As an accountancy business, we are often asked by our clients whether they can opt out of pension contributions. The answer to this question is, unfortunately, not a straightforward one. In the UK, workplace pensions are now a legal requirement for many employees. If you are an eligible worker, your employer must automatically enrol you into a workplace pension scheme. This means they must make contributions on your behalf. However, there are some circumstances in which you can choose to opt out of these contributions.

 

In what circumstances can I opt out of pension contributions?

If you are over 22 and under state pension age and earn more than £10,000 per annum, you are considered an eligible worker. You must therefore be enrolled into a workplace pension scheme. If you do not want to participate in this scheme, you can opt out within one month of being enrolled. If you opt out, you will no longer have to make contributions to the pension scheme. But, neither will your employer be making contributions on your behalf. So, basically, you’ll be losing ready money for your retirement.

As such, opting out of workplace pensions is never recommended. Doing this can have serious implications for your future retirement income. By choosing to opt out, you are giving up valuable contributions from your employer, and the opportunity to benefit from the tax relief provided by the government on your own contributions. Additionally, the value of the pension scheme and its benefits will be reduced over time. This means you may find it more difficult to save for your retirement in the future.

 

Take away

While you can opt out of workplace pension contributions, it is rarely a good idea. By participating in a workplace pension scheme, you can benefit from valuable contributions from your employer, tax relief, and the security of a retirement income when you reach retirement age. If you have any further questions about workplace pensions or would like to discuss your options in more detail, please don’t hesitate to get in touch with us.

As always, you can call us on 01243 782 423, or email us from our contact page to see how we can help!

We also update our YouTube Channel regularly with new content, see here: Lewis Brownlee YouTube channel

We’re all very excited this year because, of course, we have King Charles III’s Coronation coming up in May. Who doesn’t love an extra Bank Holiday! But, this has put in mind a question we get asked a lot as accountants. Can you be paid on a Bank Holiday? Here’s the answer!

Whether you can be paid on a bank holiday depends on your employment contract and the nature of your work!

In the UK, there is no legal requirement for employers to pay their workers on bank holidays. However, this is not to say that some won’t choose to do so. If your employment contract states that you are entitled to be paid on bank holidays, then you should receive your normal pay for these days. But, if your employment contract doesn’t mention them, then you likely won’t be entitled to be paid for bank holidays.

 

Where does enhanced pay or time off in lieu come into it?

If you work on a bank holiday, you may be entitled to receive enhanced pay or time off in lieu. This depends on your employment contract and the agreement between you and your employer. Some employees, such as those in the retail or hospitality industries, may be required to work on bank holidays. They may subsequently receive a higher rate of pay as compensation.

For workers who are entitled to statutory leave, bank holidays are treated as public holidays and are included as part of the minimum 28 days’ annual leave required by law. This means that if you work on a bank holiday, you may be entitled to time off in lieu or an alternative day off at a later date.

 

So, what is the verdict…

In short, whether you can be paid on a bank holiday depends on the terms of your employment contract. If your contract does not mention bank holidays, you may not be entitled to receive pay for these days. However, if you work on a bank holiday, you may be entitled to enhanced pay or time off in lieu, depending on your employment contract and the agreement between you and your employer. If you have any questions about your rights and entitlements on bank holidays, please don’t hesitate to get in touch with us.

As always, you can call us on 01243 782 423, or email us from our contact page and someone will be in touch!

We also update our YouTube Channel regularly with new content, see here: Lewis Brownlee YouTube channel

It’s hard to say with any certainty exactly what changes in payroll there will be this year. After all, it’s only March at the moment. However, we have asked our team of payroll specialists for what we might expect. So, to help you stay informed, we have compiled a list of the top ten changes they’re expecting in 2023.

1. Increase in National Living Wage and Minimum Wage

There will be an increase to the National Minimum Wage and National Living Wage rates as of April 1st 2023. So, employers who pay the lowest hourly rate to their employees can expect to be impacted by this.

