Budget 2014 19 March 2014

This is an edited version of the speech, to see the full speech go to https://www.gov.uk/government/speeches/chancellor-george-osbornes-budget-2014-speech

So in this Budget we make sure hardworking people keep more of what they earn – and more of what they save. Yesterday we set out our support for parents with tax free childcare. Today support for savers is at the centre of this Budget, as we take another step towards our central mission: economic security for the people of Britain.

OBR and economic forecasts

A year ago at the Budget the OBR forecast the economy to grow by just 0.6% in 2013. They now confirm that it grew by three times as much. At the Autumn Statement, they significantly revised up their expectations for future growth.

Today I can tell the House they are revising up their forecast again. A year ago, they predicted growth in 2014 would be 1.8%. At the Autumn Statement, 2.4%. Today the OBR forecast growth in 2014 of 2.7%. That’s the biggest upward revision to growth between Budgets for at least 30 years. Growth next year is also revised up to 2.3%. Then it’s 2.6% in 2016 and 2017. And with the output gap closed around a year earlier than previously predicted, growth returns to around its long term trend, at 2.5% in 2018. Taken together, these growth figures mean our economy will be £16 billion larger than was forecast just four months ago. Employment forecasts At home the biggest risk is clear: abandoning the economic plan that is working. And nowhere is the success of that plan more evident than in job creation. 1.3 million more people in work. The latest figures today show a staggering 24% fall in the claimant count in just one year, and the fastest fall in the youth claimant count since 1997. The OBR today forecast one and a half million more jobs over the next five years. Unemployment down from the 8% we inherited to just over 5%.

£1 coin

Of course, the prerequisite of sound money is a sound currency. And, Mr Deputy Speaker, the £1 coin has become increasingly vulnerable to forgery. Now among the oldest of coins in circulation; one in thirty pound coins are counterfeit – and that costs businesses and the taxpayer millions each year. So I can announce that we will move to a new, highly secure, £1 coin. It will take three years. We will consult with industry. Our new pound coin will blend the security features of the future with inspiration from our past. In honour of our Queen, the coin will take the shape of one of the first coins she appeared on – the threepenny bit. A more resilient pound for a more resilient economy.

Fiscal policy

We are taking further difficult decisions now so we can reduce the deficit and protect our NHS and schools and meet our obligations to the world’s poorest by contributing 0.7% of our national income to help them. On public service pensions, we implement the reforms proposed by John Hutton. We will ensure schemes are properly valued, saving the taxpayer over £1 billion a year. We are continuing with pay restraint in the public sector – an essential part of maintaining sound finances and economic stability. We will also insist on the prudent management of departmental finances. Thanks to the efforts of my colleagues in Cabinet, these now regularly come in under budget. In order to lock-in these underspends, I said in December that we would reduce spending by £1 billion in 2015-16. Today, I am making that overall billion pound reduction permanent. And I look forward to the work my excellent colleague the Chief Secretary is now doing, with the Cabinet Office, to find further efficiencies. Difficult decisions on public service pay and pensions. Further savings in departments. A cap on welfare bills. None of these decisions are easy, but they are the right thing to ensure Britain lives within her means.

Welfare

We set out today the details of that welfare cap – and we will seek the support of Parliament for it next week. From housing benefit to tax credits, the full list of benefits included in the cap is published in the Budget document today. Only the State Pension and the cyclical unemployment benefits are excluded. I am setting it at £119 billion in 2015-16. It will rise, but only in line with forecast inflation, to £127 billion in 2018-19. Britain should always be proud of having a welfare system that helps those most in need. But never again should we allow its costs to spiral out of control and its incentives to become so distorted that it pays not to work. In future, any government that wants to spend more on benefits will: have to be honest with the public about the costs, need the approval of Parliament, and will be held to account by this permanent cap on welfare.

