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Archives for Wage & PAYE

New minimum wages rates

The national minimum wage hourly rate for adults is to climb to £6.08 in October 2011.

The rise represents a 15p and a 2.5 per cent increase and was recommended by the Low Pay Commission.

Despite the economic uncertainties, the LPC said that the decision for the increase was a unanimous one.

The hourly rate for employees aged between 18 and 20 will rise by 6p (1.2 per cent) to £4.98.

For workers aged between 16 and 17, the rate goes up by 4p (1.1 per cent) to £3.68. While for apprentices there is to be a 10p (4 per cent) increase to £2.60.


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Minimum wage rates soon to increase

Employers are being reminded that new national minimum wage rates will be coming into force in October.

There is also a new rule affecting 21-year-olds.

As from 1 October, employees will no longer have to be aged 22 to become eligible for the top hourly minimum wage adult rate.

The new rates are: £5.93 per hour for low paid workers aged 21 and over, up from £5.80; £4.92 per hour for 18-20 year olds, up from £4.83; and £3.64 per hour for 16-17 year olds, up from £3.57.

For the first time there will be an apprentice minimum wage of £2.50 per hour. The new rate will apply to those apprentices who are under 19 or those that are aged 19 and over but in the first year of their apprenticeship.

The accommodation offset will rise from £4.51 per day to £4.61.

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PAYE consultation date looming

Employers have little time remaining in which to share their views with HM Revenue and Customs (HMRC) on possible changes to the PAYE system.

The government is looking to update the system and to reduce admin costs for businesses, and is seeking input from employers.

However, the consultation is due to close on 23 September.

Launching the consultation, David Gauke, the Treasury Secretary, said: “The PAYE system needs to respond better to the circumstances of the individual taxpayer because only in this way will we be able to reduce errors and provide taxpayers with the clearest picture possible of their tax and allowances.

“We also need a PAYE system that reduces the burden on employers.”

At the moment, responsibility for administering the system lies with employers, who deduct employees’ income tax and NICs at source.

A real time system could see a programme whereby tax and NICs are automatically taken from employees’ gross pay as it enters their bank accounts.

If there is a good response to the consultation, HMRC has said, there may be a second consultation of proposals in the autumn.

Details of the consultation can be found at HMRC’s website. 

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Employers reminded of possible tax errors in April payslips

Employers and employees are being reminded that there could be some errors with the new PAYE tax codes that have been issued by HM Revenue and Customs (HMRC).

As a result, employees should check their April and May payslips to see if they are paying the correct amount of tax.

This may be reflected in any unexpected change to the amount of money they receive in wages.

Worries emerged earlier in the year that a proportion of the 25 million tax coding notices that have been sent out may have been wrong.

The codes dictate how much employers and pension firms deduct in income tax for the coming 2010/11 financial year.

A number of people with one job have received two (or more) tax coding notices with different codes. This is because HMRC’s new system, which combines information on NICs and PAYE details for the first time, has been failing to distinguish between current and previous jobs in all cases.

Without complete information on those taxpayers who have moved from one job to another recently, the new database has been treating them as if they are in more than one job.

HMRC has said that it is in the process of reviewing individual cases to correct as many discrepancies as quickly as possible.

This means that in a number of cases where P2 forms have been issued to employees, HMRC won’t be sending P9 forms to their employers until the reviews have been completed. So some employees’ tax codes won’t have reached their employers in time for the new tax year.

If an employer does not receive a P9 in time, HMRC has said that they should continue to operate the existing 2009/10 code for the employee concerned even though the employee may already have been issued with a revised coding for 2010/11.

HMRC went on to add that, if an employee contacts an employer because they think their tax code may be wrong, then the employer should get them to call HMRC on the number printed on the coding notice or on 0845 3000 627.

In most cases a correct new tax code will be sent to both employers and employees in due course.

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