2. Reduction in Additional Rate Tax Band

The new tax year will bring changes to the 45% additional tax rate threshold. It will be lowered from £150,000 to £125,140. So, more high earners can expect to have to pay more tax.

3. Increase in Statutory Sick Pay

Starting April 6th 2023, the Statutory Sick Pay rate will increase to £109.40 per week. That represents a 10.1% increase from the previous year. So, this change will affect employers who have to provide Statutory Sick Pay to their employees.

4. Increase in Parental Payments

From April 2nd 2023, there will be an increase in Statutory Maternity Pay, Statutory Paternity Pay, Statutory Shared Parental Pay and Statutory Parental Bereavement Pay. The latter will rise to £172.48 per week from £156.66 per week. Subsequently, employers who provide these payments to their employees will be affected by this change.

5. Reduction in Dividend Allowance

Starting April 6th 2023, the tax-free allowance for those who receive dividend income will be reduced from £2,000 to £1,000. Consequently, this change will affect individuals who receive dividend income.

6. Extra Bank Holiday

There will be an additional bank holiday on May 8th 2023 due to the coronation of King Charles III. While we all love an extra holiday this will need to be factored into payroll. So, this change will affect employers who have to provide paid time off to their employees on bank holidays.

7. Review of State Pension Age

In the early part of 2023, there will be a review of the state pension age currently set at 66. With the increase in lifespan, people will spend a larger portion of their lives receiving the state pension. So, reviews of the state pension age will likely be a regular occurrence. Consequently, we can expect to have to adapt to changes in payroll relating to this for some years to come.

8. Reduction in Auto Enrolment Earnings Threshold

Many individuals who belong to ‘under pensioned’ groups and earn less than the £10,000 auto-enrolment threshold may have to depend mostly on the state pension after retirement. Workplace pensions provider, Now Pensions, has proposed the removal of the £10,000 auto-enrolment earnings trigger. This could enrol 3 million employees from under pensioned groups into workplace pension schemes. So, we could well see the the pensions gap be reduced.

9. Replacement of UK GDPR

The Data Protection and Digital Information Bill, which proposes amendments to existing laws like the UK’s General Data Protection Regulation (UK GDPR), was introduced to Parliament on July 18th, 2022. The second reading of the bill has been postponed, with a date yet to be announced. This change will affect the storage and protection of employee data.

10. Technological Advancements

In recent years, we have witnessed significant advancements in technology. And, this trend is expected to continue into 2023 and beyond! Automated processes within payroll departments, including AI-based systems, could be introduced to streamline processes. Also, blockchain technology could be used for secure storage of employee data and payments.

Changes in payroll – the low down

It is important to keep track of changes in payroll each year as they can have a significant impact on businesses and their employees. From changes in minimum wage and statutory sick pay to reductions in tax allowances and increases in auto enrolment earnings thresholds, keeping up with these changes can help ensure compliance with government regulations and ensure fair compensation for employees.

Additionally, with the ongoing advancements in technology and potential changes in data protection laws, it is crucial to stay informed to make the most of new tools and processes to streamline payroll operations. As the government can be unpredictable, especially with frequent changes in tax policies and legislation, staying informed is key to being prepared for future events in the short and long term. We can help you there! So, when you’re ready, we’re ready.

Please do get in touch to see how we can help on 01243 782 423. Alternatively, you can email us from our contact page and someone will be in touch!

We also update our YouTube Channel regularly with new content, see here: Lewis Brownlee YouTube channel

The cost of living crisis in the UK is affecting millions of people. Rising prices for essentials such as food, housing, and energy are putting a significant strain on household budgets. As a result, many employers are asking what they can do to help staff during the cost of living crisis. In many respects it is a difficult question to answer and, in many cases, depends entirely on what a firm can afford. While many businesses will want to help, they may simply not be able to. However, keeping channels of communication open with staff is key. Sometimes, it is the simple and inexpensive ideas that have the biggest impact.