Tax avoidance

Thanks to my Right Honourable Friend the Prime Minister’s leadership we have driven the international efforts to develop tough, new global tax rules that stop rich individuals hiding their tax and companies shifting their profits offshore. And the number of registered tax avoidance schemes has fallen by half. And while the vast majority of wealthy people pay their taxes, there is still a small minority who do not. We will now require those who have signed up to disclosed tax avoidance schemes to pay their taxes, like everyone else, up front. I am increasing HMRC’s budget to tackle non-compliance. We will block transfers of profits between companies within groups to avoid tax. We will increase tax credit debt recovery rates for those with sufficient earnings. We will give HMRC modern powers to collect debts from bank accounts of people who can afford to pay but have repeatedly refused to, like most other Western countries. We will increase compliance checks to catch migrants who claim benefits they aren’t entitled to, saving the taxpayer almost £100 million. We will take action to curb potential misuse of the EIS and VCT schemes. And we are expanding the new tax we introduced to stop people avoiding stamp duty by owning homes through a company. We will expand the tax on residential properties worth over £2 million to those worth more than £500,000. And from midnight tonight anyone purchasing residential property worth over half a million pounds through a corporate envelope will be required to pay 15% stamp duty. None of this applies to homes that are rented out. Many of these are empty properties held in corporate envelopes to avoid stamp duty.

So I will continue to direct the use of the LIBOR fines to our military charities and our emergency service charities too. Because the sums continue to grow, I can today extend that support to our search and rescue and lifeboat services – and provide £10 million of support to our scouts, guides, cadets and St John’s Ambulance. I am also today waiving inheritance tax for those in our emergency services who give their lives protecting us. I will also relieve the VAT on fuel for our Air Ambulances and Inshore Rescue boat services across Britain, and provide a new air ambulance for London – all in response to huge and heartfelt public demand and the campaigning of my Hon. Friends for Hexham, Brentford & Isleworth, and Argyll & Bute. Further, this summer, many services of remembrance will be held in our cathedrals to mark the Great War, so we are providing £20 million to support the repairs needed to these historic buildings.

Exports

Mr Deputy Speaker, We’re not going to have a secure economic future if Britain doesn’t earn its way in the world. We need our businesses to export more, build more, invest more and manufacture more. First, exports. Our exports have grown each year and the OBR today forecast rising export growth in the future. Our combined goods exports to Brazil, India and China have risen faster than those of our competitors. With Stephen Green, and now Ian Livingston, we’re expanding the reach and support UKTI offers British businesses. But for many firms the truth is you can only win the contract if you are backed by competitive export finance. Today we fundamentally change that. And we’re going to start with the finance we provide our exporters. We will double the amount of lending available to £3 billion. And I can announce that from today the interest rates we charge on that lending will be cut by a third. We will also reform Air Passenger Duty to end the crazy system where you pay less tax travelling to Hawaii than you do travelling to China or India. It hits exports, puts off tourists and creates a great sense of injustice among our Caribbean and South Asian communities here in Britain. From next year, all long haul flights will carry the same, lower, band B tax rate that you now pay to fly to the United States. Private jets were not taxed at all under the previous government. Today they are, and I’m increasing the charge so they pay more.

One key British export is the North Sea’s oil and gas. We will take forward all recommendations of the Wood report. And we will review the whole tax regime to make sure it is fit for the purpose of extracting every drop of oil we can. We will introduce now a new allowance for ultra high pressure, high temperature fields to support billions of pounds of investment, thousands of jobs and a significant proportion of our energy needs. Even with these measures, the North Sea is a mature basin – and the OBR have today revised down the forecast tax receipts by a further £3 billion over the period. Britain is better together.

Housing

Mr Deputy Speaker, our country needs to export more – and it also needs to build more. House building is up 23%. But that’s not enough. That’s why we’re making further reforms to our planning system and offering half a billion pounds of finance to small house building firms. And it’s why we’re giving people a new Right to Build their own homes and providing £150 million of finance today to support that. It’s why we’re funding regeneration of some of the urban housing estates that are in the worst condition, and we’re extending the current Support for Mortgage Interest Scheme to 2016. And it’s why we’ve got Help to Buy. We’re extending the Help to Buy equity loan scheme for the rest of the decade, so we get 120,000 new homes built. In the South East where the pressure is greatest we’re going to build new homes in Barking Riverside, regenerate Brent Cross, and build the first new Garden City in almost a hundred years at Ebbsfleet. We’re going to build 15,000 homes there, put in the infrastructure, set up the development corporation and make it happen. Taken all together, the housing policies I announce today will support over 200,000 new homes for families.

Investment

Today I have approved a £270 million guarantee for the Mersey Gateway Bridge thanks to the hard work of my Honourable Friend for Weaver Vale.

Tomorrow we introduce legislation to give new tax and borrowing powers to the Welsh Government to fund their infrastructure needs, and they can start now on work to improve the M4 in South Wales. Because of the exceptionally poor weather this winter, I am making an additional £140 million available, on top of that already provided, for immediate repairs and maintenance to damaged flood defences across Britain. Our roads too have taken a battering.

