News Items at - 16^th July 2008

Introduction

This week’s collection of new items looks at a couple of specialist areas, namely minimum agricultural wage rates in England and Wales and, for those of you with an interest in international payroll, details of the very first comprehensive Tax Information Exchange Arrangement.

Otherwise, you can have a preview of the new SSP1 “change-over” form, due to come into use in October, and review HMRC’s own guidance on the September personal allowance change.

Agricultural Wages in England and Wales

Proposals for changes from October 2008

The Agricultural Wages Board for England and Wales met on 16-18 June 2008 to discuss proposals for a new Wages Order to come into force on 1 October 2008.  Representations on any of the changes may be sent to the Secretary of the Board, no later than 21 July 2008.

The proposals include the following changes:

• an increase in the Grade 1 (Initial Grade) pay rate for workers over compulsory school age of 3.9%, from £5.52 to £5.74 per hour
• increases in the pay rates for Grades 2-6 of 4.3%
• an increase in the accommodation offset from £4.30 to £4.46 per day, the offset only to apply when at least 15 hours have been worked in a week, and a definition of what constitutes minimum standards of accommodation
• new limits on the number of holiday days that may be bought out, and provisions to allow up to 2 weeks holiday to be taken between 1 April and 30 September
• an increase in the maximum period of bereavement leave to four days, pro-rata to the number of days worked, and a new provision of up to two days for the death of a brother, sister, grandparent or grandchild
• extension of the definition of a Grade 3 (Lead Worker) to include the role of Team Leader.

Further information:
Agricultural Wage Negotiations 2008 - Proposals Only  http://www.defra.gov.uk/farm/working/agwages/awb/pdf/agwages-props08.pdf

Personal Tax Allowance

Increases from September to reduce the impact of removing the 10% tax rate

HMRC has provided two pages of information, one for individuals and one for employers, about the way in which the increase in the personal allowance will be introduced from 7 September 2008.

Further information:
Find out what the increased Personal Allowance means for individuals  http://www.hmrc.gov.uk/employers/epa-understanding.htm
Find out what the increased Personal Allowance means for employers  http://www.hmrc.gov.uk/employers/epa-basicrate.htm

International Tax Enforcement

Tax Information Exchange Arrangement with Bermuda

The International Tax Enforcement (Bermuda) Order 2008 was made on 9 July 2008.  It is the first comprehensive Tax Information Exchange Arrangement (TIEA) to be signed by the UK with an Overseas Territory and broadly follows the Model Agreement on Exchange of Information on Tax Matters that is provided by the Organisation for Economic Co-operation and Development (OECD).

The Arrangement provides for the exchange , on request, of information, irrespective of whether the conduct being investigated would constitute a crime under the laws of the UK or Bermuda.  The taxes covered by the Arrangement are taxes of every kind and description currently imposed by the UK and Bermuda, and any identical or substantially similar taxes introduced in the future.   

The UK previously concluded limited agreements providing for the exchange of information in relation to the taxation of income from savings with Jersey, Guernsey, the Isle of Man, Gibraltar, the Cayman Islands, the British Virgin Islands, Anguilla, the Turks & Caicos Islands, Montserrat, the Netherlands Antilles and Aruba.
This Arrangement will enter into force once both the UK and Bermuda have completed the  domestic legislative procedures necessary to give effect to the Arrangement.

Further information:
The International Tax Enforcement (Bermuda) Order 2008  http://www.hmrc.gov.uk/si/2008-1789.pdf
Memorandum to the International Tax Enforcement (Bermuda) Order 2008  http://www.hmrc.gov.uk/si/2008-1789-em.pdf
OECD Agreement on Exchange of Information on Tax Matter  http://www.oecd.org/dataoecd/15/43/2082215.pdf

Statutory Sick Pay

Simplification of procedures

Courtesy of the Institute of Payroll Professionals (IPP), we are able to provide sight of the new version of form SSP1 that will come into use from 27 October 2008.  It must not be used by employers before that date.
Further information:

Payroll deadlines during the next month

July 18 – (July 19 is a Saturday) – This is the deadline for payment of tax and NICs to the Accounts Office, for tax month 3 by employers who pay monthly, for tax months 1 to 3 by employers who pay quarterly, unless they make their payments electronically.

July 18 – (July 19 is a Saturday) – This is the deadline for payment of Class 1A NICs to the Accounts Office in respect of benefits in kind reported by employers on forms P11D for the 2004/05 tax year, unless they make their payments electronically.

July 22 – For employers who pay their tax and NICs to the Accounts Office electronically, this is the deadline for electronic payments, including payments of Class 1A NICs to be cleared into the HMRC bank account.  Payments through BACS must be initiated by July 20 at the latest.

August 2 – This is the date by which any changes to the provision of company cars in the three months to July 5 must be reported using form P46(Car).

