Tag Archives: PAYE

national minimum wage increase October 2016

National Minimum Wage increases from 1st October 2016

As they do every year, the National Minimum Wage (NMW) rates will increase on 1st October 2016. If you run a business and employ staff, you need to be aware of the changes and introduce them in your first payroll period following the introduction.

The Government regularly name and shame employers paying less than the minimum wage. Worse still that the potential bad press for your business is the penalty for non-compliance – up to £20,000 per worker.

 

National Minimum Wage Rates from October 2016

From next month the new rates of NMW will be:

  • 21-24 year-olds – £6.95/hr (up from £6.70/hr)
  • 18-20 year-olds – £5.55/hr (up from £5.30/hr)
  • 16-17 year-olds – £4.00/hr (up from £3.87/hr)
  • Apprentices – £3.40/hr (up from £3.30/hr)

The recently introduced National Living Wage for workers aged 25 and over, remains at £7.20 per hour. The Low Pay Commission will be making a recommendation to Government in the Autumn on the rate which should apply from April 2017.

As well an increase in employees net pay, you’ll see an increase in your monthly PAYE bill. The overall cost increase to employ a full time worker aged between 21-24, will go up by around £590 extra per employee per year (£520 in gross wages and another £70 on Employers National Insurance Contributions).

 

Tax breaks for employees

.Over the past couple of years, you have no doubt seen companies advertising that they will reclaim tax for you if you had to pay for uniforms for work, or spent money travelling for work. There’s nothing wrong with what these companies are offering, however they do take a hefty enough chunk of any payment you are due back. For the most part, it’s simply a case of filling out a single form.

So what can you claim for and how do you go about it?

Uniforms/work clothes & tools

You are allowed to claim for the cost of cleaning, repairing or replacing uniforms or specialist work clothing or specialist tools you had to buy for your job. However, you are not able to claim for the initial cost.

You can either claim for the actual cost of these expenses or, HMRC has a table of flat rates for each occupation that you can use instead. You are fully entitled to claim the higher amount.

Mileage

Most people are aware that when you use your own car to travel for work purposes (not travelling to work from home, or vice-versa), your employer can pay you a mileage rate. This payment is tax free so long as it isn’t more than the approved HMRC rates (currently £0.45). But what if your boss pays you less than this rate (which he or she is perfectly entitled to do)?

Well, the HMRC rates are deemed to be the cost incurred per business mile – an average of total fuel costs, insurance, road tax, wear & tear, depreciation, tyres etc. So if you don’t get the full 45p per mile, in the taxman’s eyes you are out money. As such, you are allowed to claim tax relief on this difference.

If you do very few business miles, this isn’t going to be worth your while. However, as an example, if you do 5,000 miles a year at a mileage rate of 25p, you have incurred costs of 5,000 x 20p which is £1,000. For basic rate (20%) taxpayers, that equates to £200.


Professional Fees & Subscriptions

If you have to pay a subscriptions or membership fee to certain approved organisations either because it is a requirement of your job or is helpful in your job, you are entitled to claim tax relief on this. Your organisation must be on the list of approved professional bodies and you can’t claim any relief if your employer covered the cost.

How to claim

If the total of your expenses is less than £2,500 (and you don’t currently fill in a tax return) you need to submit form P87. If your claim is for more than this amount you must claim on your tax return, even if you don’t currently file one.

Now for the good news – you can go back up to four tax years to make a claim.

If you think you have incurred expenses for work and I haven’t mentioned it, have a look at the HMRC guidance on this. As a rule however you should be able to claim for any expenses which were incurred “wholly and exclusively” for work purposes.