you have to pay Apprenticeship Levy each month if you:

• Have an annual pay bill of more than £3 million.
• Are connected to any companies or charities for Employment Allowance purposes and have a combined annual pay bill of more than £3 million.

When should you get your accountant involved?

As you can see, apprenticeships are slightly more complicated than hiring regular employees.

As such, we always recommend telling your accountant if you are planning to/ already hire apprentices.

We can look at your finances and tell you if it’s the right option for your current business model.

Furthermore, if you are worried about the payroll obligations of hiring an apprentice, we can guide you through the process or even handle the whole affair for you.

Either way, it is always advisable to speak to your accountant sooner rather than later when it comes to apprenticeship matters.

To speak to an experienced accountant or payroll specialist, please get in touch with one of our team.

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We have been working closely with many of our clients to help break down the key aspects of these changes and offer tax advisory insights to help them prepare for what lies ahead.

Here’s some of our thoughts on the subject.

Changes for employees

From 6 January, a significant change in NICs will come into effect for employees.

Previously, the NIC rate stood at 12 per cent on earnings between £12,571 and £50,270.

However, this rate is being reduced to 10 per cent, potentially saving the average full-time wage earner around £450 annually.

Most analysis, however, points out that the NICs reduction will only incur higher taxes later down the line, so the actual benefit to employees is likely to be minimal.

Impact on the self-employed

Self-employed individuals are also facing alterations in NICs.

Starting from 6 April 2024, self-employed professionals will pay eight per cent on profits falling between £12,571 and £50,270, down from the previous nine per cent rate.

Additionally, the separate Class 2 NIC contributions will be eliminated.

For those earning £28,200, these changes could result in savings of approximately £350 per year.

National Insurance thresholds

The government has also decided to freeze the National Insurance threshold at £12,570 until 2028.

As wages increase, more employees will find themselves liable for National Insurance payments.

This has implications for SMEs, particularly when hiring new staff or considering salary adjustments.

The wider tax landscape

It’s not just National Insurance that’s changing.

The freezing of thresholds for both National Insurance and Income Tax until 2028 will result in 3.2 million more taxpayers and 2.6 million higher-rate taxpayers by 2028.

This policy aims to generate an additional £25.5 billion a year by 2027-28.

For employees earning £35,000, this could translate to an extra £440 in direct tax annually by 2027-28.

Preparing your business

As an SME business owner or entrepreneur, what can you do to prepare for these changes?

• Review your payroll: Ensure your payroll system is updated to reflect the new NIC rates for employees and the self-employed. Compliance is key to avoiding penalties.
• Consider compensation strategies: As thresholds remain frozen, consider the impact on your employees’ take-home pay. Exploring compensation strategies can help retain and attract talent.
• Financial planning: Consult with tax advisors to assess the broader financial implications for your business. Understanding the tax landscape is crucial for strategic decision-making.
• Stay informed: Tax policies evolve, and it’s vital to stay informed about future changes that may affect your business. Regularly engage with tax experts to stay ahead of the curve.

As an SME business owner or an entrepreneur, being prepared is the key to navigating these alterations successfully.

By understanding the impact on your payroll, tax liabilities, and bottom line, you can make informed decisions to ensure your business remains resilient in the face of evolving taxation.

If you have specific questions or require tailored advice for your SME, don’t hesitate to reach out.

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This figure is a decrease of 11 per cent since July, even though the furlough scheme is due to end on 30 September 2021 and, after this date, employers need to decide whether to pay all their workers’ wages or let them go.

August 2021 was the first month companies had to pay 20 per cent of their staff’s wages if they were on furlough, along with their pension and National Insurance Contributions (NICs).

During the worse months of the pandemic, where unemployment was highest, companies proposed 150,000 job cuts a month, revealed the Insolvency Service.

If employers plan to make 20 employees or more redundant, they have to notify the Insolvency Service when they start the process.

Recent data revealed that 1.9 million workers were still on the furlough scheme at the end of June 2021, and many experts expected these workers to be made redundant.

However, as mentioned, August saw the lowest amount of redundancy proposals so far this year.

Due to this data, the once forecast unemployment rate in autumn may be smaller than expected – says the Director of the Institute for Employment Studies, Tony Wilson.

For more information or advice on related issues, please contact our team today.

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• Flexible working: pending a consultation, flexible working will become the default unless employers have good reasons not to offer it. This will introduce a wide range of arrangements over the time and place of work, such as home working, job-sharing and flexitime – benefitting both disabled workers and carers.
• Statutory leave: The Government will “progress a commitment” to introduce a statutory leave entitlement for an extra week of unpaid leave per year, to help support unpaid carers with their additional responsibilities.
• New advice hub: the new service will provide “clear advice” to both disabled people and employers on employment rights, such as discrimination in the workplace and reasonable adjustments.

Commenting on the strategy and the launch of the new advice hub, Business Minister Amanda Solloway said: “We want the UK to be the best place in the world to work and do business for everyone – and removing the barriers disabled people face will be critical if we’re to meet that goal.
“From the new employment advice hub to Carer’s Leave, we hope these changes will make a real difference to the working lives of disabled people and carers.”
Acas Chief Executive, Susan Clews, added: “Our new hub explains how the law protects disabled people from discrimination at work and the basic rights that they are entitled to.
“It is also a great resource for employers to help them create diverse, inclusive workplaces that are welcoming to disabled people and promotes equal opportunities for all employees.
“Advice on the hub includes tips on how to prevent disability discrimination, how to make reasonable adjustments and how employees can raise complaints about disability discrimination at work.”
According to the latest statistics, disabled people have an employment rate that is 28.8 per cent lower than that of people who are not disabled. This difference is known as the “disability employment gap”.
Click here to access the National Disability Strategy, or click here to access the new advice hub.
For help and advice with related matters, please get in touch with our expert team today.

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