J&K payroll

Key facts about National Minimum Wage

Gill — Fri, 18 Oct 2024 10:26:46 +0000

Who gets it – and who doesn’t?

It’s a criminal offence to not pay someone the National Minimum Wage
It applies to most workers over school leaving age including casuals, part-timers and agency workers
All businesses must comply – regardless of size

It doesn’t apply to self-employed people or company directors

Why NMW matters to employers

If your company has underpaid its workers, the consequences could be severe:

Arrears

You must pay arrears to the worker immediately and you may end up paying more than you would have if you had paid the correct amount to start with. In one instance, a national retailer was forced to make back payments of £193,000 for almost 3,500 workers after it required them to be at work before and after opening hours without pay.

Naming and shaming

HMRC will now publicly name any employer, big or small, who breaks minimum wage law.

Penalties and prosecution

On top of the arrears, employers risk financial penalties of up to £20,000.

Criminal prosecution is rare but the most serious cases can be heard in a Crown Court, meaning that there’s a potential for an unlimited fine.

How is NMW enforced?

HMRC have the power to check your wages at any time – it’s your responsibility as an employer to keep records proving compliance with NMW and you have to keep these for 3 years. You could be randomly targeted or a worker’s complaint could trigger an investigation.

Out of the blue, our biggest client received a random minimum wage inspection. The HMRC inspectors spent a full day digging into the payroll and payment records.

We handled the entire assessment on behalf of our client and were happy to host the compliance team at our premises. They delved into the current year’s files as well as the previous three years’ files, picking staff at random and tracing their wages from timesheet to bank account.

We spent the day making them tea and being quizzed in depth, using paper and electronic records to prove compliance. With a good understanding of the business, we could answer HMRC’s questions with confidence.

The client passed the inspection with flying colours.

Would your business stand up to scrutiny?

Where can I get more help?

The rates change in April each year. Rates for previous years can be found at gov.uk.

A good payroll provider will watch out for NMW compliance issues as part of the service.

ACAS 0300 123 1100 (Mon to Fri 8am-8pm, Sat 9am-1pm)

ACAS gives free impartial advice to employers and workers.

Pay and Work Rights at Gov.UK

Follow this link to report NMW breaches.

This article updated Oct 2024.

Image credit: University of Liverpool Faculty of Health (CC BY 2.0)

Why we don’t trust HMRC’s systems

Gill — Wed, 10 Aug 2016 13:53:58 +0000

We know from experience that the taxman’s figures can be a work of fiction. But even by HMRC standards, this is extreme.

A Bristol man got a letter to say he owed over £14 TRILLION in tax!

Imagine getting home from the pub and opening that brown envelope.

https://metro.co.uk/2016/08/10/rail-worker-gets-tax-bill-for-14301369864489-6059075/

How to avoid HMRC penalties

Gill — Tue, 16 Sep 2014 16:21:11 +0000

HMRC uses penalties to encourage compliance. There are 2 types to watch out for.

Payment penalties

Pay on time

There are deadlines for paying your taxes. If you’re late in paying, expect to receive a penalty. You may also be charged interest every day until you pay the bill.

Pay electronically

Cheques can get lost in the post. Paying electronically e.g. via online banking is quick and easily trackable.

Use the right reference

However you pay, always include your accounts office reference, otherwise your money will end up in an HMRC slush fund instead of being correctly applied against your account!

Filing penalties

File on time

You must report Pay As You Earn (PAYE) wages in “real time” – in other words, on or before payday.

Weekly, fortnightly, monthly, whatever. Every time someone gets paid through payroll, you must tell HMRC.

File accurately

That’s why it’s so important that you tell us – in advance – about any changes to your payroll.

You may have to prove to HMRC that you weren’t careless in making an error.