Author Archive: Muhammad Zia

New weapons in the war on cybercrime

It is a nightmare that plagues both business and private users alike, but cyber security experts are continuing to fight back against the online crooks using email scams targeting their organisations.

The UK’s cyber police force, the National Cyber Security Centre (NCSC), has published guidance for businesses on a new reporting tool that can be added to their organisation’s Microsoft Office 365 accounts where potential scams can be reported directly to the NCSC’s Suspicious Email Reporting Service (SERS).

It is just one weapon in the long battle against online criminals and comes as the cost to the UK from cybercrime incidents amounts to £5.7 million this year.

More than ever the internet is vitally important to the UK economy but is also exploited by those wishing to cause harm – with cybercrime being largely invisible but having devastating effects on companies and their employees.

A generation of tech-savvy younger people has also become a prime target for scammers and phishers.

Phishing is when attackers attempt to trick users into disclosing personal information by clicking a malicious link that will download malware, or directing them to an insecure website.

There have been 14,883 cybercrime incidents involving scammers and phishers since the start of the year, with one-third of the total losses, £1.9 million, coming from businesses, according to fraud prevention experts PPC Shield.

Since 1 January this year, their survey shows that 43 per cent of reported incidents involve hacking, fake social media posting and email scams.

Since its launch in April 2020, the Suspicious Email Reporting Service has received over 6,500,000 reports from the public – resulting in the removal of more than 97,000 scam URLs.

Link: UK reports £5.7 million of losses due to cybercrime

Couples could be missing out on tax breaks

Couples may be missing out on tax breaks without realising it, according to HM Revenue & Customs (HMRC).

Savings can be made both with Income Tax and Capital Gains Tax (CGT) by using their personal tax allowance.

For CGT, a couple’s two allowances (each equal to £12,300) can be combined to reduce the final tax bill on a transaction like selling a second home.

But for nearly two million couples who are married or in a civil relationship, the ‘Marriage Allowance’ can also be used and save up to £252 per annum in Income Tax.

This can be backdated to include any tax year since 5 April 2017. If your spouse or civil partner has since died, you can still claim.

If one partner earns below the Personal Allowance threshold of £12,570 and the other is a basic rate payer, then 10 per cent of the lower earner’s allowance can be transferred to the higher earner.

For the current tax year, that figure is £1,260, which means an annual tax saving of £252. Multiply this by the backdated four years and you could have a saving of £1,220.

For couples who have been together for many years, a change in circumstances like the effects of the COVID pandemic, where they may have lost a job but have found lower paid employment, could also mean they are now eligible.

Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary, said: “Marriage Allowance lets eligible couples share their Personal Allowances and reduce their tax by up to £252 a year. Nearly 1.8 million couples are already using the service – it is free, quick and easy to apply, just search ‘marriage allowance’ on GOV.UK.”

Claims are automatically renewed yearly but couples should notify HMRC if their circumstances change.

Visit GOV.UK to find out more about Marriage Allowance.

Link: 1.8 million couples benefitting from extra tax relief

Minimum wage non-payment excuses ‘outrageous’

The National Minimum Wage has been in place for more than two decades. It currently stands at £8.91 per hour for adults over the age of 23 (The National Living Wage), while the lowest figure is £4.30 per hour for an apprentice.

While a sizeable number of breaches will be down to errors or incorrect interpretation of the rules, a few unscrupulous employers are abusing it and have come up with some dubious excuses for not paying what is a legal requirement.

HMRC has published some outrageous excuses for not paying:

  • She does not deserve the National Minimum Wage because she only makes the teas and sweeps the floors.
  • The employee was not a good worker, so I did not think they deserved to be paid the National Minimum Wage.
  • My accountant and I speak a different language – he does not understand me, and that is why he does not pay my workers the correct wages.
  • My employee is still learning so they are not entitled to the National Minimum Wage.
  • It is part of UK culture not to pay young workers for the first three months as they have to prove their ‘worth’ first.
  • The National Minimum Wage does not apply to my business.
  • I have got an agreement with my workers that I will not pay them the National Minimum Wage; they understand, and they even signed a contract to this effect.
  • My workers like to think of themselves as being self-employed and the National Minimum Wage does not apply to people who work for themselves.

