Payroll Update from Lisa Kennery

Payroll Update from: Lisa Kennery

Commission and Holiday Pay – a Decision

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The employment tribunal in Leicester has handed down its long-awaited decision in Lock v British Gas.

Daniel Barnett’s employment law bulletin summarises: Mr Lock was a salesman on a basic salary with variable commission paid in arrears. Mr Lock’s commission depended not on the time worked, but the outcome of that work, i.e. sales achieved. Mr Lock could not earn commission whilst on leave, and therefore would lose income by taking it. He brought a claim for his ‘lost’ holiday pay after taking leave in December 2011 to January 2012. Following the ECJ’s decision last year, the employment tribunal has held that Mr Lock’s holiday pay should include an element for his commission. It has done so by inserting new words into regulation 16(3) of the Working Time Regulations 1998 as follows:- “(e) as if, in the case of the entitlement under regulation 13, a worker with normal working hours whose remuneration includes commission or similar payment shall be deemed to have remuneration which varies with the amount of work done for the purpose of section 221.” This will impact on future holiday pay entitlement. The impact on back-claims is reduced by the two year cap on backdated claims which takes effect on 1 July 2015

Abolition of employer National Insurance contributions for under 21’s

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If you employ anyone under 21 years old you will no longer have to pay Class 1 secondary National Insurance contributions on earnings up to the new Upper Secondary Threshold (UST) for those employees.  This comes into effect from 6 April 2015 so be prepared to change the NI Category letters of those employees to ensure you’re paying the correct amount of NI contributions.The Abolition of employer National insurance contributions for under 21’s section of GOV.UK has been updated and now includes more detailed guidance for employers, plus detail on the new category letters and rates.

The New Marriage Allowance

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Registration for the new Marriage Allowance for married couples and those in civil partnerships is now open.

The government has opened registration for the new Marriage Allowance, a tax break for married couples, helping them save up to £212 a year.

Applying online is straightforward. Couples can register their interest to receive the Allowance now at gov.uk/marriageallowance.

From 6 April 2015, more than 4 million married couples and 15,000 civil partnerships will be eligible for the tax break.

The Allowance means a spouse or civil partner who doesn’t pay tax – therefore is not earning at all or is earning below the basic rate threshold (£10,600) – can transfer up to £1,060 of their personal tax-free allowance to a spouse or civil partner – as long as the recipient of the transfer doesn’t pay more than the basic rate of income tax.

From April, HMRC will contact those who have already registered for the Marriage Allowance to apply. People can register at any point in the tax year and still receive the full benefit of the allowance.

Applying online is simple. One person in a couple will apply online to transfer the allowance to their spouse or civil partner, and HMRC will tell the recipient about the change to their Pay As You Earn (PAYE) tax code.