Changes affecting employers from April 2009

23 April 2009

Annual Leave
Statutory minimum paid holiday entitlement increases from 4.8 to 5.6 weeks from 1 April 2009. This means that someone who works a 5 day working week will receive an extra 4 days holiday (an increase from 24 to 28 days) which will ensure that employees receive public holiday entitlement in addition to the 4 weeks statutory minimum required by the European Working Time Directive.

Statutory Payments
The standard rate of Statutory Maternity Pay, Statutory Paternity Pay, and Statutory Adoption Pay increases to £123.06 per week (or 90% of the persons average weekly earnings if that is less than £123.06 per week) with effect from 6 April 2009.

The rate of Statutory Sick Pay increases to £79.15 per week from 6th April 2009.

Other employment law changes from April 2009 include:

• Flexible working- the right to request flexible working is extended to those with children aged 16 or under, those with a disabled child aged 18 or under, and those with caring responsibility for adults who are relatives or live at the same address.
• Employment Tribunal rules have been changed
• National minimum wage enforcement regime is reinforced, and new method introduced of calculating arrears.
• New code of practice for dealing with Statutory Disciplinary and Grievance procedures.
• Changes to immigration regulations.
• New rules regarding Trade Union membership.

These notes are for guidance only, please consult you HR advisor or the websites noted below for full details of how they may apply to you or your employees.

For more information on any of these topics visit: www.businesslink.gov.uk or www.berr.gov.uk

Pre-Budget Report 2008

23 April 2009
The Chancellors' pre-budget report, announced on 24th November 2008, is the Governments' response to the deepening recession in the economy.

VAT
The most widely reported change was the reduction in VAT from 17.5% to 15% with effect from 1st December 2008. The rate will remain at 15% for 13 months until 1st January 2010, when it will revert to 17.5%.

There are a few specific areas worth further consideration for this change in VAT:

• VAT invoices issued in advance of 1st December 2008, in respect of goods or services to be delivered on or after 1st December 2008. In these circumstances, the supplier may apply the new VAT rate of 15% to the earlier payment or invoice, and will be required to issue a credit note against the original invoice at the higher rate of VAT. The VAT regulations require that this credit note must be issued to the customer within 14 days of the change in the VAT rate, but for this change, the time limit has been extended to 45 days. For further information please refer to the HMRC website.

• For smaller businesses operating the Flat Rate scheme, the flat rate which they use in their VAT return calculations, will reduce by a smaller %. The new rates are available on the HMRC website.

Corporation Tax
The Small Companies' Rate of corporation tax, was planned to increase from 21% to 22% from 1st April 2009, this increase has now been deferred until 1st April 2010.

Trading loss carry back
A temporary measure will allow businesses to carry current trading losses back against the prior three year profits, instead of the current entitlement to carry losses back one year. A maximum £50,000 of trading losses incurred in accounting periods ended between 24 November 2008 and 23 November 2009 can be carried back three years, starting with the latest year.

Business Payment Support Service
HMRC have recognised that business owners may struggle to pay their various tax payments during these times when cash flow is tight. Temporary arrangements will be available to enable payments to be made over a longer period. Interest will still be payable on balances outstanding. The HMRC Business Payment Support line number is 0845 302 1435.

Other headline items include:

• New Small Business Finance Scheme
• Tax rate of 45% will apply to savings and non savings income over £150,000 from tax year 2011/12
• An increase in the main rates of National Insurance contributions by 0.5% from tax year 2011/12.

This article is a summary of a small selection of items announced in the Pre-Budget report, and is not intended to be a complete report.

This article is for general guidance only, appropriate professional advice must be sought to apply this to your own circumstances.

23W LLP are a firm of Chartered Accountants based in Giffnock. Please visit our website www.23w.co.uk, or call Alistair or Alison for more information.

Important changes to National Minimum Wage rates

1 October 2008
If you are an employer, then you must be aware of changes to the national minimum wage rates with effect from 1 October 2008.