HMRC says it has issued more than £14 million in penalties to employers who failed to pay the correct rate of the National Minimum Wage or National Living Wage in the 2020/2021 tax year.

More than £16 million in unpaid salaries was also recovered which should have been paid to more than 155,000 workers across the UK.

Link: HMRC reveals absurd excuses for not paying National Minimum Wage

SME confidence is on the rise as employers make plans to expand their workforce

Official research has found increasing confidence amongst SME employers, with 26 per cent saying they expect to increase their employee headcounts over the coming year.

The findings from the Small Business Survey, carried out by the Department for Business, Energy and Industrial Strategy (BEIS), show that the number of small employers – those with fewer than 250 employees – that expect to employ more staff is more than two-and-a-half times those who expect to see their payrolls shrink.

Despite the impact of the pandemic, the proportion of employers expecting to take on more staff has already exceeded 2018 levels (25 per cent) and is approaching the 28 per cent recorded in 2019.

Meanwhile, the proportion of employers expecting to reduce their headcounts in the next year has fallen sharply from 16 per cent in 2019 to just 10 per cent this year – despite the furlough scheme coming to an end this month.

The accommodation and food, arts and entertainment, health, information and communication and administration were the sectors most likely to foresee rising numbers of employees.

The survey also uncovered optimism about the prospects for revenue growth, with 41 per cent of SMEs expecting turnover to grow in the coming year, while just 16 per cent expected to see a fall.

Around 67 per cent of SMEs reported that they had made a profit or surplus during their most recent financial year, with profitable businesses being relatively evenly spread across micro, small and medium businesses.

Link: Longitudinal Business Survey: SME Employers – UK, 2020

How will the National Insurance and dividend tax increases affect me?

Taxpayers face an increase in their National Insurance contributions (NICs) and dividend tax rates from 2022. To explain how this significant change may affect you, please use our helpful FAQ below:

How much is the National Insurance rate increasing?

The Health and Social Care Levy will see a 1.25 percentage point increase in NICs.

When will National Insurance rates increase?

The Health and Social Care Levy will be effectively introduced from April 2022. From 2023 it will then “be formally separated out” under new legislation.

Who will the increase affect?

The increase in NICs will initially affect everyone earning over the age of 16, but below state pension age, earning more than £184 per week through employment or with profits of £9,568 or more a year in self-employment.

The 1.25 percentage point increase also applies to employer contributions separately.

From 2023, the Health and Social Care Levy will also apply to individuals working above State Pension age as well. Currently, this group are not required to pay any NICs.

Are there any exemptions to the National Insurance increase?

The increase will not apply to Class 2 NICs, which is the flat rate paid by the Self-Employed with profits above the Small Profits Threshold (currently £6,515 per year) or Class 3 NICs.

This class of NIC is made up of voluntary contributions from taxpayers to fill in gaps in their contributions’ records to qualify for benefits.

How will the increase in the National Insurance rate affect my earnings?

The amount you earn will affect how much you pay to the Health and Social Care Levy.

Here are some examples of how much you will pay towards the levy depending on your earnings:

  • £20,000 per year – £130
  • £30,000 per year – £255
  • £50,000 per year – £505
  • £80,000 per year – £880
  • £100,000 per year – £1,130

These amounts will be made in addition to your existing NICs.

The amounts and rates may differ for the self-employed.

Will the new health and social care reforms affect dividends?

Dividend tax rates will be increased by 1.25 percentage points to help fund the health and social care reforms. From April 2022, those in receipt of dividends will retain the £2,000 tax-free dividend allowance but will see 1.25 percentage points added to each rate of dividend tax above this.

How will changes to dividends tax affect ‘every day’ investors?

Shares held in ISAs are not subject to dividend tax, while the £2,000 tax-free dividend allowance combined with the personal tax-free allowance of £12,570 means that 60 per cent of individuals with dividend income outside of ISAs are not expected to pay any dividend tax and won’t be affected.

