Employment Tax & Reward - Key Objectives for 2019/2020
Tax and reward is in an area that requires ongoing attention, particularly at a time of political and economic change.
FIVE KEY OBJECTIVES
From an Employment Tax & Reward perspective, there are five key areas that we are helping organisations with in the 2019-20 tax year:
1) Employment Status
A headline topic with changes to be introduced from 6 April 2020. Organisations need to take action to ensure they have robust governance in place to manage this risk area but also to help attract and engage the best talent available so their business can continue to grow.
If you engage individuals or Personal Service Companies off payroll, please do get in touch. Our Tax Talk articles (including this one) provide helpful background reading. We can help put a plan in place, review your compliance and enhance processes so that you are ready for 6 April 2020.
2) National Minimum Wage
This remains a key technical area given HMRC and the Government’s focus on this over recent years. Our team has significant experience helping organisations from all sectors manage their compliance and respond to HMRC enquiries.
It is often the case that technicalities involving deductions from pay, salary sacrifice, pay periods, payments being made for certain items and worker status are giving rise to NMW non-compliance which can lead to fines of up to £20,000 per worker and being named and “shamed” on the Government website. We can help organisations navigate and comply, particularly given the context of recent tribunals (Middlesbrough FC), challenges (Iceland) and proposed changes (recent Consultations into salaried worker status and salary sacrifice).
Alongside this, considering NMW as part of pay and reward strategy is important given the need to manage pay differentials and ensure there are financial rewards for progressing within employment.
3) Pension Salary Sacrifice
All organisations in the UK are now required to ensure employees have at least 8% of their pensionable pay going to their pension from April 2019, with the employer required to contribute at least 3% of this.
This has meant increasing costs for both the employer and employee of participating in a pension scheme. To help reduce these costs and increase employee net pay, introducing Pension Salary Sacrifice can help as it means:
- Employers can reduce their National Insurance costs; and
- Employees can increase net pay each pay period by reducing employee National Insurance costs
For example, if an employee makes annual employee pension contributions of £1,000, the employer will save £138 per year and the employee will save £120 per year (if paying NIC at 12%).Therefore, an organisation can make significant savings and we can help you implement efficiently and effectively within the 2019-20 tax year to realise those savings as soon as possible.
4) HMRC compliance – Payroll, Expenses and Benefits
If you have not had a HMRC PAYE review in the past three years, it is likely you will receive one shortly. HMRC is carrying out more reviews into organisations’ compliance with expenses, benefits, termination payments and payroll. It is there important ,regardless of whether you are a small family business, public sector body or a listed company, to ensure you have robust and effective controls in place.
HMRC has a range of different approaches to reviews depending on organisation size and sector and we can help you prepare carefully. Key topic areas recently have included Payments in Lieu of Notice, permanent and temporary workplaces, staff entertaining, payments to Non-Executive Directors and company vehicles (e.g. is it a van or a car?).
5) Pay & Reward Strategy
It is a key time to ensure you are best placed to attract and retain the best talent. Identifying your current pay and reward structure and reviewing how attractive this is, as well as looking at how it be enhanced is proving to be a growing area of importance, especially when looking at the wider context of Brexit, transparency (Gender Pay Gap), increased National Minimum Wage rates (how do you help differentiate reward at different levels?) and the Employment Status debate.
Understanding how reward is also communicated and considered by employees is critical too – looking at non-cash reward, cash (bonuses, salary etc) and other less tangible reward aspects is important (including the office culture, agile working etc).
Lastly, for those organisations within the construction and housing sector, managing Construction Industry Scheme compliance is vital, particularly given the introduction of the VAT Reverse Charge from October 2019.
Our Employment Tax & Reward team is on-hand to provide whatever level of assistance is required. Please let us know if you would like to discuss the matters highlighted.