Here are some good ideas that businesses are currently using to good effect:

Flexible Work Arrangements

Allowing your employees to work from home or adjust their work hours can help them save on transportation and childcare costs. It can also reduce stress levels. By providing flexible work arrangements, you can help your employees manage their expenses more effectively.

Financial Assistance

Obviously, not all businesses will be able to do this but your business may consider offering loans, advance payments, or other forms of financial support to help employees make ends meet. This could include emergency grants or short-term loans, or even a salary advance. By providing financial assistance, you can help your employees avoid the need to take on high-interest debt or fall behind on their bills.

Increase Wages

If possible, you might consider increasing your employees’ salaries to help them keep pace with rising costs of living. While this may not be feasible for all companies, even a modest pay rise can make a significant difference to employees struggling to make ends meet.

Employee Discounts

Offering your staff discounts on products or services can help offset some of their expenses. This could include discounts on groceries, travel, or other essentials, or even access to a company vehicle at a reduced rate.

Benefits and Perks

Providing additional benefits such as health insurance, retirement plans, or paid time off can help reduce the financial stress on your employees. For example, offering a flexible benefits package that allows employees to choose the benefits that are most important to them can help them manage their costs more effectively.

Keep talking about the cost of living crisis

It’s important to keep an open dialogue with your employees about their financial concerns and to work together to find mutually beneficial solutions. Encouraging employees to share their experiences and ideas can help you identify new ways to support them during the cost of living crisis. By showing you care and are doing what you can (however insignificant that may seem to you), you can help your staff by remaining human and implementing measures to help where you can.  

Please do get in touch to see how we can help on 01243 782 423, or email us from our contact page and someone will be in touch! We also update our YouTube Channel regularly with new content, see here: Lewis Brownlee YouTube channel

As an accountancy business, we are often asked whether it is acceptable to pay staff cash in hand.’ This question is becoming increasingly relevant as the government cracks down on illegal employment practices and implements stricter penalties for employers who do not comply with the law. Here, our blog will explore the legal implications of paying employees in cash, and why it’s not the best choice.

 

It might sound good, but it’s illegal!

Paying employees in cash is illegal in the United Kingdom and contravenes the National Minimum Wage Act 1998. When employees are paid cash in hand, there is no record of the payment. So, no taxes or National Insurance contributions are paid on their behalf. This puts the employer at risk of penalties and fines from HM Revenue & Customs (HMRC) for failing to pay the correct amount of tax and National Insurance.

In addition to the legal consequences, paying employees in cash can also impact the employee. Without a record of payment, the employee may not be able to prove their income in the future. This can have serious implications including making it difficult to obtain a loan, mortgage or other financial products. Furthermore, employees paid in cash are not entitled to employment rights such as statutory sick pay, statutory maternity pay, and redundancy pay.

 

If it’s not ok to pay staff cash in hand, what’s the alternative?

As an alternative, it is recommended that employers pay their employees through the payroll system. This ensures that the correct taxes and National Insurance contributions are paid and the employee’s rights and entitlements are protected. Employers can also take advantage of the many benefits that come with using a payroll system, such as automated calculations and payments, and the ability to easily manage holiday pay and other entitlements.

 

In brief…

While it may seem easier, it is illegal and could result in serious consequences for both the employer and employee. Employers are strongly advised to use a payroll system to ensure that their employees are paid correctly and their rights are protected.

With the help of an accountant, employers can simplify the payroll process and reduce the risk of errors and penalties. Paying employees legally can help employers build a positive reputation and foster a supportive and fair work environment. It really is the only win-win scenario when it comes to paying staff properly.

 

If you are concerned about how to pay staff, or would like to find out more about what processes and practices your business should use, please do get in touch. We have experts in the field who can make sure your business accounts and payroll departments are operating efficiently and effectively, and in line with UK rules and regulations. So, when you’re ready, we’re ready!

Call us today on 01243 782 423. Alternatively, you can email us from our contact page and someone will be in touch!

We also update our YouTube Channel regularly with new content, see here: Lewis Brownlee YouTube channel