Nevertheless, many SME business owners are likely to find themselves caught by the change.

How much money will the increase to National Insurance and dividends tax raise?

The changes will raise an additional £12 billion each year.

Will the changes to health and social care affect my estate?

It will have little impact on a person’s estate from a tax perspective.

However, a new lifetime care cost cap of £86,000 and a new means-tested system will mean that from 2023, more complex or long-term care costs should be limited, potentially leaving more for future generations.

Be aware, that accommodation-related costs of care, i.e. those associated with daily living, such as food, energy bills and the property in which a person resides, will not count towards the cap.

The cap only covers the personal care elements, such as dressing, washing and eating, whether that is in a care home or within your home.

How will the new means-tested system work?

The new test for adult social care will come into effect in October 2023 based on a person’s income and savings, as follows:

Total assets above £100,000 – Full fees must be paid but the maximum that a person will have to pay over their lifetime towards personal care costs will be £86,000 as a result of the new cap.

If by contributing towards care costs, the value of a person’s remaining assets falls below £100,000, they are likely to be eligible for some financial support.

Total assets between £20,000 and £100,000 – Local authorities may fund some care costs. However, individuals will be expected to contribute towards the cost of their care from their income, but if that is not sufficient, they will contribute no more than 20 per cent of their chargeable assets per year.

If by contributing towards care costs, the value of a person’s remaining assets falls below £20,000, then they would continue to pay a contribution from their income but nothing further from their assets.

Total assets less than £20,000 – These individuals will not have to pay anything for their care from their assets. However, they may still need to make a contribution towards their care costs from their income.

Further details of the financial impact and rule surrounding dividend tax and National Insurance is expected in a future Budget and will be introduced in the next Finance Bill.

This change may have a significant impact on existing care and retirement plans, as well as your current remuneration strategy.

If you own or operate a business it may also have a substantial impact on your employment costs and payroll administration.

For advice on how this change may affect you, please speak to us.

Mitigate a major risk to your business this National Payroll Week!

Students of risk tend to measure it in two ways; the severity of the consequences if things go wrong and the likelihood of things going wrong in the first place.

Nuclear war breaking out tomorrow would be a high impact – low probability risk. Having a paper cut in the next year would be low impact – high probability risk.

Slowly reversing into a bollard in a car park this evening would be, for most of us, a low-impact – low probability risk.

However, there is one more category of risk; high impact – high probability risks. The consequences of things going wrong are severe and the chances of things going wrong are high. These are the most dangerous risks.

These high impact – high probability risks do not need to be dramatic. They can be as mundane as paying your staff.

This National Payroll Week, we are highlighting the risks that come with trying to go it alone with what is virtually always a deceptively complicated process.

If you are assessing the risks your business faces, then write ‘PAYROLL’ in capital letters at the top of the page and underline it.

Yes, paying every employee the right amount, with the correct deductions, every payday and without fail turns out to be a deceptively complex undertaking – even if your balance sheet is brimming with cash and you only have a handful of employees.

If your financial position has been stretched by the pandemic or you have more than a handful of employees, things become trickier still.

And, if things go wrong, the consequences can be devastating. They can even lead to the loss of your business.

Even if they don’t, they can damage your employment relationships, your reputation and even see you hauled in front of an employment tribunal.

Payroll is complicated, even where staff receive regular salaries, because the rules change frequently and those rules are often conditional on particular characteristics of different employees, including their ages and rates of pay, which also change frequently.

These factors combine to make constant payroll changes inevitable for even small employers.

Employers simply cannot afford to take a ‘set and forget’ approach to payroll.

Even paying the correct rates of the National Minimum Wage (NMW) and the National Living Wage (NLW) can be surprisingly challenging.

The Government published a list of the most common reasons for failing to pay the correct rate of the NMW and NLW recently.

