With April marking the annual tax and wage changes, it is important all businesses monitor what changes have been made and why you should stay updated. If you fail to keep up with tax and wage changes, fines could follow your business – something you must avoid.
Coleman & Co can help all businesses throughout Lisburn with their financial management. Whether you struggle to adapt to tax and wage changes or your business has poor financial performance, we can assist.
Minimum Wage Increase
Every April, the current national living wage and the national minimum wage changes. Whether you employ apprentices, young workers or over 25’s, you must ensure wage is correct. If some staff members were previously on national minimum wage, it is important that you make the necessary changes. You can view the changes in minimum wage from 2017 to 2018 for each age group below:
- Apprentice: £3.50 – £3.70
- Under 18: £4.05 – £4.20
- 18 – 20: £5.60 – £5.90
- 21 – 24: £7.05 – £7.38
- 25 & Over: £7.50 – £7.83
With these significant changes, if your payroll fails to keep up with the minimum wage changes, fines could be given. Legal action could also be taken by your employees, so avoiding this issue will ensure the correct payslips are always given, without any legal issues. Whether you are employing new staff, or this applies to existing members of your team, pay changes must be made.
Personal Allowance Increase
Your personal allowance, the amount of money you earn before being taxed, has also increased in April 2018. This means if you earn less than £11,850 in a tax year, you will not receive tax on your wages. Allowance has risen from April 2017, where your personal allowance was £11,500. This could lead to a reduction in tax of up to £70 for some staff members, whether you work part-time or on minimum wage.
In addition to this, the threshold to pay higher tax rates has also increased. To pay the higher tax rate of 40% on your wages, your income must now be £46,350 or above. This amount also includes the increased personal allowance, meaning a reduction in tax of up to £337.50 per year.
Penalties & Fines
Although this may not seem a massive issue, if you complete your own finances it is integral to meet these tax and wage changes within your business. Employers who fail to pay their staff members National Minimum Wage could face fines up to £20,000. As this fine is larger than any cost of raising staff members wages, taking the fine is simply not worth it. Not only could you face a backlash from staff, but 100% of unpaid wages will also have to be paid.
Tax returns must always be accurate. No matter what tax and wage changes have been made, incorrect tax submission to the HMRC could lead to penalties. Initially, you may just face a warning, but overdue returns or regular mistakes could leave you with big fines to pay. To ensure tax returns are accurate, you must stay updated with all changes, every tax year.
Tax and wage changes must be considered within your budget, otherwise, you run the risk of penalties and fines. Coleman & Co can help every business ensure tax returns and payroll never causes a problem.
If you require advice regarding any financial issues in your business, do not hesitate to contact our team. We can discuss all tax and wage changes and provide several services to ensure businesses never have financial issues. Call Coleman & Co on 028 9266 3599 or fill in our contact form for accountants in Lisburn.