My Honourable Friend for Northampton North has been a persistent campaigner for resources to repair the pot-holes in his constituency and across the country. His persistence has paid off and I’m making £200 million available which local authorities can bid for. I trust Northampton will be making an application. Modern infrastructure is part of a successful economy. So too is a modern industrial strategy.

If Britain isn’t leading the world in science and technology and engineering, then we are condemning our country to fall behind. So we will establish new centres for doctoral training, for Cell Therapy and for Graphene – a great British discovery that we should break the habit of a lifetime with and commercially develop in Britain. To make sure we give young people the skills they need to get good jobs in this modern world, we’ve doubled the number of apprenticeships and I will extend the grants for smaller businesses to support over 100,000 more. And we’ll now develop new degree level apprenticeships too.

Business tax

Today we accept their recommendation to move the collection of Class 2 NICs into self-assessment, abolishing for 5 million people this wholly unnecessary bureaucracy. And we’ve cut business tax rates.

Corporation tax was 28% when we came to office. In just two weeks corporation tax will be down to 21%, high street stores will get £1,000 off their rates, and every business in the country will get the Employment Allowance – a £2,000 cash-back on jobs. Next year, corporation tax will reach 20% and we take under 21s out of the jobs tax altogether. Businesses keeping more of their money to create jobs and invest in the future. Today I want to go further. Many of the enterprise zones we created are now flourishing – so the business rates discounts and enhanced capital allowances will be extended for another three years.

And I can confirm that with the Northern Ireland Executive we’ll establish the first enterprise zone there near Coleraine. I’m raising the rate of the R&D tax credit for loss-making small businesses from 11% to 14.5%.

Two years ago, I launched the Seed Enterprise Investment Scheme to help finance start-ups. It’s been a great success and I’m making it permanent. We’re backing investment into social enterprises with a Social Investment Tax Relief at a rate of 30%. And we’re supporting our creative industries too.

The European Commission has today approved the extension of our film tax credit – and I will apply the same successful approach to theatre, especially regional theatre. From this September there will be a 20% tax relief for qualifying productions, and 25% for regional touring.

And we’re expanding by a third the size of the cultural gift scheme. But I want to do something today that helps all businesses invest.

In 2012 I increased the Annual Investment Allowance ten-fold to £250,000. This generous allowance was due to expire at the end of this year – and all the business groups have urged me to extend it. So we will. But we’ll do more. We’re going to double the Investment Allowance to £500,000, extend it to the end of 2015, and start it next month. 99.8% of businesses will get a 100% investment allowance.

Manufacturing Today, by tilting the playing field – extending the 2% increase in company car tax in 2017-18 and 2018-19 while increasing the discount for ultra low emission vehicles – and reducing the rate of fuel duty on methanol. But above all we are going to have a £7 billion package to cut energy bills for British manufacturers – with benefits for families and other businesses too. First, I am capping the Carbon Price Support rate at £18 per ton of CO2 from 2016-17 for the rest of the decade. This will save a mid-sized manufacturer almost £50,000 on their annual energy bill. Duties So we’re backing exports, backing manufacturing, backing a Britain that builds. And

Mr Deputy Speaker, we also want to help hardworking people keep more of what they earn and of what they save. That’s what we’ve done by freezing council tax, freezing fuel duty and raising the personal allowance to £10,000. And from next year tax free childcare – 20% off, for up to £10,000 of childcare costs for parents.

I can confirm that the fuel duty rise planned for September will not take place. Petrol will be 20 pence lower per litre than it would have been.

Let me turn now to tobacco and alcohol duties. Tobacco duty has been rising by 2% above inflation and will do so again today. Today, I am scrapping that escalator for all alcohol duties. They will rise with inflation, with these exceptions:

Scottish Whisky is a huge British success story. To support that industry, instead of raising duties on whisky and other spirits, I am today going to freeze them. And with some cider makers in the West Country hit hard by the recent weather, I am going to help them by freezing the duty on ordinary cider too. And then there’s beer. I know the industry, led so ably by my Honourable Friend for Burton, have been campaigning for a freeze. But beer duty next week will not be frozen. It will be cut again by 1 pence. Pubs saved. Jobs created. A penny off a pint for the second year running.

