Category: payroll

Employment Allowance

HMRC allow most employers to get £3,000 off their National Insurance liability.

Unfortunately, if you employ someone for personal, household or domestic work you are unable to claim this as the employees are being employed in a personal capacity to support the running of a household.

It is important to know the rules otherwise you could end up paying back this money to HMRC.

You can claim on the following:

old age

mental or physical disability

past or present dependence on alcohol or drugs

past or present illness

past or present mental disorder

You cannot claim the Employment Allowance if you are employing a nanny unless the nanny is employed for an individual who needs care because of one of the reasons set out above.

To claim for the Employment Allowance, it will need to be submitted via payroll software by means of sending an EPS (Employment Payment Summary).

NMW National Minimum Wage 2020/21

From April the NMW (National Minimum Wage) rates are changing for the 20/21 tax year.

As an employer you must comply with the national minimum wage, if you do not you could end up in an Employment Tribunal or be reported to HMRC and face a fine of up to £20,000.

The new hourly rates for the tax year 2020/21 are:

  • Apprentice   – £4.15
  • 16 to 17 year old   –  £4.55
  • 18 to 20 year old   –  £6.45
  • 21-24 year old   –  £8.20
  • 25+   –  £8.72

If nanny lives in the family home and not separate accommodation provided by the employer, then the national minimum wage does not apply.

For live in nannies, there is a daily accommodation offset rate of £8.20 per day, £57.40 a week. These rates are set every April, so it is important to keep up to date with the new legislation. These rates are from April 2020.

For accommodation provided to nanny other than the family home, this will need to be declared as a Benefit In Kind.

Zero-Hours contracts

‘Zero hours contract’ is a non-legal term used to describe many different types of casual agreements between an employer and an individual.

Generally speaking, a zero hours contract is one in which the employer does not guarantee the individual any hours of work. The employer offers the individual work when it arises, and the individual can either accept the work offered, or decide not to take up the offer of work on that occasion.

Regardless of how many hours are offered, the employer must pay at least the National Minimum Wage.

Everyone employed on a zero hours contract is entitled to statutory employment rights. There are no exceptions.

A person will benefit from the employment rights associated with their employment status and individuals on a zero hours contract will either have the employment status of a ’worker’ or an ‘employee’.

Any individual on a zero hours contract who is a ‘worker’ will be entitled to at least the National Minimum Wage, paid annual leave, rest breaks and protection from discrimination.

Unpaid Parental Leave

Eligible employees can take unpaid parental leave to look after their child’s welfare, for example,

spend more time with their children

look at new schools

settle children into new childcare arrangements

spend more time with family, such as visiting grandparents

Their employment rights are protected during parental leave.

Parental leave is unpaid. Employees are entitled to 18 weeks leave for each child and adopted child, up to their 18th birthday.

The limit on how much parental leave each parent can take in a year is 4 weeks for each child (unless the employer agrees otherwise).

You must take parental leave as whole weeks (eg 1 week or 2 weeks) rather than individual days, unless your employer agrees otherwise or if your child is disabled. You don’t have to take all the leave at once.

Employees qualify if all of these apply:

they’ve been in the company for more than a year

they’re named on the child’s birth or adoption certificate or they have or expect to have parental responsibility

Employees must give 21 days’ notice before their intended start date. If they or their partner are having a baby or adopting, it’s 21 days before the week the baby or child is expected.

Employees must confirm the start and end dates in their notice. Unless an employer requests it, this doesn’t have to be in writing.

Nanny and Additional Employment

When nanny gets an additional job whilst still in your employ, it is her responsibility to make sure her tax codes in each employment are correct.

As an employer, you could always notify her of her tax situation in your employment and what should happen in her 2nd job. This way you have mitigated any risk of an under payment for nanny and potentially your costs increasing if you have agreed a net wage.

If you are nanny’s main job and have the tax code 1250L for her, if she gets another job, Basic Rate tax (BR) must be applied in her other job.  This can be indicated by nanny completing a starter checklist and ticking statement C –

https://public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///Applications/PersonalTax_iForms/1.0/SC&template=SC.xdp

 

Bank Holidays

Bank Holidays 2020

2020 is upon us and it is always handy to have a list of the bank holidays for the year and what day of the week they fall on.

These are the dates of the bank holidays in 2020 for England.
1 January Wednesday New Year’s Day
10 April Friday Good Friday
13 April Monday Easter Monday
8 May Friday Early May Bank Holiday
25 May Monday Spring bank holiday
31 August Monday Summer bank holiday
25 December Friday Christmas Day
28 December Monday Boxing Day

 

If a bank holiday is on a weekend, a ‘substitute’ weekday becomes a bank holiday, normally the following Monday.

It is worth noting that if nanny does not work 5 days a week that she is still entitled to bank holidays on a pro rata basis, for example if nanny only works 3 days per week then she is still entitled to 3/5ths of the 8 bank holidays whether her working day falls on a bank holiday or not.

Tax Year End Adjustments

As the end of the tax year approaches, are nanny’s payslips correct?

It is important to make sure that what is being submitted to HMRC is correct, and the P60 we will shortly produce is right.

Has nanny had a pay change that is not reflected on the payslip?

Have you given nanny a bonus recently?

Has nanny recently changed address or changed her name?

Always check nanny’s payslips as her tax code may have changed causing her net pay to differ

What are the regulations if nanny is a student?

If nanny is a student, they will still be subject to paying Tax and NIC on their salaries like normal workers if they earn above their personal allowance, which for the current tax year (19/20) is £12,500.00 gross per annum (£1,041.67 gross per month).  If nanny’s earnings are below this threshold then they will not be subject to tax deductions on their salaries.

Nannies over the age of 16 will need to have Employee National Insurance deducted.

Nannies who are students and come from overseas will not be able to get a National Insurance refund if they return home, even if they work in the UK for a short period of time.

The only way a foreign student nanny could get exemption from National Insurance is to produce either an A1, E101 or E120 certificate from a European Economic Area (EEA)

If your student nanny leaves the UK to return to their native country during the tax year, they may be able to claim back some or all of the Tax which they may have paid on their salary in the UK.  They would need to complete and return a form ‘P85’ to HMRC, including parts 2 and 3 of their P45 from their current employment. If nanny, has worked in the UK for a full tax year, then they will not be able to claim back the Tax which they have paid on their earnings.

The P85 form can be obtained by contacting HMRC directly.

 

https://www.gov.uk/tax-right-retire-abroad-return-to-uk

Nanny and Private use of Car

If you have provided nanny with private use of a car, you need to inform HMRC straightaway. The quickest way is to complete a form P46 car

By notifying them straightaway, they will reduce nanny’s tax code the month she is given the car.

Failure to tell them when she has the car, will mean her tax code will be coded incorrectly causing an under payment.

Even though you have notified HMRC of the car via a P46 car, you will need to complete a P11d and pay Class 1A National Insurance on the benefit amount.

Please see link below

www.gov.uk/tell-hmrc-company-car

RTI Real Time Information

RTI stands for Real Time Information and was introduced by HMRC in 2012. HMRC put this system into place so that every time an employee is paid, it is the employer’s responsibility to make a submission to them detailing this payment.

By employers using RTI, it enables HMRC to process any amendments to employee’s tax free allowance in real time rather than as done previously on previous years records and pass this information to Department for Work and Pensions. In turn this makes sure Universal Tax Credit claims are based on accurate figures of an employee’s income.

As an employer, if your payroll submission is not sent to HMRC on time, £100 fines will be issued. It is important as an employer to make sure all pay details are sent to HMRC on or before the date nanny is paid.