All I've got's a sunny afternoon?

BBC Radio 2's Simon Mayo saw fit to play The Kinks' Sunny Afternoon yesterday. And appropriately so - it was unseasonably warm and George 'babyface' Osborne realised this Spring's budget. In this blog, we look at what effect these most recent announcements have on employers.

NICs

Some employers, and many accountants, may welcome the move towards integrating NICs and income tax into one system. However, for now, the government are continuing with the current system. Employers (and employees alike) will see an additional 1% being added to NICs. That said, the rate at which they become payable has now been moved to £136/week.

Petrol allowance

After April 6th, the 40p rate on business mileage increases to 45p. If employers pay less than 45p per mile then the employee can claim it back from the tax man. This applies only for the first 10,000 miles on cars, vans, motorcycles and bikes. A further 5p in the mile can be claimed back for passengers.

Company cars

Drivers of low emission vehicles (between 95gm/km and 220gm/km) will see the tax they pay on company cars drop by 1%, but this isn't effective until April 2012. Other vehicles will remain at the current rates.

Tax avoidance

The government plans to introduce legislation to crack down on employers avoiding paying NICs by offering other benefits or so-called 'disguised remuneration'. The plan is that PAYE and NICs become payable on loans or rewards made in connection with employee's employment. This can be backdated to 9th December 2010. However, Mr Osborne did indicate that they would focus on schemes designed to avoid tax, limiting the impact on genuine arrangements.

Enterprise Zones

Under the Tories, we see a re-introduction of Enterprise Zones. This incentivises businesses to move into the identified zones by offering discounted business rates. Whilst these are aimed at creating prosperity in key geographical areas, critics describe this as economical musical chairs - moving jobs rather than creating new ones.

Childcare vouchers

The tax-free limit of £55 / week is changing for new scheme members from 6th April. From this date, the tax relief will take into account the person's tax allowance, which is most likely to affect higher rate tax payers. Essentially, higher rate taxpayers will be limited to £28 per week and top rate taxpayers earning over £150,000 will be entitled to just £22 per week of tax relief.

Apprenticeships

The Chancellor has confirmed 50,000 new apprenticeships, aimed at reducing youth unemployment. Funding for a further 80,000 work experience placements has also been announced. Together with tax breaks on corporation tax, it is hoped that this will offer the stimulus to encourage businesses to recruit.

For further information on the budget and how it affects other areas of your business, see the full announcement on the HMRC website.

Work Experience? Internships? Apprenticeships? Is this really also unpaid labour or could this add value to your business?

Today, unemployment is at its highest with the latest unemployment figure of almost a million 16-25 year olds known to be sat at home twiddling their thumbs. This clearly shows that young people are finding it harder and harder to find a job. Even those with a degree and a master’s degree struggle as ‘work experience’ is considered to be as valuable as going to University.
Generally, the term 'work experience' refers to a limited period of time that an individual spends with an organisation. This gives an opportunity to learn directly about the work that the company does and is also known as a placement or an internship. Today, all young people have to consider work experience. However, there are implications for this as to whether ‘work experience’ needs to be ‘paid work experience’?

National Minimum Wage - (£5.93)
There can be laws on being paid when it comes down to work experience. National minimum wage (NMW) legislation ensures that almost all workers in the UK who are over compulsory school leaving age are entitled to be paid at least the National Minimum Wage. 'Worker' has a legal definition and depends upon the existence of a contract of employment or a contract to personally perform work or services. These contracts can be written, oral or implied.
However, with high competition in gaining a job, working unpaid could be a thing of the future. With competition for graduate jobs at a high, employers are looking for more than just a good degree from their graduate recruits. Employers, particularly small and medium sized businesses, recruit for “real” positions and expect new graduates to be able to quickly adapt into their role. Employers frequently look for work experience as evidence of your skills, commitment and understanding of the career. Without experience, particularly in some sectors such as HR, media, advertising, etc, it is very difficult to compete and for many employers, it provides a route in.

The Governments Plans
Jackie Orme, Chief Executive at the Chartered Institute of Personnel and Development (CIPD) expressed that young people have suffered in the recent recession. Research shows employers are reluctant to hire from groups where they feel basic job skills are lacking. Work experience is a perfect way to break the vicious circle of no experience and give young people an opportunity to develop and demonstrate the skills and commitment employers need.

The Benefits for Organisations
Some tips for businesses may include:
· Planning ahead – think about forthcoming projects or staff holidays where a young person could provide essential resource.
· Setting expectations – brief the young person in advance rather than once they arrive to save time in the long run
· Giving responsibility – give young people projects that help your business complete work you may not have been able to deliver.

Who’s holding the baby?! The due date for additional paternity leave approaches…..

In an effort to promote equality and good parenting a new right to additional paternity leave (APL) is to be introduced from the 6th of April this year. The reforms are intended to give parents greater flexibility in the way in which they share childcare responsibilities in the first year of their child's life. The regulations will be welcomed by many couples, who for financial or social reasons might prefer to adopt a shared approach to parenting in the early stages of their child’s life.

Who is eligible?
§ you are the father of a child due on or after 3 April 2011
§ your wife, partner or civil partner is pregnant and due to give birth to a child on or after 3 April 2011
§ you and your partner receive notification that you are matched with a child for adoption on or after 3 April 2011
§ your wife, partner or civil partner is adopting a child from overseas and the child enters Great Britain on or after 3 April 2011
§ the child's mother is entitled to statutory maternity leave, maternity pay or allowance or statutory adoption leave or pay

What will additional paternity leave entitle you to?
§ between 2 and 26 weeks’ APL, if the mother has returned to work. This is in addition to 2 weeks’ ordinary paternity leave. APL can only start 20 weeks after the child is born; and
§ be entitled to receive additional statutory paternity pay if the mother has not exhausted her statutory maternity pay when she returns to work. He also has the right to maintain the same terms and conditions (other than pay) as if he had been at work;
§ have the right to return to work in the same job and on the same conditions.

How does this impact on you the employer?

Some employers, however, have voiced apprehension over the new legislation. Elaine McIlroy notes that in a recent survey of HR professionals, 45% expressed concern over its introduction, citing anxieties over managing the new policy.

What can you put in place to manage the change?
Employers should have existing policies in place to manage maternity, paternity and adoption leave and, in many respects; these can be adjusted or extended to make provision for APL
Ensure line managers are briefed and trained on the new employee rights to reduce the risk of discrimination against employees who are eligible for APL. Consider issuing a Q&A on the qualification and notification requirements for APL.
Consider whether any enhanced benefits offered to mothers on additional maternity leave (such as enhanced maternity pay) should be offered to fathers on APL. We are not sure how the law will develop on this one and the Government does not believe that a failure to replicate such benefits will give men grounds for a claim, but it is arguable that treating men and women differently through this period could give rise to discrimination.
In addition, employers will have to update redundancy policies and guidelines to ensure they record that fathers on APL, like mothers on ordinary maternity leave, are entitled to be offered any suitable alternative vacancies, if their role is made redundant.

However, like every new piece of legislation that is put in place it is a waiting game to see what impact it will have and how the law develops. Nevertheless, by being aware of a few adjustments that can be made now this should enable the implimentation to be a smooth one.