Mercer & Hole’s Business blog - HR- Human resources

The Government has issued a consultation paper on its proposal to create a new employment status which is intended to give businesses greater choice about the contracts they can offer to staff. The paper states the Government is aware that businesses need flexibility and freedom to allow them to grow and take on staff.  In particular, the government perceives a need to remove the fear of being taken to employment tribunal which it believes is deterring businesses from hiring.  Businesses are currently free to choose the best arrangement for their circumstances in relation to the type of contracts...

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Employers with 50 or more employees have been required to file online employee starter or leaver forms since 6 April 2009. HMRC announced, in February, that they would begin to issue penalties to such employers who had not filed the forms online in the period 6 January 2011 to 5 April 2011. The first penalty notices will be issued on 26 April 2011 and will range from £100 to £3,000 depending on the number of forms which should have been filed. Future penalty notices will be issued after the end of the quarters ended 5 July, 5 October, 5 January and 5 April. Other employers, with fewer than 50 employees, are required to file...

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HMRC has now published an Employer Helpbook giving full details of the various rates and limits for PAYE and NIC for the current tax year. Full details can be found on HMRC’s website. Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Cathy you can call her on 01908 605552. Email Cathy Corns  ...

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HMRC has accepted that employers may be able to reclaim some Class 1A National Insurance Contributions (NIC), that is, the NIC paid on benefits in kind. Where an employer provides an employee with a benefit in kind that has mixed use – i.e. the benefit is used for both private and business purposes, e.g. a telephone – an income tax deduction is available in respect of the business use so the taxable benefit relates only to the private use. However, such deductions are ignored when calculating the Class 1A NIC due....

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HMRC has recently launched ‘Basic PAYE Tools’ to help employers run their payroll systems.  This online resource replaces the Employer CD-ROM. It, apparently,  includes all of the CD-ROM’s interactive features plus an automatic update facility. Employers who have used the CD-ROM will now need the new tools for the rest of this tax year and for future tax years. The tools can be downloaded by visiting the Business Link website. HMRC has 'strongly recommended' that employers keep up to speed with PAYE developments by signing up to...

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Just in case you missed the announcement from HMRC, from April 2011, Class 2 National Insurance contributions will be payable on 31 January and 31 July, the same dates as Self Assessment tax bills. You should receive two payment requests from HMRC in the year, in October and April, showing payments due to 31 January and 31 July respectively. If you already pay by direct debit, your payments will be delayed by HMRC to bring the payment dates into line. This means that: For the first year only, monthly Direct Debits will stop for a short period and then start again. Class 2 contributions due for April 2011...

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Just a reminder that the increases in the rate of National Insurance contributions take effect from 6 April 2011. The changes include: An increase in the main rates of National Insurance contributions paid by employees and the self-employed by 1% to 12% and 9% respectively. An increase in the additional rates paid by employees and the self-employed by 1% to 2%. An increase in the employer rate of National Insurance contributions by 1% to 13.8%. You may want to look at timing on any substantial bonuses. Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the...

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A recent tax case has thrown up a worrying issue. A company paid its employees by way of dividends from a special purpose company. HMRC tried to tax the dividends under PAYE – and lost. The dividends were taxed as dividends not income, at the relevant (lower) rates. However, the Court held that the dividends should be subject to National Insurance. What does this mean going forward? Although it has to be said that this case did involve deliberate manipulation to convert remuneration into dividends, could this be the start of HMRC trying to collect National Insurance on other dividends?...

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With the proposed increase in national insurance contributions approved employee shares are becoming a popular way of delivering a tax effective incentive to reward key employees for performance and loyalty. From an employer’s perspective share schemes can be a low cost option particularly bearing in mind the national insurance costs on delivering a comparable sum by way of bonus. For the employees the schemes can deliver capital gains with rates capped at 28% and the possibility of entrepreneurs relief for some minority shareholders bringing this down to 10% as opposed to income tax and NIC rates set to be a...

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There was a lot of speculation about national insurance costs leading up to the emergency Budget and now that the dust has settled the position is clear. The threshold at which contributions start to become payable will increase by £21 pw over inflation BUT there will be a 1% increase in employees and employers contributions from 6 April 2011. The increase in the threshold will save £120 pa for employees but for anyone earning more than £12,012 over the threshold there will be an absolute cost. In broad terms this means that anyone earning over £19,000 will be paying more national insurance personally....

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