HM Revenue and Customs (HMRC) has issued a statement urging students and other summer workers to check that they are being paid the correct National Minimum Wage (NMW) rates.

In the 2020/21 tax year, HMRC helped over 150,000 workers across the UK to recover over £16 million remuneration that was due to them because incorrect NMW rates had been used.

Most workers should be paid the correct NMW and National Living Wage rates. This includes temporary seasonal staff on zero-hour and short-term contracts working in bars, hotels, shops and warehouses.

These workers have been reminded by HMRC that minimum wage rates are reviewed and updated at the end of every tax year. This could mean that many people could be underpaid by their employers who have not updated payroll systems with the current NMW rates.

Steve Timwell, Director of Individuals and Small Business Compliance at HMRC, said: “We want to ensure that seasonal workers and students are being paid what they are entitled to and, as the economy reopens, help employers if they are unsure of the rules.”

National Minimum Wage hourly rates from 1 April 2021:

• £8.91 – age 23 or over (National Living Wage)
• £8.36 – age 21 to 22
• £6.56 – age 18 to 20
• £4.62 – age under 18
• £4.30 – apprentice

HMRC explains: The two most common causes of minimum wage underpayment are deductions and unpaid working time. For example:

• Expenses for tools or equipment needed for the job.
• Cost of uniform or clothing connected with the job.
• Travelling time between work locations.
• Training time.

Other reasons for underpayment can include employee tips not being included in their wages, and an employee moving to a higher rate per hour after a birthday.

Employers who pay workers less than their entitled amount must pay arrears of wages to the employee.

If your business needs help or advice, contact us today.

The tax office is now open for claims from employees that have incurred work-related costs for the year to 5 April 2021 and have not been – and will not be – reimbursed by their employers.

How to make a claim – the DIY approach

You can claim online, by post or by phone.

This will involve completing application forms and you will need full details of money you have laid out in the tax year.

You can also claim for previous years within the permitted deadlines.

And if this process seems like too much trouble, we can help…

How much can you claim?

There are two choices. You can either gather all the receipts and other evidence to support your claim or you can claim HMRC’s flat rate allowances.

You will need to check that flat rate claims are available, but they generally cover expense claims for uniforms, work clothing and tools.

What can you claim for?

You can claim for:

• Using your own vehicle for business mileage
• Paying costs for using a company vehicle
• Hotel and meal expenses
• Use of your own home (providing a home office workspace for example)
• Uniforms, work clothing and tools

In fact, if your employer has asked you to pay for any costs associated with your work for that employer, you should be able to make a claim if you have not been reimbursed.

We can help.

If you are unsure how to work out what you can claim for or how to make a claim we can help. Please call so we can discuss your options.

Inflation is a measure of how much the value of currency depreciates each year. For example, if prices for a loaf of bread rise by 3% in a year, you would have to earn that extra 3% to continue to purchase bread, so your extra earnings would have no extra value.

According to the Bank of England, average price inflation rose by an average of 5.2% a year between 1950 and 2020. £10 in your purse or wallet in 1950 would now need to be £350.42 to have the same purchasing power.

The process is pernicious. As prices increase there is a tendency to try and buy now before prices increase. This increase in demand can further outstrip supply and push up prices even more.

The reverse applies if prices fall; this is known as deflation. There is a tendency to defer buying decisions in the hope that prices will fall further. This is a disaster for businesses as they must lower prices to win sales, become unprofitable, and if the process continues, become insolvent and forced to liquidate.

While earning keep pace with inflation the increasing number of £s in your pocket will help you maintain your purchasing power, but the increased earning will not allow you to buy more stuff.

If inflation outstrips earnings, then you will have less purchasing power.

Inflation is a recent phenomenon. Between the seven hundred years 1200 and 1900, average inflation was low, only 0.4% per annum. In the next one hundred years, as the effects of industrialisation and increases in money supply took effect, average inflation was 4.4%.

If the Bank of England manages to keep inflation at the target rate of 2%, we should suffer no ill effects. The danger is if rates climb above 2% the BOE may need to increase interest rates – their prime instrument for reducing inflation – which means that we will all have to pay more to borrow money or finance our debts.

