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Don't be an April fool...

Weightmans is urging clients to ensure their affairs are in order as a number of legislative and regulatory changes come into force this April.

Weightmans is urging clients to ensure their affairs are in order as a number of legislative and regulatory changes come into force this April.

Experts from the firm’s Employment, Pensions & Immigration, Corporate, Education and Private Client teams have provided some top tips to ensure you can navigate the April changes as easily as possible.

Consequences can be severe for organisations that choose to disregard the changes, and are advised to seek legal advice to ensure adherence where appropriate.

1 April

Business rates revaluation

From 1 April 2017, small business rate relief will be doubled from 50% to 100% and extended to properties with a maximum rateable value of up to £15,000. Businesses with a property that has a rateable value of £12K or less will receive 100% relief whilst businesses with a property that has a rateable value of between £12 - 15K will receive tapered relief. The threshold for the standard business rates multiplies will also be increased to £51K.

To alleviate the impact of the business rates revaluation in additional to the already announced £3.6bn transitional relief fund:

  • Pubs with a rateable value of under £100K will receive a £1K discount (for this year only)
  • Businesses who as a result of the revaluation lose Small Business Rate Relief will have their increases capped at £600 (£50 per month); and
  • The government will provide £300m funding to local authorities in England to provide discretionary relief to those hardest hit.

Karl Jackson
Partner
T: +44 (0)161 214 0524
Email Karl

Making good on benefits schemes/salary sacrifice

Following a consultation last year, the income tax and NIC advantages of employee benefit arrangements offered through salary sacrifice schemes will be restricted from April 2017.

This is subject to a one year grace period until April 2018 for arrangements put in place before April 2017 and a 4 year grace period until April 2021 for any existing arrangements in relation to cars, accommodation and school fees (unless in each case the arrangement is ended, varied or renewed before then).

The changes do not, however, apply to salary sacrifice arrangements in exchange for the following benefits:

  • Childcare
  • Cycle to Work schemes
  • Ultra-low emission cars
  • Pensions (Including advice and enhanced employer contributions).

They also do not apply to salary this is sacrificed in exchange for additional holiday entitlement or other intangible benefits such as flexible workin

Haydn Rogan
Partner
T: +44 (0)161 214 0517
Email Haydn

National minimum wage

The National Living Wage and National Minimum Wage will change on 1 April 2017 as set out below:

Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice
April 2017 £7.50 £7.05 £5.60 £4.05 £3.50

It is essential to ensure that all your employees receive the new increased rates going forward. The new pay rate will only affect an individual’s pay from the first full pay reference period after 1 April. You will need to ensure that your contracts and other standard documents reflect the new rates.

Failure to do so may result in investigation by HMRC, which can demand payment of arrears and impose a penalty. The penalty for non-payment of the National Minimum Wage and National Living Wage is 200% of the amount owed (to a maximum of £20,000 per worker). Genuinely self-employed individuals and voluntary workers are not entitled to receive the National Minimum Wage

Phil Allen
Partner
T: +44 (0)161 214 0504
Email Phil

Annual whistleblowing reports introduced

This change will require identified people (to whom a worker can report whistleblowing in certain circumstances) to produce an annual report on any matters that are reported to them. The reporting period will be a 12 month period from 1 April each year. The report should not contain information that may identify the worker, the employer or the person in respect of whom the disclosure has been made.

Emlyn Williams
Partner
T: +44 (0)151 243 9569
Email Emlyn

2 April

Increase in maternity/paternity/adoption pay

The rate of statutory maternity pay is rising to £140.98 from 2 April 2017, rising for the first time since 2015.

Also on 2 April 2017, the rates of statutory paternity pay and statutory shared parental pay will to go up from £139.58 to £140.98 (or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate).

The rate of statutory adoption pay increases from £139.58 to £140.98.

Phil Allen
Partner
T: +44 (0)161 214 0504
Email Phil

6 April

Apprenticeship Levy

The apprenticeship levy is essentially a 'payroll tax' set at 0.5% of an employer’s total wage bill, payable regardless of whether the business currently has or intends to have any apprentices. Any employer in the UK with a payroll of over £3million per annum will be subject to the payment - this figure will be calculated on the basis of total gross earnings, not including other payments such as benefits in kind.

