Living wage two months away
In April the National Living Wage becomes law.
This brings an addition to the National Minimum Wage for workers aged 25 or over, with a 50 pence increase in hourly pay - taking it to at least £7.20 per hour.
Ahead of this increase, the Government has undertaken an extensive media campaign in order to ensure that every employer is aware of and understands the change.
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Hide AdHowever a recent survey found many may still be behind the curve.
Salary Sacrifice is a widely used and very popular tax-efficient way of funding employee benefit packages - including pensions, car use, health packages and career/work development loans.
The “sacrificed” portion of the salary avoids both income tax and national insurance, however this initiative could result in employers inadvertently breaching the new minimum income level.
As with the National Minimum Wage, employers will be breaking the law if the hourly rate they pay after the sacrifice is below the minimum hourly rate, rather than the headline pre-sacrifice rate.
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Hide AdA recent survey of employers - the Jelf Employee Benefits survey - found that almost 40 percent were unaware of this issue. Whereas a further 19 percent of employers were aware of it, but still to needed to put in place steps to comply with the law change.
These findings are more than worrying, as both the income level and date of introduction were established in the summer budget statement.
For those who fail to correctly comply, the HMRC can name and shame but also enforce a penalty of up to £20,000 per worker.
Therefore ensuring payment structures are up to date is essential, and every business owner should look carefully at their pay and benefits structure over the coming two months to avoid what could be a crippling fine.
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Hide AdTaking the time to make such small changes can ensure both you and your business are protected.
Whether you are an employer or an employee, you can get more information on the National Living Wage by visiting the Government website www.livingwage.gov.uk
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