Author Archive: Muhammad Zia

National Insurance credit scheme will be introduced to tackle child benefit gaps

The Government plans to introduce new legislation to help parents who earn more money than others with their future pensions.

In essence, if you did not claim child benefit because you earned over £50,000 when you had children, you will soon be able to claim National Insurance credits.

These credits are important for getting the full State Pension when you retire.

Why do you need National Insurance credits for your pension?

To get the full State Pension, you need a certain number of years where you have paid National Insurance contributions.

These contributions are usually made when you work and pay National Insurance.

However, if you are a parent or carer and you do not work or earn less because you are looking after children, you might not pay National Insurance.

This is where National Insurance credits come in.

They act like ‘placeholders’ for the years you are not working due to childcare.

These credits count towards your National Insurance record, just like if you were working and paying National Insurance.

But, if you did not claim child benefit because you earn over £50,000, you might have missed out on getting these credits.

So, the National Insurance credit scheme allows you to claim the credits you’ve missed, helping you qualify for the full State Pension.

When will you be able to claim?

The Government is saying that it should be from April 2026, and it will cover anyone affected since 2013. However, they have not revealed the full claiming process yet, nor the full eligibility conditions.

Having said that, it is entirely possible that when the claiming process opens, thousands of individuals will be applying so it is best to get your affairs in order sooner rather than later.

We recommend you do two things:

  1. Check your National Insurance contributions record online here to see if there are any gaps.
  1. Speak to an experienced accountant who can prepare you for claiming.

Please get in touch if you have any questions about your National Insurance Contributions.

Employee benefits and mandatory payroll reporting

Starting in April 2026, UK employers will have to include the benefits they give to their employees, like company cars or health insurance, directly in their payroll.

This means these benefits will be taxed through the payroll system, and not reported separately.

This change is to make tax reporting easier for employers, but it also means employers need to be ready for a few added responsibilities.

Your new responsibilities

You will no longer be able to pick and choose which benefits you include in your payroll and which you report separately – it will all have to be reported via your payroll records.

In addition, you will need to:

  • Keep track of your data more rigorously and stringently.
  • Take on more responsibility with PAYE, which will now be scrutinised more heavily.
  • Explain these changes clearly to your staff so they understand where, how and why their benefits are being taxed.
  • Check if your payroll software is compatible with the proposed changes.
  • Figure out how to manage certain benefits, like loans or company cars, under this new system, which might be tricky.

Employees might also see changes in their cash flow because, with benefits in kind being added to their payroll, the tax on these benefits will be taken out of their monthly pay.

This means they might end up with different take-home pay each month, especially during the first year of this change.

Practical steps to manage the changes

To effectively manage the upcoming changes in payrolling benefits in kind, here are some practical steps you can take:

  • Start preparing now. Review your current payroll processes and benefits administration to identify any changes needed.
  • Ensure your payroll software can handle the inclusion of benefits in kind. If not, plan for necessary upgrades. Conduct testing well in advance to avoid last-minute hitches.
  • Train your payroll and HR teams on the new requirements. They should understand the changes in tax calculations and reporting.
  • Develop a clear communication strategy to inform your employees about how these changes will affect their pay and tax.
  • Encourage employees to review their personal finances and budgeting, considering the potential changes in their monthly take-home pay.

By taking these steps, you can ensure a smoother transition to the new system and easily maintain compliance.

Remember, early preparation and clear communication are key to managing this change effectively.

If you need support or advice in relation to this change, please speak to our team.

UK company law is changing – Get ready now!

There is a series of impending changes to UK company law as a result of the enactment of the Economic Crime and Corporate Transparency Act last year.

These highly anticipated changes, expected to commence on 4 March 2024, subject to parliamentary schedules, will significantly impact the operation and compliance requirements of your company.

Directors must understand and comply with these changes from the first day of their implementation, which is why our team have outlined the new rules below:

Key changes to prepare for:

  • New rules for registered office addresses: From 4 March 2024, your company must have an ‘appropriate address’ as its registered office. This means a location where any documents sent are likely to be noticed by someone acting on the company’s behalf and where document delivery can be acknowledged. PO Box addresses will no longer be acceptable. If your company is currently using a PO Box, you must update this by 4 March 2024 using your company’s authentication code.
  • Requirement for a registered email address: Another critical requirement is for all companies to provide a registered email address to Companies House from 4 March 2024. This email will be used for official communications and will not be publicly disclosed. For new companies, this requirement applies upon incorporation, while existing companies must comply when filing their next confirmation statement after 5 March 2024.
  • Statement of lawful purpose: Upon incorporation and in your confirmation statements, you will need to affirm that your company is formed for a lawful purpose and that its intended activities will be lawful. This step is to ensure that all companies operate legally. Non-compliance with this requirement can lead to the rejection of your documents.

Given these changes, you should be prepared to provide evidence of your registered office address and ensure all statements regarding the lawful purpose are accurate and up to date.