Personal allowance

 Mr Deputy Speaker, it is a central part of our long term economic plan that people keep more of the money they have earned. When we came to office, the personal tax allowance was just £6,500. In less than three weeks time, it will reach £10,000. That’s an income tax cut for 25 million people. Today, because we are working through our plan, we can afford to go further. Next year there will be no income tax at all on the first £10,500 of your salary.

I can also confirm today that the higher rate threshold will rise for the first time this Parliament, from £41,450 to £41,865 next month, and then by a further 1% to £42,285 next year.

And because I am also passing the full benefit of today’s personal And I am linking the rate of the transferable tax allowance for married couples to the personal allowance, so it will also rise to £1,050.

Savings And we are going to make the New ISA more generous by increasing the annual limit to £15,000. £15,000 of savings a year tax free – available from the first of July. And I’m raising the limits for Junior ISAs to £4,000 a year too.

So we will launch the new Pensioner Bond paying market leading rates. It will be issued by National Savings and Investments, open to everyone aged 65 or over, and available from January next year. The exact rates will be set in the autumn, to ensure the best possible offer - but our assumption is 2.8% for a one year bond and 4% on a three year bond. That’s much better than anything equivalent in the market today. Up to £10 billion of these bonds will be issued. A maximum of £10,000 can be saved in each bond.

And because 21 million people also invest in Premium Bonds I am lifting the cap for the first time in a decade from £30,000 to £40,000 this June, and to £50,000 next year – and I will double the number of million pound winners.

The tax rules around these pensions are a manifestation of a patronising view that pensioners can’t be trusted with their own pension pots. I reject that. People who have worked hard and saved hard all their lives, and done the right thing, should be trusted with their own finances. And that’s precisely what we will now do. Trust the people. Some changes will take effect from next week. We will:

• cut the income requirement for flexible drawdown from £20,000 to £12,000

• raise the capped drawdown limit from 120% to 150%

• increase the size of the lump sum small pot five-fold to £10,000

• and almost double the total pension savings you can take as a lump sum to £30,000 All of these changes will come into effect on 27 March.

Pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, anytime they want. No caps. No drawdown limits. Let me be clear. No one will have to buy an annuity. But instead of the punitive 55% tax that exists now if you try to take the rest, anything else you take out of your pension will simply be taxed at normal marginal tax rates – as with any other income. So not a 55% tax but a 20% tax for most pensioners. But there is one final reform to support savings I would like to make. Mr Deputy Speaker, There is a 10 pence starting rate for income from savings. It is complex to levy and it penalises low income savers.

Today I am abolishing the 10 pence rate for savers altogether. No tax on those savings whatsoever. And we will almost double this zero-pence band to cover £5,000 of saving income.

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.

Budgeting Success

A lot of small businesses are missing the importance of budgeting ahead.

The reason why businesses budget, is to set long term goals for themselves and to track the progress to ensure they are achieving what they set out at the beginning of the year.

Use it for anything, ie build up the business to make a decent living for the shareholders, improve the balance sheet position, take over a global market, the choices are yours.  Plan for them.

Here are some simple ways of budgeting and forecasting the year ahead.

There are two ways, a long term fixed budget, set out at the beginning of the year and then track when the actual figures come through, or a rolling budget which means once the month is up you roll ahead to the next month, so you are always looking at least a year ahead.

Set yourself some goals you would like to achieve over the next couple of years, and set out how you are going to achieve them.  This could be in note form or a more detailed report.

Sales

Set yourself realistic goals to achieve for your sales turnover.   A top down approach.  Use last year as a guide plus a percentage for growth or inflation.

This method is a great way of keeping the costs under control.

A bottom up approach, is more loose in that you put in your costs, and set the targets of sales that you have to achieve to pay for everything. It can make targeting sales more difficult as costs are not as controlled.

Cost of Sales

If you have been running your business a little while you might have these figures to hand as a percentage of turnover.   If not then a costing exercise can be done to work this out.

Overheads.

Put everything in to this and spread it over the next year. Ie rent, wages, advertising, heating, office costs, travel.  It all goes in here. Split it out by category so that you know what you’re spending on what.  

If you are doing a yearly one, spread these costs over the 12 months. 

If you are aware of seasonality fluctuations make sure they are apparent in your budget.

Starting off with the profit and loss budget is a good way to start, if you are feeling confident then set up a balance sheet forecast and a cashflow one too.   If they are all connected together, you will always know ahead of time what your financial position is going to be.  There is some great software in the market that can help you with this.

Now use this template to put in your long term goals.  If you are looking to purchase equipment, or taking on new staff for a project, a new sales contract.

