| Enews - September 2006 | ||||||||
Introduction This month we include a variety of articles, quite a few of which look at the changes implemented by the new Employment Equality (Age) Regulations 2006 which come into effect from 1 October. We also report on guidance issued by HMRC on the changes to statutory sick pay. We also include our usual round up of news. Please have a look through the articles and get in touch if we can help. |
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National minimum wage changes
Many legislative changes are confined to April and October each year. 1 October 2006 sees the introduction of a number of changes not least of which are the increases to the national minimum wage (NMW) rates. The NMW rate has been increased with the rate for workers aged 22 and over rising by 30 pence to £5.35 per hour. Rates for workers under 22 increase by 20 pence to £4.45 and the rate for 16 - 17 year olds by 30 pence to £3.30.
HMRC won’t give opinions on trading status of companies For a number of years taxpayers or their agents have been able to approach HMRC for their views as to whether a company was a trading company for business taper relief purposes. Many advisers have used this facility to great effect to ensure the availability of the 75% reduction in the taxable gain. HMRC have now withdrawn the facility to ask for a pre transaction view and will only give an opinion after the transaction has taken place.
UK facing skills crisis Over the last few months we have reported how employers are finding it difficult to find employees with the relevant skills. According to the TUC the only way to solve the skills crisis in the UK is for businesses to provide more training to their employees. TUC research shows that one in three employers are not currently training their staff. The TUC suggests that employers should be providing literacy and numeracy skills as well as job specific training.
Recruitment and age discrimination The Employment Equality (Age) Regulations 2006 take effect from 1 October 2006. ACAS has published a free guide for business owners to help them deal with the regulations. The guide looks at key areas such as recruitment, appraisal, promotion, redundancy and retirement.
Age discrimination and PAYE The Employment Equality (Age) Regulations 2006 become law from 1 October 2006 and this has far reaching implications some of which we have reported on previously. HMRC have published some guidance which looks at the implication of the legislation on payment of some statutory payments which employers make. Payments affected include statutory sick pay (SSP), maternity pay and paternity pay. From 1 October 2006 it will be necessary to pay sick pay to those employees who are under 16 or over retirement age. SSP will be due as long as the employee satisfies all the other payment conditions such as the length of time they are off sick (known as a period of incapacity for work) and level of earnings. HMRC guidance clarifies the treatment of the situation where the employee is already sick before 1 October and gives examples. Statutory maternity and paternity pay will also be payable to employees under the age of 16 as long as they satisfy the level of earnings and length of service requirements. HMRC have published some guidance on the impact of these changes from a payroll perspective which is available from the link below.
Guidance issued on maternity pay changes As part of the Work and Families Act there will be some significant changes to maternity pay entitlement for women whose babies are due from 1 April 2007 onwards. The due date should be taken from the maternity certificate MATB1 which the woman obtains from the midwife when she is about 20 weeks pregnant. Women who qualify for statutory maternity pay (SMP) will be entitled to 39 weeks paid SMP. The first six weeks of their entitlement will be paid at 90% of their average pay. The remaining 33 weeks of the payments will be due at the lower rate of SMP which is currently £108.85. HMRC have published some examples which show how the new entitlement will be calculated.
Change for VAT treatment of mobile phones HMRC have published guidance for businesses which buy and sell mobile phones, computer chips and certain other goods which will change the way in which VAT is dealt with on these items by making the purchaser responsible for paying the VAT using a system known as ‘reverse charge’. This means that the purchaser will be responsible for paying the VAT on the purchase of the goods and then will generally be able to claim a deduction for the input VAT suffered on the goods purchased. This change in treatment is as a result of carousel fraud or missing trader fraud which is estimated to costs one to two billion pounds a year in lost VAT. HMRC had asked for EC approval to change the VAT treatment of these items and propose to implement the change with effect from 1 December 2006 which does not give much time for those businesses affected to get their systems working correctly.
Red tape is holding business back The Federation of Small Businesses (FSB) has joined forces with the Foreign Policy Centre (FPC) to campaign against regulations that they believe limit small business growth. The FSB has published a report that includes several key recommendations for the government that they should:
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