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The minimum Workplace Pension contribution amounts required by domestic employers is due to increase. This increase should be easy to manage (as long as you are prepared!). Stay ahead of the game with Stafftax’s 5 Step Guide:

A Legal Requirement for all employers!

Workplace Pensions and automatic enrolment is now a legal requirement and must be provided by all employers, including domestic employers. If you are unsure of what this means for you, take a look at our ‘About Workplace Pensions’ page for a quick overview.

When is it due to increase?

The current employer minimum contribution set by the government has been 1%. This is due to rise to 2% on 6th April 2018 and again in April 2019 to 3%.

What do I need to do?

Both the employer and employee can choose to contribute more than the minimum if they wish, but it is the employers responsibility to ensure the pension scheme is a qualifying scheme, and contributions are deducted correctly.

Only pay what you need to!

To save money, the percentage contribution can be paid on something called 'Qualifying Earnings'. Using Qualifying Earnings means that you only pay a pension contribution on part of the gross salary, rather than the whole salary, therefore reducing the amount to pay.

Don't have time to spare?

Find out how we can help take the hassle out Workplace Pensions and Automatic Enrolment, read about our fully managed pension service or contact our Pension Team on 0203 137 4573. 

babyatchristmas croppedA full time employee has a statutory right to at least 5.6 weeks (28 days) of paid holiday a year. This includes bank holidays. Annual leave should only be taken as it has been accrued.

Bank Holidays

As the 28 days’ annual leave includes bank holidays, if an employee takes the day off on a bank holiday it is deducted from their annual leave entitlement. If a part time employee does not normally work on a day which a bank holiday falls, then the bank holiday does not affect their entitlement.

Part Time Employees

Part time employees get a direct proportion of the 28 days. This can be calculated by multiplying the number of days a week they work by 5.6.

FOR EXAMPLE, if Anna works three days a week she is entitled to 16.8 days’ holiday a year, including bank holidays. 3 x 5.6 = 16.8.

Fractions of days must be honoured. They can be rounded up, but not down.

If an employee does not work the same number of hours each day, then their annual leave should be calculated in hours rather than days.

FOR EXAMPLE, if Bob works eight hours a day Monday and Tuesday and four hours each Wednesday, he works 20 hours a week so is due 112 hours’ holiday a year, including bank holidays. 20 x 5.6 = 112.

cotswoldsHave you considered employing a domestic couple to keep your home running smoothly?

Domestic couples can be a complete solution, providing a seamless team with multiple skills.

Between the two of them, domestic couples can often undertake a wide range of duties, such as housekeeping, childcare, laundry, shopping, driving, gardening, DIY, care of animals, swimming pool maintenance, etc.

You may want, for example, a couple combining the skills of a nanny/housekeeper with a handyman/gardener or a housekeeper/cook with a houseman/estate manager/driver.

Usually separate accommodation will be provided for the domestic couple and a joint salary. Couples will generally be looking for the security of a long-term position and will want to take their annual leave together.

Stafftax works with a number of agencies who can help with all sorts of domestic staff recruitment, including domestic couples. Complete our online form and we will put you in contact with a highly skilled recruitment agency to suit your needs.

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What is a Gross Salary?

A gross salary is the amount an employee earns before any deductions such as tax, NI, pensions and student loans are removed.

What is a Net Salary?

A net salary is the amount an employee will be paid after any deductions are made; the amount going into the employee’s bank account.

Most salaries in the UK are agreed in gross terms, but in the domestic arena a net salary is sometimes requested. At Stafftax we encourage an understanding of both types of salary. However, we recommend that a gross salary is agreed and stated in the Employment Contract as agreeing a gross salary has many benefits for both employer and employee:

Employer

  • If there are certain unexpected expenses, such as unpaid tax from a previous job, a higher tax rate due to the employee having another job, or student loan repayments, the employer's costs will not be affected as they will come out of the agreed gross salary.
  • You can accurately work out any additional expenses that are based on the gross salary, such as employers National Insurance contributions and employers workplace pension contributions.
  • Agreeing a gross salary ensures that you are only paying the employer's contribution to the employee’s pension. Agreeing a net salary will mean that you pay both employee’s and employer’s contribution.
  • Increases in tax and NI thresholds will not affect your costs as an employer.

For the Employee

  • A gross salary agreement means the employee will receive an increase in their net pay when the Personal Tax Allowance is increased - which usually happens annually.
  • Our 2016 wages survey revealed that employers were becoming more aware of the importance of agreeing a gross salary. This could mean that they would be more likely to employ somebody who will agree a gross salary rather than a net salary.
  • The rest of the UK (including HMRC) talk in terms of gross. When operating in the financial world, such as when applying for loans or mortgages, banks will usually ask for proof of gross salary. A net salary this means that the gross salary may be subject to change and this uncertainty may cause problems.

At Stafftax we have salary calculators that will give you an estimated conversion of your salary from gross to net and vice versa. If you would like any further advice you can always contact us, we are always happy to help!

benefits imageBenefits in Kind are ‘perks’ or added benefits provided by the employer above and beyond the employee's salary. They are often taxable and must be reported annually to HMRC as part of employee's total earnings.

Who pays the tax?

Benefits in kind offer a good example of why it is important for employers to agree a gross salary with their employees. If a net salary is agreed, then the employer is liable for the tax. If a gross salary is agreed, then it comes out of the employee’s salary. In addition to tax there may also be a Class 1A National Insurance charge of 13.8% of the value of the benefit to be paid - the employer always pays this charge.

Examples of taxable benefits*

  • A car or use of a car for the employee’s own purposes
  • Employee accommodation, if it has a separate front door and separate utilities from the employer’s
  • Medical insurance
  • An interest free loan

Examples of benefits that are tax-free*

  • Use of a car for work purposes
  • Use of a mobile phone (for work and / or private purposes)
  • Personal gifts other than cash that are given for reasons unrelated to the job – ie a wedding or retirement gift
  • Bicycles and cycling safety equipment provided for employees to get to and from work

*PLEASE NOTE THESE LISTS ARE NOT EXHAUSTIVE.

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