You may have to increase sales to achieve these goals, but set targets.  You may have to increase your advertising spend, or take on more staff, take this into account.

Once your budget is done, then as the months pass and you know your actual income and costs.  Put them into the spreadsheet.

If you are not quite making the targets, look into the cause of the fluctuations, to get yourself back on track.

Happy budgeting. 

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own.  It is not intended to be used to make all of your business decisions but as a guide only.

How Graphs Can Be Used For Your Business

Graphs can be used by Financial and Non Financial managers in a variety of ways.

Sales

Sales Managers have targets that are set for them by the company they work for.  They can track their sales in a variety of ways.

Our example shows Sales split by category/or segment and shown against budget. Targets that were set at the beginning of the year.

This graph also tells you the most popular and productive products on sale.
You can take this further and look at the margins of each product category, you might not sell a lot of something but if it returns a higher margin/profit rate, you don’t have to sell as many to get the same profit figures. There may also be seasonality in that product line.

Ie in hot weather a newsagent may sell a lot more drinks than bars of chocolate.
In cold weather the icecream freezer might go untouched. Easter, Half Term, Christmas. You would tailor your sales targets to match demand.

Apply this method to your particular product line.

 

Cashflow

You might want to set yourself a target bank balance for you to meet your overheads and make a profit.

The graph will show against budget whether you are meeting that goal.

It also gives indication of the business behaviour, see our example the graph shows above the line at first, then dips over February to April then comes back up.  Back into the target position and above.

If the graph had shown erratic it would give an indication of how well the manager is managing the business. In a planned approach, or finger in the air approach.

Gross Profit

This is a key figure in your accounts, it indicates whether you have made enough sales to now cover your overheads and make a profit.

Our graph shows a rise and then a sharp dip in May, this could be down to several factors.  The Sales themselves were generally low that month, an error in charging the right selling price for a new product line, an operational issue.

If you see a dip in any of these things, look for the reason, if easily explained, you could be putting action in to put yourself back on track.  Also look out for high peaks, these should be explainable.  ie a new contract, timing issues, seasonality, or it could be an error.

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own.  It is not intended to be used to make all of your business decisions but as a guide only.

As the clock ticks towards 01 April 2024, businesses across the nation are bracing themselves for the significant minimum wage increase set to come into effect. With no accompanying support from governments in these challenging times, the burden falls on the shoulders of businesses to adapt and plan effectively.

The Rise of Minimum Wage

As with every year, April 1st marks a pivotal moment as the minimum wage sees a substantial increase. Workers aged 21 and over will be entitled to the National Living Wage where currently it was workers aged 23 and over. While the intention behind such adjustments is to uplift low-wage workers and tackle income inequality, the reality for businesses is starkly different. For many, this hike presents a formidable challenge, with limited government assistance.

Financial stability is crucial to any business. It is extremely important that you protect and enhance it. Cashflow of your business is vital. You need to be aware of how much money is coming in and how much money is going out of the business. You will need to have a plan in place to cover any shortfalls.

Governments are having their own challenges and not always there to help us in a crisis, we have to stand on our own two feet, to see ourselves through these challenging trading times.

To stay on top of cashflow, it is best to speak to your accountant about cashflow projections. We have also got examples of how to get the best of cashflow on our website, click here to find out more.

We have examples of cashflow and budgeting here.

So, what can be causes of cashflow issues?

The number one issue we see is when a supplier has increased their prices significantly. This is when you need to decide if there is something you can scale back on or is it time to start shopping around. Talking to your suppliers if you notice increases, we’ve all been facing this over the past 18 months.

Track and monitor your costs, by carrying out management accounts, comparing this year with last year, you can see instantly what has changed for you and your business.

Late payments from customers can lead to cashflow issues too. This can sometimes cause tension as you do not want to ruin relations. The following tips can help tackle these issues;

·        Ensuring your invoices are accurate and on time can help avoid late payments.

·        Giving gentle reminders as it approaches credit term limits.

·        Providing easy payment solutions such as bank transfer or a direct debit system

·        Check your customers credit score, giving too much credit without looking into your customer bill paying activities can lead to bad debts.

·        Discounts for early payment to improve the timing of when the cash will be paid in can help too.

We all dislike to pay tax, but it is a part of life. Tax planning helps to keep your business financially healthy. We must ensure we have the funds to cover the tax payments. This is why it is crucial to work with your accountant so that you know well ahead of time how much your tax bill is. Not paying the tax bill in full and on time can add to the cost. Penalties and interest will incur and can make this less manageable.

