Posts From November, 2016

National living wage slowing pay growth 

The costs to employers of the national living wage (NLW) are expected to lead to a growth in average salaries of 1.7% in 2016, according to the Chartered Institute of Personnel and Development (CIPD).

A third of businesses surveyed estimated the NLW to raise average salaries by 2%, while 21% said it would lead in weaker pay awards.

Pay expectations are higher among smaller businesses in comparison to larger businesses and private sector organisations which average at 1%. 

21% of employers have cited the NLW as a reason for weaker pay growth; while 16% say that national insurance contributions are weighing down wages.

11% say that auto-enrolment will have a negative impact on basic pay.

Mark Beatson, chief economist at the CIPD, said: 

“Employers have to manage the consequences of government-imposed increases to the cost of employing people. 

“The national living wage and auto-enrolment were introduced to improve the living standards of low-paid employees, but this can only happen without significant job losses if the productivity of low-paid employees also increases.”

Talk to us today to discuss the NLW.

Posted by ANDREW AINSWORTH Saturday, November 26, 2016 8:52:00 AM Categories: News

NIC and income tax alignment could affect 40% of workers  

Two fifths of the working people would see their tax liability change under proposals to bring national insurance contributions (NICs) and income tax into closer alignment, according to the Office of Tax Simplification (OTS). 

The proposed changes would see employees taxed in the same way for both national insurance and income tax on the same earnings, while employers would pay a payroll based charge.

According to the report:

·         40% of the working population would be affected by the change

·         part-time employees, women and those under 35 would benefit

·         those earning more than £20,000 income would be worst off from the changes, particularly those with multiple jobs, higher incomes or in industries with bonuses.

Key proposals include:

·         moving employees NICs to an annual, cumulative and aggregated (ACA) system on employment income

·         charging employers NICs as a levy on total payroll costs

·         a more transparent NICs system

·         aligning IT legislation for IT and NICs so that charges are the same

·         bring taxable benefits in kind into class 1 NICs and abolish class 1A NICs.

Colin Ben-Nathan, chairman of employment taxes sub-committee at CIOT, said:

“Changing to an ACA system for employee NIC will produce losers as well as winners and so careful thought will need to be given to the transition, particularly to the effect on the lower paid.  

“One approach may be for the government to raise the primary threshold for employee NIC closer to the level of the income tax personal allowance so that the lower paid are properly protected.”

Contact us today to discuss how these changes may affect your business.

Posted by ANDREW AINSWORTH Saturday, November 26, 2016 8:50:00 AM Categories: Business Tax HMRC

The National Living Wage and the National Minimum Wage will increase from April 2017 

The National Living Wage for those aged 25 and over will increase from £7.20 per hour to £7.50 per hour. That means over £1,400 a year more for a full-time worker previously on the National Minimum Wage.

The National Minimum Wage will also increase:

  • for 21 to 24 year olds – from £6.95 per hour to £7.05
  • for 18 to 20 year olds – from £5.55 per hour to £5.60
  • for 16 to 17 year olds – from £4.00 per hour to £4.05
  • for apprentices – from £3.40 per hour to £3.50
Posted by ANDREW AINSWORTH Saturday, November 26, 2016 8:42:00 AM
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