The levy will be paid through PAYE and will apply to both private and public sector organisations. All employers will receive an annual allowance of £15,000 to offset the levy, and the regulations clearly state that ‘connected companies’ will only receive one levy allowance for the tax year.

Contributing employers will be allocated funding via a ‘digital voucher’ system to allow them to purchase ‘off the job’ training. Employers of all sizes will have access to the new 'Digital Apprenticeships Service' which will provide online support and guidance to enable businesses to effectively manage their apprenticeship programmes and to source relevant training.

Employers are not permitted to make any deductions in respect of the levy from the wages of apprentices or other employees or workers.

Larger organisations should have now factored this significant additional cost into budgeting exercises for the next financial year.

Susan Matthews
Associate
T: +44 (0)113 213 4013
Email Susan

Immigration skills charge

From 6 April 2017, an Immigration Skills Charge will be introduced so that employers who sponsor migrant workers under Tier 2 will be required to pay £1,000 per person per year. A lower rate of £364 will apply to certain smaller businesses and charities. This means that employers may have to pay up to £5,000 per migrant worker they sponsor to come to the UK on a five year Tier 2 (General) visa on top of standard visa charges. There are some exemptions where the Immigration Skills Charge does not have to be paid: for certain PhD job codes, Tier 2 (Intra-Company Transfer) applicants, Graduate Trainees and those switching in to Tier 2 from Tier 4.

Elaine McIlroy
Partner
T: +44 (0)141 404 9300
Email Elaine

Pensions advice allowance introduced

The Pension Advice Allowance will enable people to withdraw £500 up to three times, but only once each year, allowing for advice at different stages in their lives.

This allowance can be used to cover the cost of any regulated financial advice, whether it is given digitally or in a traditional face-to-face capacity.

The tax-free allowance will be available to holders of defined contribution (DC) pensions and hybrid pensions with a DC element, but not to people in defined benefit or final salary-type schemes.

Mark Poulston
Partner
T: +44 (0)151 242 9473
Email Mark

Statutory redundancy pay increases

It has been confirmed that statutory redundancy pay will rise from April 2017. There will also be an increase in the statutory rates and limits which apply to other employment rights, such as the basic award for unfair dismissal and the maximum unfair dismissal compensatory award.

The new limits will apply to dismissals where the effective date of termination is on or after 6 April 2017. Where the dismissal falls before this date, the old rates will apply.

£489 - maximum amount of a week’s pay for calculating statutory redundancy pay, and the basic award for unfair dismissal
£14,670 - largest possible statutory redundancy payment or basic award
£80,541 - maximum compensatory award which can be made after a successful “ordinary” unfair dismissal claim
£95,211 - maximum potential award for unfair dismissal when the basic and compensatory awards are combined
Guarantee pay - now £27 per day

These increased awards will only apply where the dismissal takes place on or after 6 April 2017. Where the dismissal is effective before 6 April 2017, the old limits will still apply, regardless of the date on which compensation is awarded.

There is also an additional cap of one year’s gross salary on the compensatory award for unfair dismissal, if it is lower than the maximum compensatory award figure.

However, there is no cap to the awards that can be made in many cases, including those for discrimination on the grounds of a protected characteristic, or those where whistleblowing is alleged to be the reason for the dismissal or detrimental treatment.

Phil Allen
Partner
T: +44 (0)161 214 0504
Email Phil

Gender pay gap reporting

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 come into force on 6 April 2017 and will apply to private and voluntary organisations with 250 or more employees.

Affected employers will be required to publish a gender pay report every year setting out 14 prescribed measures of pay. The information on pay required will be a 'snapshot' as at 5 April 2017 and employers must report on the pay period for each employee which includes that date. The obligation will be repeated annually for the period including 5 April each year.

The first gender pay gap reports (in respect of April 2017 pay data) will be due by 4 April 2018 and must be published for three years on the employer's website and a central government website. Organisations should ensure compliance with the regulations to avoid being named and shamed.

Similar gender pay gap reporting legislation now also applies to public sector bodies in England. The annual 'snapshot' date is 31 March for public-sector employers.