There are allowances and reliefs out there to bring the tax bill down. Getting this done correctly will ensure that you pay the lowest but accurate amount over to HMRC.

Set up a savings account, and slowly build up the cash towards any tax bill, you don’t get surprises when its time to pay the bill then. Any surplus in that account, could pay for something you want.

Businesses that plan ahead, traditionally do better than those that don’t plan and work in the dark.

There are approximately 5.6 million businesses in the UK, of which 98% are considered small to medium sized businesses. So, we small businesses are crucial to the UK economy, there is no denying this.

Whether you are a start-up and excited for the times ahead, or an establishment renewing your challenges, we all want to be successful with our business. In our latest blog, we talk about tips we think are vital to any business.

We all have a vision in mind, of where we’d like to see our business in the future. This vision needs to be translated on paper as your business plan. A business plan is a must for all business owners. This can help outside investors get an insight of your business, for if ever you need funding to grow your business.

Business Plan

A business plan should consist of;

·    Summary – What is your purpose, what is your vision?

·    Target market – Who are you likely to sell to

·    Competitors – What is your rivals weakness? Why are you different?

·    Staff – Do you need people to help run your business. What level of skill and pay is required?

·    Suppliers – Who will be your main supplier?

·    Marketing Plan – How will you advertise yourself to the world

·    Operations – Which is the best way to run your business.

·    Finance – How much money do you need? Determine the profitability of the business.

Business Structure

As well as a business plan, you will need to have a business structure. Sole trader, partnerships and limited companies all have their own pros and cons. Deciding which structure to choose is not always straightforward. If an asset is owned outright, then you would need to consider retaining personal ownership on incorporation. If you’re not sure which structure model you should go for, then here at Cross Accounting we can give tailored advice to you.

Year End

We cannot stress enough the importance of doing your year end as early as possible. Once completed, this will give you peace of mind as you will not have to worry, until next year. It will also give you more time to budget for your tax bill. You will not be in a rush to find the money for the tax bill and not kill your cashflow. Keep all receipts for your expenses, these will all help lower the tax bill. If you buy equipment or tools, mobile phone bills, petrol, these are all deductible. HMRC can conduct random spot checks, so it’s important to keep paperwork, recommended for 6 years.

Budgeting

Having budgets in place for your business can help you predict the near future. This allows you to have a spending plan, so you can make sure you have money for the things you need and the things that are important to you. You can see what is eating up your cash and avoid spending on unnecessary fees. Below is an example of a very simple budget.

These tips will keep you motivated and more importantly give you an idea of where your finances lay, helping you to quickly identify if there are rainy days ahead.

If you need expert tailored advice, please do get in touch as we are always happy to help.

There is always new rates and thresholds that come in to place in the new financial year.

The National Minimum Wage rate has gone up, however, the personal threshold has stayed the same.

Personal Allowance

The personal allowance is the amount you can earn without having to pay any tax.

This financial year 2023-24 is £12,570

National Insurance Rates

As an employee, you will pay Class 1 NI rates. If you earn above the primary threshold, then you will play Class 1 NI. The primary threshold for 2023-24 are £242 a week, or, £1,048 a month, or, £12,570 a year.

You will pay an additional 2% if you are in the upper earning limit. The upper earning limit are £967 a week, or, £4,189 a month, or, £50,270 a year

As an employer, you will have to pay national insurance on your staff members. This includes if you are a sole director on payroll. The rate applies to earnings above the secondary threshold. The secondary threshold for 2023-24 are £175 a week, or, £758 a month, or, £9,100 a year.

Employment Allowance

Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to the annual allowance amount. For the year 2023-24 this is £5,000

National Minimum Wage

The National Minimum Wage is the minimum pay per hour all workers are entitled to by law. These rates apply from 1 April 2023

SSP Statutory Sick Pay

Employees are entitled to SSP if they are off work for 3+ days. The same weekly Statutory Sick Pay rate applies to all employees. However, the amount you must actually pay an employee for each day they’re off work due to illness (the daily rate) depends on the number of ‘qualifying days’ they work each week.

If you want to ensure you are not breaking the payroll rules with NMW and SSP, message us to see how we can help.

If you do not understand the personal allowance threshold give us a call on our Cardiff or Bridgend office where the team will be happy to help.