Next week, many of the present lockdown regulations in England are being relaxed. But cautionary guidance has also been published. It recommends:

1. Meeting in well-ventilated areas where possible, such as outdoors or indoors with windows open.
2. Wearing a face covering where you meet people you do not normally meet in enclosed and crowded spaces.
3. Washing your hands with soap and water or using hand sanitiser regularly throughout the day.
4. Covering your nose and mouth when you cough and sneeze.
5. Staying at home if unwell, to reduce the risk of passing on other illnesses onto friends, family, colleagues, and others in your community.
6. Considering individual risks, such as clinical vulnerabilities and vaccination status.

If anything has been learned in the last eighteen months, it is to expect the unexpected. Fingers crossed that the proposed relaxations in social distancing will not mean an unwelcome and unmanageable rise in hospital admissions.

Businesses in the hospitality and entertainment sectors will be holding their breath. Firstly, will government follow through with the stage 4 relaxations to COVID regulations on the 19th, and secondly, how long will they last?

Of course, there is no way of knowing. Which makes long-term planning difficult, but all business owners should keep a weather eye on the statistics on the coming months.

We recommend adopting a flexible planning process. Rather than fixing your financial plans, review and revive them on a regular basis. Key events that could impact your plans in the coming months could include:

• Continuing COVID uncertainties,
• Bank interest rate rises,
• Continuing supply issues as we become adjusted to the EU withdrawal.

If you need help creating or revising your financial plans, please call, we can help.

One of the largest fixed costs associated with business premises are rates payments to local authorities.

The present system for reviewing rates in England is somewhat antiquated, the last review in England was 2017.

The government had previously undertaken to move to more frequent revaluations, having introduced legislation to bring forward the next revaluations to 2021 – based on 2019 property values. Due to COVID, and to help reduce uncertainty for firms, this was delayed, with the next revaluation set to take effect in 2023 – based on 2021 values.

To regularise the process and move to a three-year review, the government are now undertaking a formal consultation that is timed to conclude Autumn 2021.

If the government are successful, perhaps we will move to a fairer and faster system for valuing rates based on the current use and value of properties rather than that applicable up to five years previously.

If, at the next rates review in England, your rates assessment is increased, you may be able to claim a transitional relief. This means that changes to your rates bill will be phased in gradually if you are eligible. Your council should automatically adjust your bill if you are eligible.

Additional rates reliefs currently available to business rates payers in England include:

• Small business rates relief
• Rural rates relief
• Charitable rates relief
• Enterprise zones
• Exempted buildings and empty buildings relief
• Hardship relief
• Transitional relief
• Retail discount
• Local newspaper relief
• Nurseries discount

Contact your local authority to make sure you are receiving any reductions to which you may be entitled. They will also be able to reassure you that you have had any COVID support grants that you may have been able to claim.

Employers will need to start contributing to work not done by furloughed employees from 1 July 2021.

The update from HMRC is reproduced below:

From 1 July 2021, the level of grant will be reduced, and you will be asked to contribute towards the cost of your furloughed employees’ wages. To be eligible for the grant you must continue to pay your furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough.

The table below shows the level of government contribution available in the coming months, the required employer contribution and the amount that the employee receives per month where the employee is furloughed 100% of the time.

Wage caps are proportional to the hours not worked.

You can continue to choose to top up your employees’ wages above the 80% total and £2,500 cap for the hours not worked at your own expense.

If you still have employees on furlough now would be a good time to engage in a formal planning process to work out how your business will manage the transition back to you covering all wage costs from 1 October 2021.

Realistically, this should involve preparing a business forecast for at least the next twelve months.

We can help

Let us help you prepare the necessary forecasts and consider your options.

Release from social distancing restrictions, in England, is deferred until 19 July 2021, which for most of us, means no change up to that date. We are still required to work from home when we can and maintain the other Step 3 social distancing provisions.

However, there are a few additional concessions that will apply up to the 19th. We have summarised these below:

• The 30-person gathering limit for weddings, receptions and commemorative events is removed and replaced with any limits set by venues to maintain social distancing guidelines.
• An extension of pilots for large events at higher capacities, including some at full capacity such as the Wimbledon finals.
• Easing rules in care homes, including removal of the requirement for residents to isolate for 14 days after visits out.
• Allowing out-of-school settings to organise residential visits in bubbles of up to 30 children, in line with the current position for schools.

Fingers crossed that come the 19th, infection rates will be under control, and we really can start to get back to normal. Anyone remember what that was like?