On 10 March 2011, the Office of Tax Simplifications published its interim report on simplifying small business taxation. One of the major structural changes recommended for the longer term was the integration of income tax and NICs. This proposal was subsequently accepted by the Government at the time of Budget 2011.
As implementation would be complex and involve a wide range of policy and implementation issues, the Government announced its intention to start consultation on the options, stages and timing of reform.
Do you have any views on the proposals to merge PAYE tax and NICs?
Think it's a good idea but next to impossible to implement?
The government would like your views and has posed 14 questions in an effort to understand the issues involved.
Click on this link for full information. http://greengagespayroll.blogspot.com/p/integrating-operation-of-income-tax-and.html
This will also open up the links you will need to take part in the questionnaire. The questionnaire is open to anyone who wishes to express an opinion and is especially relevant to employers and payroll providers. A rare chance to truly get our opinions heard and one that I will certainly take advantage of.
Monday, 25 July 2011
Saturday, 23 July 2011
The Cost of being an Employer?
This week I received an email question from a fellow networker.
"I’m doing a business plan thinking about labour costs and I wondered if there is a rough way to estimate employer costs PAYE & NI on an hourly rate e.g. an extra 20% of the hourly rate paid?
To keep round numbers, say I wanted to pay someone £10 per hour – what would the other costs I would have to pay be related to being an employer? …or is is not that straightforward!?"
It's not quite that straightforward because it never is when HMRC and the Government are involved and this was my reply.
First of all, the costs are calculated on a weekly, monthly or annual salary. So let's do it on a weekly and you can multiply by 52 to give you an annual figure.
National Insurance.
If the weekly salary is below £139.00 then there are no N.I. costs to you or the employee.
The employer pays NI on all earnings once the salary reaches £136.00 per week and this is at 13.8%
Between £139.01 and up to £817.00 per week, the employee has NI at 12% .
For anything earned over £817.00 the NI the employee pays is reduced to 2%
* For earnings between £102.00 and £139.00 per week, although no contributions are made, employees are still credited for pension purposes by HMRC. This is another good reason why a payroll should be run for the employee and records submitted to HMRC at year end.
Tax.
This is worked out on annual figures.
Earnings up to £35,000.00 per annum employee pays 20% tax
(Because of the hourly rate quoted in the question, I didn't think the rates for higher earnings would be required so didn't include these)
One other thing you may want to factor in is the onset of the Pensions Reform where it will be compulsory for employers to contribute to their employees pension. This won't actually affect you until 2014 but is something you will need to be aware of. The cost of this is set to start at 1% rising to 3% over a period of 5 years. A big blow to small employers and one they need to budget for.
"I’m doing a business plan thinking about labour costs and I wondered if there is a rough way to estimate employer costs PAYE & NI on an hourly rate e.g. an extra 20% of the hourly rate paid?
To keep round numbers, say I wanted to pay someone £10 per hour – what would the other costs I would have to pay be related to being an employer? …or is is not that straightforward!?"
It's not quite that straightforward because it never is when HMRC and the Government are involved and this was my reply.
First of all, the costs are calculated on a weekly, monthly or annual salary. So let's do it on a weekly and you can multiply by 52 to give you an annual figure.
National Insurance.
If the weekly salary is below £139.00 then there are no N.I. costs to you or the employee.
The employer pays NI on all earnings once the salary reaches £136.00 per week and this is at 13.8%
Between £139.01 and up to £817.00 per week, the employee has NI at 12% .
For anything earned over £817.00 the NI the employee pays is reduced to 2%
* For earnings between £102.00 and £139.00 per week, although no contributions are made, employees are still credited for pension purposes by HMRC. This is another good reason why a payroll should be run for the employee and records submitted to HMRC at year end.
Tax.
This is worked out on annual figures.
Earnings up to £35,000.00 per annum employee pays 20% tax
(Because of the hourly rate quoted in the question, I didn't think the rates for higher earnings would be required so didn't include these)
One other thing you may want to factor in is the onset of the Pensions Reform where it will be compulsory for employers to contribute to their employees pension. This won't actually affect you until 2014 but is something you will need to be aware of. The cost of this is set to start at 1% rising to 3% over a period of 5 years. A big blow to small employers and one they need to budget for.
Thursday, 21 July 2011
Pension Reform & How it will affect Employers
In June, I attended a Pensions Reform course to learn about all the new pension changes planned by the Government and how they will be implemented. To give a snapshot of this and what it will mean to employers I have written a separate page (link below). I do want to stress that I am not a pension provider or advisor. This is simply information of what is to come.
Incidentally, The Pensions Regulator sees the payroll function as key to the automation of auto-enrolment, particularly when it comes to identifying when jobholders reach the age of 22 and/or a jobholder has earnings that reach the PAYE threshold. The payroll function will also be in the position to calculate the relevant pension contributions and monitor the eligibility of jobholders.
Wednesday, 20 July 2011
Moolah without the Hoo Ha!
So now I have introduced myself I guess a little information about Greengages is required.
Firstly, the name. This was my husbands' idea. Greengages is cockney rhyming slang for wages. I think it's perfect even though I sometimes have to explain it. It fits me and my South London roots.
From my experience with the clients I worked with whilst employed, the most obvious thing to me was to 'get the job done and don't bother me with the techniques behind it. Just tell me what I need to do, when it has to be done by and how much it is going to cost me.'
This is exactly what I offer my clients and hence my strapline 'Moolah without the hoo ha!'
Secondly, I don't want this blog to be a sales pitch, so go visit my website for that!
Firstly, the name. This was my husbands' idea. Greengages is cockney rhyming slang for wages. I think it's perfect even though I sometimes have to explain it. It fits me and my South London roots.
From my experience with the clients I worked with whilst employed, the most obvious thing to me was to 'get the job done and don't bother me with the techniques behind it. Just tell me what I need to do, when it has to be done by and how much it is going to cost me.'
This is exactly what I offer my clients and hence my strapline 'Moolah without the hoo ha!'
Secondly, I don't want this blog to be a sales pitch, so go visit my website for that!
Post Number One. (I couldn't think of a better title)
Having now been in business for myself for 9 months and after receiving much advice on marketing and promoting my services, I realise it is now time to start a blog. This is a little alien to me as it seems strange to be writing what is essentially a public diary and as I don't posses any great literary skills, I will attempt to write posts that will be interesting and informative and with any luck, might even be amusing now and again.
Please feel free to add any comments and I welcome your feedback and questions if you have any.
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