Failure to comply with these new regulations, especially regarding registered office and email address, could lead to the committal of corporate offences and, potentially, the striking off of your company from the register.

Act now

While the changes may seem a way off yet, we suggest you take the following steps now:

  • Review and update your registered address: If you use a PO Box, change this to a compliant address before 4 March 2024.
  • Prepare and submit an official email address: Select an email address for your company and ensure it is ready to be registered with Companies House.
  • Ensure Compliance with lawful purpose statements: Review your company’s objectives and activities to ensure they align with lawful operations.

Should you need any assistance or have any questions, please feel free to reach out for further guidance from our experienced team.

Understanding the new tipping laws in the UK’s hospitality sector

The hospitality industry has just witnessed the introduction of the Employment (Allocation of Tips) Act 2023 which is going to affect almost every facet of the sector.

This landmark legislation, which received Royal Assent on 2 May 2023, and is set to take effect from 1 July 2024, aims to ensure fair and transparent distribution of tips across the around two million workers within the industry.

What does the Act actually say?

At the core of this legislation is the clear differentiation between voluntary customer tips and service charges that businesses often add to bills by default.

Employers must now distribute all tips, without unfair deductions, directly to their employees (obviously, taking into account only the necessary tax withholdings).

Government initiatives and the Code of Practice

In anticipation of these changes, the Government has unveiled a draft Code of Practice.

Although it is still undergoing consultation, the Code is designed to flesh out the Act’s requirements, offering guidelines to businesses for fair tip allocation and ensuring employees understand their rights through further information and education.

It covers several critical areas:

  • Scope and definitions: It clarifies what constitutes a “tip” and outlines acceptable payment methods.
  • Fairness in distribution: The Code encourages employers to consider various factors, such as employee performance and customer intent, to ensure equitable tip allocation.
  • Transparency requirements: Employers are now required to develop and share a documented policy on tip distribution with their employees, detailing the allocation process and adherence measures.
  • Dispute resolution: It stipulates the establishment of fair procedures for handling tip distribution disputes, applicable to both direct and agency workers.
  • Terminology: A glossary section is included to demystify terms used within the Code, such as “basic pay” and “agency worker.”

What are the implications for your hospitality business?

Businesses that withhold tips from their employees are the subject of much public chagrin and dissatisfaction when they are found out and the Act will not add a legal aspect to this.

It also reflects a broader move towards a cashless society and the decrease in cash use since the pandemic.

It also introduces specific obligations for employers:

  • All tips must be allocated to employees, with only tax exceptions.
  • Employers are required to communicate their tipping policies to their workforce.
  • Accurate records of tip distribution must be maintained.

Employees, in turn, are empowered to request their tip distribution records, enhancing their ability to seek recourse through employment tribunals if needed.

Strategic adjustments and compliance

You will need to set up compliant tronc schemes, consider the immediate impact on your cash flow, and develop policies that detail the fair distribution of tips amongst your workers.

Moreover, you will need to keep detailed records for three years and ensure the inclusion of agency workers in the distribution process.

Failure to comply could lead to Employment Tribunal claims and financial penalties so it is important to speak to an expert in employment law as soon as possible.

We can help you understand your responsibilities, obligations and rights under this new legislation and ensure you remain compliant.

Please get in touch for more information on the Employment (Allocation of Tips) Act.

Rotherham Taylor advances green initiatives with tree-saving (digital) certification

Lancashire accountancy firm Rotherham Taylor has put its greenest foot forward and achieved its Certificate of Environmental Accomplishment from its recycling partner in recognition of its forest-friendly policies.

Run by the Sefton-based Cardboard King, which recycles over 200 tonnes of waste material each month, the programme aims to support firms in boosting their recycling initiatives, reducing waste and achieving their ESG and sustainability goals.

“We would certainly urge other firms to get involved with this programme,” said Director at Rotherham Taylor, Rebecca Bradshaw.

“It’s been a great experience for our team and has provided a significant boost to the direction of our environmental initiatives.”

Rotherham Taylor seized the opportunity to advance its ‘trees for our fees’ initiative, with the aim of beating the national Net Zero target by 20 years to achieve this coveted status by 2030.

Focusing its environmental efforts, the firm’s arboreal ambitions saw it recycle 0.795 tons of material and save a number of trees from the chopping block – not for the first time!

As part of its ’23 for 23’ challenge, the team donated funds to Just One Tree, a not-for-profit organisation committed to planting trees and combating climate change around the world.

In 2024, not content to rest on its collective laurels, the team will also be planting one new tree for each client it onboards this year.

Rebecca Bradshaw continued: “We’re incredibly proud of this achievement and that we’ve been able to make a positive difference through our ESG commitments.

“Thank you to all our team for making a conscious effort to reduce waste and recycle where possible.

“Our Net Zero goal starts with small, impactful changes and this has certainly been one of them. Looking forward, we will continue to build on these activities and put sustainability first.”