The April 2018 “To-Do” List

27 March 2018

The new tax year is almost upon us, and while you may think it’s been a fairly quiet year on the changes front, we know it’s just one consultation outcome away from being chaos! Get your house in order by ensuring your “To-Do” List is up to date.

To do;

1. Increase in Statutory Costs

Are you and/or your payroll providers aware of the new statutory employment rates? Click here to view our news item on the rates in effect from April 2018.

The personal allowances also increase from 6th April 2018. The basic personal allowance will rise from £11,500 to £11,850 and the Higher Rate threshold will rise from £45,001 to £46,350.

From 6th April 2018, the minimum employer pension contribution rate will also increase from 1% to 2% and the employee contribution rate will increase from 1% to 3% raising the total contribution rate to 5%.

2. Criminal Finance Act

Although this has been effective from 30 September 2017, have you implemented a plan in relation to Part 3 Section 45 of the Criminal Finance Act 2017? The legislation created a new corporate offence for failing to prevent tax evasion. The offence makes a corporation liable for the facilitation of criminal tax evasion of a tax payer by any person or entity associated with the corporation.

To ensure that your business is adequately protected should an associated person undertake tax evasion, you should implement the following preventative measures;

  • Risk assessments
  • Proportionality of risk-based procedures
  • Top level commitment
  • Due diligence
  • Communication (including training)
  • Monitoring and review

If your company is caught up an investigation into evaded tax, can you say that you had sufficient prevention procedures in place to stop it from happening?

3. GDPR

The General Data Protection Regulation (“GDPR”) is effective from 25th May 2018. Under GDPR the maximum fine will increase 4% of annual worldwide turnover in the preceding financial year or 20 million Euros (whichever is higher!).

We have found that GDPR presents companies with much more work than expected because quite often nobody had the processes in place to get data protection right in the first place. GDPR affects all aspects of your business and should not be ignored.

Have you undertaken a review to ensure that you are GDPR ready ahead of 25th May 2018?

4. Gender Pay Gap Reporting

The requirement for “large” companies to publish a report on their gender pay gap figures has now come into force and the first reports are due on 30th March for public sector employers and 4 April 2018 for private and voluntary sector employers.

If you are an employer of 250+ employees on 5th April, then you are considered a “large” employer for the purposes of gender pay gap reporting and you need to publish your figures!

5. Review your holiday pay calculation

We have seen various tribunal cases which challenge the way employers have calculated holiday pay;

  1. Employers who engage workers whose working hours fluctuate often calculate holiday pay entitlement as 12.07% of annualised hours. A recent case, L Brazel v The Harper Trust, ruled that this is not always the correct method for calculating holiday pay. See our news item here.
  2. Regular voluntary overtime which is often worked in excess of employees contracted hours should be included in the holiday pay calculation. See our news item here.
  3. Miscategorising individuals as self-employed and denying them employment rights such as holiday pay can result in hefty back claims. The European Court of Justice (“ECJ”) recently awarded a worker 13 years’ worth of holiday pay which was not paid to him whilst he was incorrectly engaged as a self-employed contractor. See our news item here.

Holiday pay is yet another minefield for employers to navigate. The financial risk of getting holiday pay wrong is too high to be ignored, especially with the abolishment of Tribunal fees.

6. Itemised Payslips

The Employment Rights Act 1996 (“ERA”) (Itemised Pay Statement) (Amendment) Order 2018 was laid before Parliament on 8th February 2018 and introduced a clause into the ERA that requires employers to ensure payslips state the number of hours being paid to employees where wages vary according to time worked, either as;

  • A single aggregate number of hours or,
  • As separate figures for hours worked doing different types of work for different rates of pay

The requirement comes into force on 6 April 2019, if you engage workers whose wages vary as a consequence of time worked you must ensure you have processes and software in place that can meet the requirements of this legislation to provide itemised payslips.

To watch out for;

7. Taylor Review consultations

Following Matthew Taylor’s review into the modern world of work and the report entitled “A Framework for Moderns Employment” jointly drafted by two government committees, we have seen the government announce four consultations which could potentially lead to the biggest change to employment status since 1996.

The four consultations include;

Aspire will be having our say on the Employment Status consultation as we believe the consultation has the potential to completely change how we determine employment status for tax and employment rights purposes and, as such, have wide ranging consequences for the entire UK labour market. If you would like to discuss any of the consultations, then please get in touch with us.

8. VAT threshold

Following the Chancellor’s brief Spring Statement, a consultation was launched with the aim of understanding the reasons why small businesses are deterred from exceeding the current VAT threshold of £85,000 and how they can tackle the problem.

It has been suggested that businesses are often put off from exceeding the VAT threshold due to the administration and financial impact being registered for VAT has on a business. A number of proposals are being consulted on. The government is trying to make VAT simple for business people to understand and operate, some of the proposals are;

  • Applying the threshold over 2 years instead of 1 year
  • Applying different VAT rates based on the turnover of a business. This would work in a similar way to the Flat Rate Scheme
  • Allow businesses to exceed the threshold by 50% for a single year without registering. If the business exceeds the 50% cushion or the threshold for over 12 months the business must register

See our news item here.

It is crucial that any changes are simple for business people to understand and operate. We will keep you updated on any further information in relation to the consultation.

9. Will new IR35 rules (already in place for the public sector) be introduced into the private sector?

The Autumn Budget announced that a consultation on how best to implement the IR35 changes, which took effect in the public sector from 6th April 2017, into the private sector would be published in 2018.

We are yet to see the consultation published but have heard many tales that it will be here before we know it.

Aspire will keep you updated.

Aspire can help…

Every year employers are given a new tranche of obligations and requirements to comply with and are often given very little in the way of support. Aspire believe that with suitable planning and preparation, you can successfully complete your “to do list” with ease!

If you would like to discuss any of your obligations or any upcoming changes, please do not hesitate to get in touch with Aspire.