Minimum wage payments – are you paying your staff enough? NI contribution changes reminder, plus useful resources to access if you are learning to export goods
Are you getting minimum wage payments right?
Last Tuesday, the government named and shamed 524 businesses for failing to pay the minimum wage to their staff.
These failures amounted to a total of nearly £16 million that had not been paid to their workers. Each of the employers named has had to repay their staff for the shortfall and have also faced financial penalties of up to 200% of their underpayment.
The list includes businesses of all sizes, including some major high street brands. For instance, Estee Lauder, Easyjet, Greggs, Moss Bros, Currys, and NHS Highland all appear on the list.
It is clear that the government will take enforcement action against employers that do not pay their staff correctly. Since it can be easy to unintentionally underpay a worker, such as when they hit 18 or 21 when there is a mandatory increase, it is a good idea to regularly review your payment rates.
This is especially important as we come to the start of a new tax year on 6th April as the rates of pay are increasing as set out in the table below.
| 2023/24 rate | 2024/25 rate | |
| National Living Wage 21 and over (previously 23 and over) | £10.42 | £11.44 |
| 18 to 20 | £7.49 | £8.60 |
| Under 18 | £5.28 | £6.40 |
| Apprentice | £5.28 | £6.40 |
| Accommodation Offset | £9.10 | £9.99 |
If you need any help with your payroll or reviewing whether your wage payments are correct please feel free to contact us we would be happy to help you!
See: https://www.gov.uk/government/news/over-500-companies-named-for-not-paying-minimum-wage
The Body Shop goes into administration
The latest casualty of the difficulties hitting the high street is The Body Shop, which entered administration on 13 February 2024.
Administration can be a worrying time for employees as well as customers and suppliers. However, administration is not as serious as when a company immediately goes into liquidation. Let us explain.
When a company goes into administration, it essentially means that it is placed under the management of licensed insolvency practitioners. These insolvency practitioners, known as administrators, help salvage the business or its assets. This process is typically started when a company is struggling financially and cannot pay its bills or other financial obligations.
During administration, the administrators take control of all the company’s operations, finances and assets. Their goal is to maximise the returns for creditors. This might involve restructuring the business, selling off parts of the business, or seeking new investment that will stabilise the company’s financial position.
Going into administration provides the company with protection from legal action by creditors, giving it breathing space to weigh up its options and find a solution. It can also help to preserve jobs. And because it allows for a more orderly resolution of the financial difficulties the company is facing, it helps to keep more value for the various stakeholders in the business.
Ultimately, the aim of administration is either to rehabilitate the company and return it to a solvent trading position, or to achieve a better outcome for creditors than would be possible through an immediate liquidation.
If you have any concerns about your company’s financial position, please contact us at your convenience. We will be happy to talk and guide you through the options available to you.
Cuts to National Insurance: Reminders about changes
In November 2023’s Autumn Statement, the government announced some National Insurance (NI) changes. Some of these changes went into effect in January 2024, whereas others will come into effect on 6 April 2024. Here is a reminder of the changes.
Cut to the main rate of Class 1 employee NI contributions from 12% to 10%
This reduction received the most headlines. This change went into effect from 6 January 2024, and you have likely already made this adjustment.
In some cases, employers were not able to make the change in time due to software not being ready. If that is the case for you then an incorrect amount of NI will have been deducted from your employees and this will need correcting. Details on how to do so are here: https://www.gov.uk/payroll-errors/correcting-your-fps-or-eps But, please feel free to contact us if you need any help.
HM Revenue and Customs (HMRC) have recently confirmed that the 2% cut also applies to the married woman’s reduced rate of NI contributions, where the rate has dropped from 5.85% to 3.85%. The married woman’s reduced rate of NI contributions applies to married women who opted in before the scheme ended in April 1977.
Cut to the main rate of Class 4 self-employed NI contributions from 9% to 8%
Class 4 NI applies to the taxable profits of a self-employed business. It is calculated when your self-assessment tax return is prepared and collected as part of your income tax bill.
This cut comes into effect for profits earned from 6 April 2024 onwards. There is nothing you need to do to benefit from this cut, it will be automatically applied when your tax bill is calculated.
Removal of liability to pay Class 2 self-employed NI
Sometimes known as the self-employed ‘stamp’, Class 2 NI has been a feature for self-employed taxpayers for many years. It is quoted by HMRC as a weekly rate (£3.45 per week for the 2023/24 tax year) and is usually collected as part of your self-assessment tax bill.
From 6 April 2024 the liability to pay this has been removed. For 2024/25, if your trade profits are above £6,725, you will accrue entitlement to state benefits without paying Class 2 NICs so the charge effectively becomes £nil. However, if your trade profits are below £6,725 and you wish to continue accruing entitlement to state benefits, you’ll need to pay class 2 NICs on a voluntary basis.
If you have any concerns or questions about the NI you are paying, please contact us, we will be happy to help you!
Resources on learning to export
The Department for Business & Trade has made available learning resources for businesses to help with what is involved with exporting. These resources are designed both for new and experienced exporters.
The resources cover:
- Learning how to identify opportunities abroad and find the best target markets;
- Preparing to sell into a new country, such as how to find customers and win bids;
- Understanding international rules and how to get your goods to their destination; and
- Learning how to raise funds, get paid and manage exchange rates.
There is an opportunity to sign up and gain some additional benefits.
Exporting can also involve additional Customs and VAT requirements. If you need any help with this or would like to discuss your plans, please feel free to contact us!
For more about this resource, please see: https://www.great.gov.uk/learn/categories/