Jawaid Rehman
Partner
T: +44 (0)121 200 8123
Email Jawaid

Reform to intermediaries rule IR35

Reforms to the intermediaries legislation (commonly referred to as IR35) come into effect from 6 April 2017.

The new rules require universities to assess whether or not any individuals who supply services to the university via an intermediary (such as a personal services company (PSC) or an agency) are within IR35 i.e. if the worker had been engaged personally by the university rather than via an intermediary, they would have been regarded as an employee of the university.

Where the rules apply, the person who pays the intermediary for the worker’s services, which will be the university in cases where the contract is with the worker’s PSC, also has to operate payroll and deduct PAYE income tax and NICs from the payments to the intermediary.

HMRC have published an online Employment Status Service tool that can be used by universities to help assess whether or not the new rules apply to a particular engagement.

The changes will affect all payments made on or after that date even if pursuant to contracts entered into (or even completed) before then.

Haydn Rogan
Partner
T: +44 (0)161 214 0517
Email Haydn

IHT changes – residence nil rate band

From 6 April 2017 onwards there will be an additional inheritance tax free “residence nil rate band” available. This will begin at £100,000 in the tax year 2017/18 and will increase by £25,000 each tax year, reaching £175,000 by 2021. This “residence nil rate band” is available where the deceased leaves a property (or the proceeds of sale of a property), in which they have lived at some point, to their direct descendants (children/grandchildren etc).

The residence nil rate band is available on top of the existing inheritance tax nil rate band of £325,000. If the estate is passed to the deceased’s spouse, that cumulative estate will potentially have two nil rate bands available, totalling £650,000, plus two residence nil rate bands, totalling £350,000. This will take some people out of inheritance tax altogether.

The amount of residence nil rate band available will be tapered for estates worth more than £2 million and from 2020/21 will not be available at all on estates worth more than £2.7 million.

James Knowles
Associate
T: +44 (0)161 233 7408
Email James

Payment Practice Regulations

From 6 April, some of the UK’s largest companies will be required to publish details of their payment practices and policies twice a year. Following in the footsteps of Gender Pay Gap reporting, The Reporting on Payment Practices and Performance Regulations 2017 are designed to tackle the issue of late payments by making the performance of large businesses a matter of public record.

It’s hoped the availability of this information will help small and medium sized firms build valuable, fair commercial relationships with responsible customers.

Businesses obliged to report must have met - in the last two financial years, from 6 April 2017 - two, or more, of the following conditions:

  • An annual turnover exceeding £36 million
  • A balance sheet total exceeding £18 million
  • An average number of employees exceeding 250.

The first reports will be publicly available to view through a government portal from October of this year.

Paul Raftery
Partner
T: +44 (0)161 214 0528
Email Paul

Reform to intermediaries rule IR35 in the public sector

Reforms to the intermediaries legislation (commonly referred to as IR35) in relation to the public sector come into effect from 6 April 2017.

The new rules require public sector bodies (including government departments, the NHS, local authorities, police and fire authorities and educational establishments including universities) to assess whether or not any individuals who supply services to the public sector body via an intermediary (such as a personal services company (PSC) or an agency) are within IR35 i.e. if the worker had been engaged personally by the public sector body rather than via an intermediary, they would have been regarded as an employee of the public sector body.

Where the rules apply, the person who pays the intermediary for the worker’s services, which will be the public sector body in cases where the contract is with the worker’s PSC, also has to operate payroll and deduct PAYE income tax and NICs from the payments to the intermediary.

HMRC have published an online Employment Status Service tool that can be used by universities to help assess whether or not the new rules apply to a particular engagement.

The changes will affect all payments made on or after 6 April 2017 even if pursuant to contracts entered into (or even completed) before then.

Haydn Rogan
Partner
T: +44 (0)161 214 0517
Email Haydn

Salary sacrifice

The tax benefits of salary sacrifice arrangements other than those relating to pensions, childcare, Cycle to Work and ultra-low emission cars will be removed from April 2017.

This is subject to a one year grace period for arrangements in place before April 2017 and a 4 year grace period for arrangements in relation to cars, accommodation and school fees.

Haydn Rogan
Partner
T: +44 (0)161 214 0517
Email Haydn