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Walker Thompson Newsletter 35


Government Confirms Minimum Wage Rises

The government has confirmed that the new National Minimum Wage rates, which come into effect on 1 October 2010, will be:


  • £5.93 (£5.80) per hour for workers aged 21* and over;
  • £4.92 (£4.83) per hour for 18-20 year olds; and
  • £3.64 (£3.57) per hour for 16-17 year olds.


*This band covers workers aged 22 and over until 30 September 2010.


For the first time there will also be an apprentice minimum wage rate of £2.50 per hour, which will apply to apprentices who are under 19 or those that are aged 19 and over but in the first year of their apprenticeship.


The government has also written to the Low Pay Commission (LPC) and has asked them to pay particular attention to:


  • the competitiveness of small firms; and
  • the employment prospects of young people, including those in apprenticeships and internships.


The LPC will report to the Prime Minister and the Secretary of State for Business, Innovation and Skills by the end of February 2011, with their recommendations for October 2011.


Employment Relations Minister, Edward Davey, said:


‘The increases to the National Minimum Wage this year are appropriate for the economic climate. They will strike a balance between helping the lowest paid whilst at the same time not jeopardising their employment.


The LPC estimates that around 970,000 people stand to benefit from these increases.’

Links: LPC release BIS release






New Guidance on the Equality Act

Acas has issued new guidance to help businesses understand the changes to the new Equality Act. The new guidance, ‘The Equality Act – what’s new for employers?’, outlines what these changes will mean in practice.


Changes brought in by the Act include:


  • employers are potentially liable if their staff are harassed by people they don’t employ, such as customers and suppliers;
  • from October employers should no longer send out pre-health questionnaires with employment application packs, although certain exemptions will apply;
  • Employment Tribunals can require employers found guilty of discrimination to take steps to require them to change their policies and practices to prevent further discrimination; and
  • if the contract of employment requires employees to keep pay secret, the Equality Act makes this requirement unenforceable.


John Taylor, Acas Chief Executive, said:


‘Fairness in the workplace is good business and motivates staff as well as improving effectiveness and productivity. Last year Acas received around 32,000 calls on diversity and discrimination-related issues. Our new guide helps businesses and managers understand what the changes mean in practice and what action employers will need to take.’

Links: Acas release Acas employer guidance




And Holiday Guidance

Acas has also reminded employers of the workplace rights around annual leave and flexible working and has issued guidance on holiday workplace rights.


The Acas helpline has received over 100,000 calls relating to holidays and working time issues over the last year. John Taylor, Acas Chief Executive, said:


‘Many businesses receive an increase in holiday requests over the summer and an employer often has to balance the needs of the business with keeping a healthy and motivated workforce. We always encourage employees and employers to plan ahead and be as flexible as possible.’

Links: Acas release Acas guidance





HMRC and DWP Trial is Genuine

HMRC and the Department for Work and Pensions (DWP) are working together to offer customers the chance to participate in a voluntary scheme in which they can agree to have deductions taken from their state benefits and use those deductions to reduce their tax arrears or tax credit overpayments.


As part of this project a number of customers will be contacted by letter and invited to take part. Customers will not be contacted by telephone to take part in the scheme. The scheme is entirely voluntary.


HMRC wish to emphasise that this is a genuine trial and not a scam.


However, HMRC has also published details of a new telephone scam to be aware of. The fraudsters inform taxpayers that they are due a tax rebate and ask for their bank card details over the phone and then attempt to take money from the account.

Links: HMRC website HMRC scam





Employer Provided Company Cars

Historically, when employers started to provide, changed or stopped providing cars to employees, Form P46 (Car) had to be submitted by the employer to HMRC. This enabled HMRC to keep tax codes up to date, which in turn ensured that the employee didn’t end up with an unexpected tax bill.


From April 2009 employers were told that they no longer had to submit Form P46 (Car) for replacement company car changes. This was then followed by a statement that, from April 2010, Forms P46 (Car) relating to replacement company car changes would not be accepted.


However, this can lead to problems with tax codes and tax arrears. Following discussions with employers, from April 2011 employers will be able to notify HMRC electronically of any replacement car changes but paper forms will still not be accepted.

Link: HMRC statement




Furnished Holiday Lettings

The tax treatment of Furnished Holiday Lettings (FHL) has been advantageous for many years. Provided that certain conditions are met, FHL are treated as a trade. This can be more preferable than the tax regime for normal let property in a number of specific areas, as the rules and reliefs for trades are often more generous.


In particular, FHL are treated as trades for the following purposes:


  • some capital gains tax reliefs, such as Entrepreneurs’ Relief, business asset roll-over relief, relief for gifts of business assets, and relief for loans to traders;
  • relevant earnings when calculating the maximum relief due for an individual’s pension contributions;
  • loss relief; and
  • capital allowances.


As you may remember, the rules were extended to properties within the EEA last year but the government announced that it intended to scrap the rules altogether from April 2010. It has now been confirmed that there will be no change to the existing tax rules for the current tax year.


However, changes are being considered from April 2011. Firstly, one of the existing rules is that, for holiday accommodation to qualify as FHL, the property must be available for letting for at least 140 days a year and actually let for at least 70 days. The potential change is that the number of days may be increased for both tests.


Secondly, FHL losses can currently be set against other income and it appears likely that these rules may be made more restrictive.


So, before April 2011 you may wish to review your FHL position to ensure all possible reliefs have been maximised.

Links: HMRC guidance HMRC consultation document





HMRC use new Debt Collection Organisations

In the Emergency Budget it was announced that HMRC would use Debt Collection Agencies (DCAs) operating under industry and HMRC standards to increase HMRC’s debt collection capacity and help the pursuit of lower value debts. HMRC will be using DCAs to collect an additional £140m of tax debt. Contracts have been signed with:


  • Commercial Collection Services Ltd
  • Credit Solutions Ltd
  • Fairfax Solicitors Ltd
  • iQor Recovery Services Ltd.


Nick Lodge, HMRC Director, Debt Management and Banking, said:


‘We are all expected to pay our taxes on time and most do. DCAs give HMRC vital additional capacity, strengthening our ability to pursue the debts of those who decline to pay.


We do understand that some businesses and individuals are not in a position to pay what they owe and we have put procedures in place to help those who are genuinely struggling. But those who simply refuse to pay have to be pursued, and our partnership with DCAs ensures they will be.’

Link: HMRC release




New Legal Website Launched

A new website has been launched by The National Archives which gives clearer, faster and simpler access to legislation.


The site is designed to replace the OPSI and Statute Law websites which currently host the database. Each act is shown in its original and revised versions and a historical timeline feature enables users to see how it has evolved over the years.


This new site covers all legal jurisdictions (England, Scotland, Wales and Northern Ireland) and provides details of amendments and changes.

Link: Website







The Workforce Assessment Tool

The Age and Employment Network (TAEN) has launched a UK version of a successful US tool that allows employers to assess their current and future workforce needs. The Workforce Assessment Tool enables managers to assess how an ageing workforce will affect their business and how to attract and retain talent from all age groups. Each user receives a confidential report suggesting measures they could take to create an age-friendly workplace.


Chris Ball, Chief Executive of TAEN, said:


‘This tool will help employers relate their workplace policies and practices to salient issues facing organisations and the economy, including demographic change, workforce ageing and shrinkage, and risks arising from skills shortages. The specific age focus of this tool makes it particularly relevant to UK employers in the present context.


Following the success of the…Workforce Assessment Tool in the US, we hope that UK employers will find the tool equally useful in developing their own age management strategies.’


Links: Tool Press release 

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