Payroll FAQ's

Statutory Redundancy Pay

How is the “relevant date” for calculating statutory redundancy pay determined?

The “relevant date” is the date at which an employee’s entitlement, if any, to statutory redundancy pay (SRP) is determined, according to the following rules:

• To qualify for SRP, an employee must have two years’ continuous employment with the employer on the relevant date.
• The maximum number of years of continuous employment in respect of which payment may be made is 20, ending on the relevant date.
• The amount of SRP due is calculated by counting back from the relevant date the number of years continuous employment and paying
• 1½ weeks pay for each full year the employee was not under age 41, plus
• 1 week’s pay for each full year the employee was not under age 22, plus
• ½ a weeks pay for each year the employee was under age 22.
• The maximum weekly rate of SRP from 1 February 2008 is £330.

Identifying the employee’s “relevant date” correctly is a critical part of the SRP calculation.  The legislation, as set out in section 145 of the Employment Rights Act 1996, defines the “relevant date” in the context of a number of different situations.
The “relevant date” is,

• if the employment contract is terminated by notice, whether by the employer or the employee, the date on which the notice expires
• if the employment contract is terminated without notice, the date on which the termination takes effect
• if the employment contract is a fixed-term contract (with reference only to Government training schemes, agency workers and apprentices), the date on which the term expires
• if the employment contract is a limited-term contract (i.e. a contract that is not permanent and that is intended to terminate at the end of a fixed-term, or the completion of a task, or the occurrence of an event) which ends without being renewed, the date on which the termination takes effect
• if the employer gives notice but, within that notice period, the employee gives written notice to terminate on an earlier date, the date on which the employee’s notice expires
• if the employee accepts alternative employment but the employee or employer terminate the new contract during the trial period, the date on which the original employment ended.

Where the relevant date has been decided in any of the above situations but the employer did not give the statutory notice, or less than the statutory notice, to terminate the employment contract, the relevant date is, instead, the date on which the statutory notice would have terminated if it had been given at the appropriate time.

The statutory notice required of employers is one week, plus one week after two years, plus one week for each additional year up to a maximum of 12 weeks.

Example: An employee is dismissed on the grounds of redundancy on Friday, 20 February 2009.  No notice is given and the employee leaves immediately. 

The employee was born on 8 March 1969 and joined the business on 1 April 2002.  On the date of termination, the employee has 6 years’ continuous employment and is age 41.  An employee in those circumstances is entitled to 6 weeks’ SRP.

However, if the employer had given statutory notice, the termination date would have been 3 April 2009, six weeks after 20 February.  On that date, the employee would be 42 years old and have 7 years’ continuous employment, giving entitlement to 7½ weeks’ SRP (i.e. 6 years @ 1 week, plus 1 year at 1½ weeks).

IRELAND

Labour Court

New Orders and Notices affecting minimum pay and conditions

On 11 August 2008, the Labour Court will hold Inquiries into the proposal by the Minister for Enterprise, Trade and Employment to abolish the four existing Joint Labour Committees (JLCs) in the clothing sector and replace them with a single JLC to operate in relation to workers employed in the clothing sector and their employers.

The four existing JLCs are the Tailoring JLC, Shirtmaking JLC, Women's Clothing & Millinery JLC and Handkerchief and Household Piece Goods JLC.  Written representations may be submitted to the court in advance of the date of the Inquiries.

In addition, the Employment Regulation Order (Hairdressing Joint Labour Committee), 2008 is effective from 11 July 2008 and fixes the statutory minimum rates of pay and statutory conditions of employment of workers in the Hairdressing sector.  All employers of the workers affected by the changes are required by law to post a copy of the Notice.

Further information:
Notice of Establishment of a JLC for the Clothing Sector  http://www.labourcourt.ie/Labour/Information.nsf/
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Notice of Abolition of the Tailoring JLC, Shirtmaking JLC, Women's Clothing & Millinery JLC and Handkerchief and Household Piece Goods JLC  http://www.labourcourt.ie/Labour/Information.nsf/
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Labour Court Employment Regulation Order Hairdressing (Dublin, Dun Laoghaire & Bray) JLC 2008
http://www.labourcourt.ie/Labour/Information.nsf/
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Labour Court Employment Regulation Order Hairdressing (Dublin, Dun Laoghaire & Bray) JLC 2008   
http://www.attorneygeneral.ie/esi/2008/B26109.pdf

Employees Motoring/Bicycle Expenses

New tax free allowances from July 2008

The rates up to which employees’ travelling expenses in their own vehicles may be paid free of tax and without specific Revenue approval have been increased from 1 July 2008, as follows.  There are no changes to bicycle rates.

Further information:
IT51 Employees Motoring/Bicycle Expenses  http://www.revenue.ie/leaflets/it51.htm
Travel Rates for Motor Cars effective from the 1st July 2008  http://www.revenue.ie/doc/motorrates08.doc

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