Author Archive
Employment Law – what changes in 2013 and beyond
We are grateful to those all round good eggs (after all it is Easter soon) at Wragge & Co for publishing a snapshot of the employment reforms that are on the horizon.
Click here to see the snapshot.
Steve Clark
Give your employees a pay rise at no cost to you. Here’s how!
With the Eurozone in continued crisis, more cuts on the way and talk of a triple dip recession; keeping the lid on business 
finances is vital. But how does that affect your employees?
In many businesses April is pay review time. How will your employees feel if their take-home pay is falling in real terms? It seems that all but the top performers and job hoppers have seen their spending power fall in recent years with little prospect of recovery.
Fed up employees impact on your bottom line. Whether it is failing to come to work with their A-game, distracting others with their tales of woe or the simple act of quitting to go to a better paid job, they can undermine productivity and stop your business reaching its potential.
So its a delicate balance, as always, between payroll and profit and loss. However, if you’re looking to reward your employees there is another way. Employee benefits are a great way of putting money in your employee’s pockets without increasing your costs. In some instances it can actually end up saving you money.
Perhaps the best route to achieving this is through salary sacrifice – something many overlook. Both the employer and employee can benefit in the form of NI savings and/or reduced tax. Here’s a quick run through of how it works.
- Decide which benefits you want to offer your employees. These can be childcare vouchers, pension contributions, medical cash plan, cycle to work schemes, cars, laptops or wider benefits.
- Find a benefits platform to administrate your scheme. This part will cost you but don’t worry their fees will normally come out of the money you’ve saved in National Insurance and tax.
- Offer your employees the chance to voluntarily reduce their salary by the value of the benefits they want. These are then paid directly by the employer.
The recent changes to Child Benefit for higher earners means that some of your affected employees could end up getting some of their Child Benefit back if they use salary sacrifice.
As with any benefit, salary sacrifice needs careful explanation and communication to your employees. They will need to think about the impact of giving up salary in favour of benefits. In some instances they’ll need to get financial advice.
Sounds a good deal doesn’t it. Now if only you could find a company that’s interested in your business, can help you deal with all this, select a provider, source the benefits, communicate with your staff and give financial advice to your employees. The great news, if your reading this, is that you already have. 44 Financial have many years of experience of working with businesses like yours to install salary sacrifice schemes.
If you want one of our consultants to contact you simply click here.
Steve Clark
Budget Bad News for Final Salary Employers
In our recent article we wrote about the impending extra National Insurance costs that faces employers with final salary pension schemes.
This is going to disproportionately affect those employers who participate in public sector pension schemes – not all of whom are public bodies.
In his Budget yesterday George Osborne announced that these employers will start to pay more from 2016. This is a year earlier than we had anticipated. Osborne called it a ‘progressive pension reform’ although for many beleaguered employers in public sector schemes this will be a moot point.
At a time of massive cuts those employers who find themselves participating in public sector schemes as a result of outsourced arrangements may find this another bitter pill to swallow on top of funding and deficit rate increases.
Steve Clark
Time is running out for Child Benefit Opt Out
The tax man announced that if you want to to stop receiving Child Benefit to avoid a High Income Child Benefit Charge (HIBC) you have to do it by Thursday 28 March 2013.
This is earlier than anticipated and may catch some higher rate tax payers on the hop. Many people thought the deadline would be 5 April to fall in line with the tax year.
if the individual wants to prevent a High Income Child Benefit charge (HICBC) being assessed on the person with the higher income.
What’s the problem?
Broadly, you might be liable to this new tax charge if you, or your spouse, civil partner or partner (who is not married but who is living with them), have an individual income of £50,000 or more and one of them receives Child Benefit. If both of you have an income of £50,000 or more, the charge will apply solely to the partner with the highest income.
This means you have to decide whether to opt-out from receiving Child Benefit if you are affected. If you do, your Child Benefit will be stopped immediately. If not, you’ll continue to receive Child Benefit, but the tax man will reclaim some or all of it from your income at the end of the tax year.
Even if you decide to opt-out from receiving Child Benefit you must still register to get a self-assessment tax return by 5 October this year. That means you have to declare your Child Benefit by 31 January 2014, so that the tax man can reclaim the benefit received between January and April 2013. If you don’t declare this it’s likely you’ll receive a penalty.
What do I need to do?
If you wish to opt-out from receiving child benefit you should take action as soon as possible.
There are ways in which you can hang on to some or all of your Child Benefit by making a pension contribution or charitable donation. If you’d like to chat through your options click here to arrange a meeting.
Steve Clark
44 Financial Limited is authorised and regulated by the Financial Services Authority. The information contained in this article is general information only and any suggested actions may not necessarily be suitable for everyone.If you are unsure please seek advice. The Financial Services Authority does not regulate National Savings or some forms of mortgage, tax planning, taxation and trust advice, offshore investments or school fees planning. The information contained within this site is subject to the UK regulatory regime and is therefore targeted primarily at consumers based in the UK.
Copyright 2013
Royal Mail happy with 16% opt-out
Royal Mail has confirmed only a 16 per cent of it’s 15,000 weekly paid employees chose to opt-out of workplace pension provision. This is lower than Royal Mail thought they’d get but higher than some companies who have already gone through the process.
Only recently we commented on Asda’s announcement that they had achieved an 8% opt-out rate. You can read more here. The opt-out rates in these larger employers is much lower than many industry commentators had anticipated. Some commentators had anticipated 20%-30% opt-outs.
Some interesting feedback from Asda was that the average age of those opting out was 47. It looks like there may be a core of people who are die hard non-savers who will still opt-out. Getting these individuals to save may prove to be a challenge only achievable by the removal of the opt-out.
Our view is that as the staging dates apply to employers with less employees we’ll see the opt-out rate increase. Smaller employers are unlikely to be able to afford the kind of communications exercise that the Royal Mail and Asda undertook.
It’s all fascinating in a kind of nerdy way! Watch this space.