The minimum wage rates from 1 October 2008 are as follows:
Main rate for adults aged 22 and over- £5.73 per hour
Workers aged 18-21 - £4.77 per hour
Workers aged 16-17 - £3.53 per hour

The Budget 2008

12 March 2008
The Chancellors’ first budget on 12th March 2008 was fairly unexciting as most of the changes had been announced in his pre budget report. The main announcements were in respect of the postponement of ‘income shifting’ legislation, (broadly these measures are designed to catch couples/family members who share business profits which have been mainly generated by the efforts of one individual in the relationship), and some refinements to the ‘non-doms’ tax proposals (this legislation covers non-domiciled UK residents). As expected, we had increases in duty on cigarettes and alcohol, with the whisky industry coming under fire with a 55p per bottle increase on all spirits.

In line with the governments recent ‘green’ policies, fuel duty will once again increase by 2p per litre with effect from October, and a new ‘showroom tax’ of up to £950 will be levied on ‘gas guzzlers’ from 2010-2011, with zero rates for the least polluting cars. As an incentive to invest in low-polluting company cars, 100% first year allowances will be extended for 5 years.

The main concerns for most of us in the business community will be how the budget, and the measures announced in the pre-budget report will affect us in the coming year.

For small businesses, the corporation tax rate will increase another 1% to 21% for financial years to 31 March 2009, while the main rate for large companies falls by 2% to 28%. For those businesses with capital spending planned, the first year allowance will be replaced with an annual investment allowance of £50,000 per annum for small and medium sized businesses.

The self-employed will be affected by the extension of the Class 4 national insurance 8% band from £34,840 to £40,040.

Capital Gains Tax changes were the headline change announced in the pre-budget report, and the new flat rate of 18% comes into effect from 6 April 2008. The effect of this change on business owners has been mitigated by the new ‘entrepreneurs’ relief rate of 10% applied to £1million cumulative lifetime total of qualifying gains. Gains in excess of £1million will be taxed at 18%.

A summary of the main rates of taxation for 2008/2009 can be downloaded here.

This article is for guidance only, please contact 23W for advice to apply this to your own circumstances.

Important changes to National Minimum Wage rates and annual holiday entitlements.

from 01 October 2007
If you are an employer, then you must be aware of changes to the national minimum wage and holiday entitlements with effect from 1 October 2007.

The minimum wage rates from 1 October 2007 are as follows:

• Main rate for adults aged 22 and over - £5.52
• Development rate for 18-21 year olds - £4.60
• Development rate for 16-17 year olds - £3.40

The government have announced that all employees will be entitled to 24 days annual holiday from 1 October 2007.

Employees minimum statutory holiday entitlement of 20 days is to rise to 24 days with effect from 1 October 2007, and to 28 days with effect from 1 October 2008.

The measure is intended to ensure that all employees get a minimum of four weeks annual holiday and the equivalent of eight public holidays. It will affect employers who currently include public holidays as part of the 20 day minimum entitlement that all workers have had since the introduction of the Working Time Regulations in 1998.

23W assumes the clients and practice of Lomond Welsh.

09 September 2007
23W have taken on all the clients of Lomond Welsh as from 1st September. The sole proprietor of Lomond Welsh, Lucy Dickson is emigrating to Bratislava with her husband Fred, who is taking a new post with this employer and their daughter Elaine.

This marks the end of a search for the past few months on Lucy’s part to find a suitable home for her clients and to find a practice with similar ethos who would provide similar service and customer care levels.

An informal evening was held to enable Lomond Welsh clients meet Alistair and Alison Marr. The event, which was held at the premises of a client – Whale of a Time, an excellent kids soft play facility on Pollokshaws Road in Shawlands, was attended by around 35 clients. Short speeches were made by Lucy Dickson and Alistair Marr.

Alison Marr commented:
“We are excited about this new development in our practice. As with all our clients we aim to add value to the businesses of the former clients of Lomond Welsh. We aim to make the transition from Lomond Welsh to 23W as seamless and easy as possible.”

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