Budget 2013 and Autumn Statement 2013 have sought to include a variety of tools to assist and support either employers or their staff. In this article we summarise the key changes that employers should be aware of in 2014.
From April 2014 most businesses and charities will be entitled to a £2,000 Employment Allowance per year towards their employer National Insurance contributions bill. This will particularly help small businesses who want to hire their ﬁrst employee or expand their workforce.
Employees and Employers National Insurance
The point at which employees and employers start paying National Insurance will once again be aligned from 2014/15 at £153 per week. This will make it much easier when setting budgets or when quickly checking calculations.
Statutory Sick Pay (SSP) Recovery
Historically, employers have been able to recover Statutory Sick Pay where it exceeded 13% of their total employee and employer Class 1 NICs liability for the month in question. Unfortunately, from 6 April 2014 the recovery of SSP will be abolished.
Tax exemption for employer-funded medical treatment
In light of the withdrawal of SSP recovery, the Government are introducing a tax exemption where employers have paid for medical treatments on behalf of employees. The tax exemption will apply to amounts of up to £500.
Personal Allowance and Tax Code 2014/15
The personal allowance for 2014/15 rises to £10,000 from £9,440 in 2013/14. This should mean most employees have a tax code of 1000L unless they have less straightforward circumstances, like they have adjustments in their code or multiple jobs/ pensions.
The Government has begun its TV advertising campaign on new legislation regarding workplace pensions with the slogan, “I’m in”.
Essentially, the new law means every employer must automatically enrol workers into a workplace pension scheme if they:
- Are aged between 22 and State Pension age
- Earn more than £9,440 a year
- Work in the UK
This is called ‘automatic enrolment’. A percentage of the employee’s pay is put into the pension scheme automatically every payday. In most cases, the employer and the government also add money into the pension scheme too.
Needless to say, with such an enormous change that will have an impact on both employees’ and employers’ income alike, auto enrolment is being phased in; with the largest employers going first.
From April 2014, it will be the turn of employers with under 250 employees to comply with the new rules.
From April 2015, employers with under 50 employees will start their responsibilities- although phasing in the smaller employers will be done much more gradually.
'Beneficial Loans' arise when an employer provides their staff with cheap or interest-free loans. The difference between commercial rates laid down by HM Revenue & Customs (HMRC) and those actually charged, are deemed to be a taxable benefit where the loan balance exceeds £5,000 at any point in the tax year.
Under current plans, legislation will be introduced to increase the exemption threshold for employer-related loans to be treated as earnings, from £5,000 to £10,000. These changes will take effect from 6th April 2014 and will cut down on the National Insurance bill and administrative burden for employers, and the tax bill of employees.
RTI Reporting Concession for Small Employers
Since April 2013, employers have been reporting PAYE information to HMRC in real time - referred to as Real Time Information (RTI). This means employers (or their accountant, bookkeeper or payroll bureau) send details to HMRC every time they pay an employee, at the time they pay them use payroll software.
HMRC has announced that existing employers with nine or fewer employees, who need more time to adapt, can report PAYE information on or before the last payday in the month until April 2016.
HMRC had given small employers with under 50 employees a similar concession, but this is due to come to an end on 5 April 2014. This new relaxation is much narrower and will only apply to existing employers with nine or fewer employees.
All new employers, as well as existing employers with 10 or more employees, will need to report PAYE information in real time from 6 April 2014.
Employee Shareholder Status
The Government introduced three new tax reliefs to encourage and promote indirect employee ownership:
- From April 2014, disposals of shares that result in a controlling interest in a company being held by an employee ownership trust will be relieved from Capital Gains Tax
- Transfers of shares and other assets to employee ownership trusts will also be exempt from inheritance tax providing certain conditions are met
- From October 2014, bonus payments made to employees of indirectly employee-owned companies which are controlled by an employee ownership trust will be exempt from income tax up to a cap of £3,600 per annum
We can help
If you would like to concentrate on running the business, we can assist you with complying with your duties as an employer.
Our payroll software is RTI-compliant and we’re able to offer our clients access to a pension scheme that is ready for auto enrolment. Needless to say, we can manage your day-today payroll requirements - even if your employees are on sick, maternity or paternity leave. We’ll also handle the payroll year end for you, including any benefits and expenses forms due.
Contact us today to find out more about our services for employers and how they can benefit your business on 0800 0523 555
By Jo Nockels
Last updated March 2014
Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.