These reasons hint at the complexity of the challenge facing employers simply to pay staff the right amount, which include:

  1. Deductions of payments that take pay below the minimum wage
  2. Unpaid working time takes pay below the minimum wage
  3. Failure to pay the correct rate to apprentices
  4. Failure to pay the uprated minimum wage
  5. Failure to correctly apply the accommodation offset
  6. Incorrect work type
  7. Worker status error

Several of these common errors demand both correct interpretation of the relevant legislation and correct interpretation of a worker’s circumstances, which in turn demand familiarity, not only with the legislation itself, but also with case law and precedents.

It is easy to see why hundreds of employers find themselves ‘named and shamed’ for minimum wage underpayments every year, despite having acted in good faith.

The need for interpretation of the legislation and different working arrangements is one reason why you cannot simply rely on payroll software alone, however useful and sophisticated it is.

Without significant leaps forward in the development of artificial intelligence, software cannot replace the interpretive skill of an experienced human being.

This all points to the steps employers can take to mitigate the risks that come with payroll.

They cannot usually avoid payroll altogether. It might be possible to outsource functions or to use agency staff, but these options bring their own challenges and are not necessarily available in every sector.

You could also devote large amounts of your time to administering your payroll meticulously and diligently. But this is unlikely to be a sensible use of your time when you are trying to run and grow a business.

This is where our professional payroll support comes into its own. Not only will our team of experienced payroll professionals take the administrative burden of payroll off your plate, they will also ensure compliance with the full array of legislative and contractual requirements you need to keep abreast of.

You are freed up to focus on more profitable work, safe in the knowledge that your payroll is compliant and taken care of for you.

We turn payroll from a high impact – high probability risk into a high impact – low probability risk. While the consequences of things going wrong can still be severe, they are vastly less likely to go wrong, and you enjoy the benefits of no longer having to deal with the administrative burden.

Contact us to find out more.

Brexit and immigration: the key dates you need to know about

Despite ‘officially’ leaving the European Union in January this year, there are still a number of loose ends that need tying up.

In fact, the Brexit deal itself includes transitional rules that span from 2021 to 2028. While many of these rules relate to trade and customs, immigration is a matter yet to be fully resolved.

So, if you are a business that employs EU nationals, here are the key dates and deadlines you need to know about.

30 June 2021: the EU Settlement Scheme deadline

While the deadline has technically passed, the Government said EU and EEA citizens and family members who apply late will have their rights protected pending the outcome of their application and any appeal.

Commenting on the scheme, Minister for Future Borders and Immigration, Kevin Foster, said: “Every day thousands of people are being given status through the hugely successful EU Settlement Scheme. We’ve worked hard to ensure the vast majority applied before the 30 June deadline and are now supporting those making late applications.”

According to the latest statistics, more than five million European workers and their families have now been granted settled status.

30 March 2022: UK nationals’ right to return with EU or non-EU national family members

From 30 March next year, close family members – for example, spouses and children – of British citizens moving to the UK will need to apply for a family visa. This means the minimum income requirement (currently £18,600) will apply.

If you are bringing children, you and your partner will need to earn an extra £3,800 for your first child and £,2400 for each child you have after your first child.

If you return to the UK on or before 29 March 2022, you will need to apply to the EU Settlement Scheme instead.

31 December 2025: EU national ID cards “no longer valid for entry”

According to Home Office guidance, EU national ID cards may no longer be valid for entry to the UK after 31 December 2025. Until this date, ID cards can be used when you have:

  • settled or pre-settled status under the EU Settlement Scheme
  • applied to the EU Settlement Scheme by 30th June 2021 but have not received a decision yet
  • an EU Settlement Scheme family permit
  • a frontier worker permit
  • are an S2 Healthcare Visitor
  • are a Swiss national and have a Service Provider from Switzerland visa.

2028: UK courts in the EU

After 2028, UK courts will no longer be required to send questions relating to the rights of EU citizens living in the UK to the Court of Justice of the European Union (CJEU).

According to a House of Commons briefing paper: “UK courts retain the power to send preliminary references to the CJEU about the meaning of any aspect of Part 2 of the Withdrawal Agreement for a period of eight years after the end of the transition period. Questions about EU citizens’ rights in the UK can thus continue to be submitted to the CJEU until at least the end of 2028”.

Get advice today

For help and advice with related matters, please get in touch with our team today.