A report out in January shows that around 20% of those on apprenticeship schemes are not being paid the National Minimum Wage (NMW), while apprenticeships themselves have fallen in number.

​The figures in the Apprenticeship Pay Survey from the Department for Business, Enterprise and Industrial Strategy (BEIS) show the strange anomaly that correct levels of the NMW are largely paid in the first year of an apprenticeship, but often fall below it during the second and third years.
The highest levels of compliance were in management apprenticeship schemes, and the lowest in hairdressing (at 47% non-compliance) and child care (at 34%). Those on formal training for at least a day a week reported that they were less likely to receive compliant pay than those in more informal training.
The Apprenticeship Levy, introduced in 2017, was designed to increase people in apprenticeships by making companies offer formal apprenticeship training. Companies paying over £3 million in wages a year must pay the levy but can claim it back to cover apprenticeship training costs. Firms paying below that level in wages can apply for funding. But since the scheme came in, the number of apprenticeships has declined by 200,000 places between 2016 and 2018.
One issue has been the rise of companies offering apprenticeship training in the more office-based, soft skills and management sector, rather than the technical skills needed, for example, in construction and engineering. This focus has skewed the market towards sectors taking advantage of recuperating the levy funds, to the disadvantage of key sectors. With some traditionally employer-offered training courses rebranded as ‘apprenticeship schemes’, the concept has become watered down as the funding available is swallowed up.
At the end of 2019, the government announced that, the NMW will rise in April by 6.2% to £8.72 an hour. A report from the Resolution Foundation has found that while levels of non-compliance with the NMW fell from the turn of the century, they have risen since the introduction of the National Living Wage (NLW) in 2016. For companies failing to comply with their minimum wage obligations overall, there doesn’t appear to be much incentive to change their ways, with only a one in eight chance of being caught and penalised.
Paying your staff fairly and transparently, and engaging in genuine apprenticeship, training and development practices, is a key element in maintaining staff loyalty, productive recruitment and brand reputation.

​The intestacy rules for England and Wales have been amended.
The intestacy rules automatically apply to the distribution of estates where there is no will. There are three different sets of rules in the UK: one for England and Wales, a similar set for Northern Ireland and a wholly different set for Scotland.
The rules for England and Wales have just received a slight change, with the modification highlighting an aspect of intestacy of which many people are unaware: a surviving spouse or civil partner does not always inherit all of their deceased husband, wife or civil partner’s estate.
Up until 5 February 2020, the English and Welsh rules said that if the husband, wife or civil partner of the deceased survives 28 days, and the deceased had issue (broadly, children and their lineal descendants), then:

• The surviving spouse would receive:
  • The personal chattels of the deceased (car, clothing, jewellery, etc);
  • £250,000 outright; and
  • One half of the residue of the estate.

 

• The issue would receive the other half of the residue.

From 6 February 2020, the £250,000 figure was increased…to £270,000.
Adding £20,000 to the outright inheritance does little to solve a problem that some families can face in dealing with the family home.
If the property is not owned in joint names (as joint tenants), then a survivor may not inherit the family home outright. In some cases, intestacy can even mean that there is an inheritance tax bill to meet when the first of the couple dies, something most estate planning aims to avoid.
One other important fact to note about intestacy is that it deals only with married spouses, civil partners and relations. If you live as a couple but are not married or in a civil partnership, intestacy could leave the survivor with nothing.
The message is clear: if you have not made a will, make one. And if you have made one, make sure you know where it is and that it is up to date. 

For taxpayers who have trouble affording their tax bills, HRMC has updated its process for setting up time to pay arrangements.
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If you have missed the self-assessment filing deadline of 31 January, and are struggling to cover your tax payments, you can now set up a time to pay arrangement online with HMRC.
The online option is only available once the initial deadline has passed, allowing taxpayers until the end of February to set up a plan for 2018/19. Any submission of a time to pay arrangement is still subject to approval. You will need to set up a Government Gateway ID if you don’t already have one.
If your instalment plan is agreed, you will not face a charge or penalties for late payment from the time that arrangement is agreed. However, any payments made after the deadline of the arrangement will be subject to interest, currently at 3.25%.
Outside of this window, you will need to deal directly with HMRC to negotiate settling outstanding tax debts. Time to pay arrangements are assessed against each individual’s financial circumstances, including income, expenditure and disposable assets, taking into account what they can afford and how long they may need to pay.
Once an arrangement is in place, it can be amended to take advantage of an upturn in your circumstances, or, if necessary, extended if your situation remains difficult. In these cases, you will accrue interest from the due date to the end of the arrangement, with the amount payable included in your overall debt under the arrangement.
In extremis, HMRC can force taxpayers to use savings or assets such as second properties to pay off their final debts, which would be discussed on a case by case basis. Your primary home and pension income are protected from any realisation of assets, although a charge can be made against your property to secure your debt.
Ideally you will never need to set up a time to pay arrangement if you plan your expenditure to include your tax liabilities. If you do find yourself in difficulty over tax payments, please let us know so we can help.

In early January the Chancellor announced a new Budget date: 11 March 2020.
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This could be a significant Budget. Traditionally, the first Budget of a new Parliament is when the Chancellor delivers the medicine of tax increases and/or unpopular reforms. To borrow from Macbeth: ‘If it were done when ‘tis done, then ‘twere well it were done quickly’…that way the electorate has over four years to forget.
If you’re struggling to remember what happened in Budget 2019, don’t worry – you haven’t forgotten. Unusually, in 2019 there was no Budget. There was a Spring Statement in March 2019 from Philip Hammond, but the general election call forced his successor, Sajid Javid, to abandon the planned Autumn Budget originally set for 6 November. During the election campaign the Conservative party said that the Budget would be revealed in February, but this date shifted again in the new year when the Chancellor announced a date of 11 March.
We already know a good proportion of what the Chancellor will announce, as draft legislation was published eight months ago in anticipation of the cancelled Autumn 2019 Budget. The contents will almost certainly include controversial legislation to strengthen the operation of off-payroll working rules (IR35) in the private sector, possibly with some amendments following the government’s last minute review, as well as tighter rules on the capital gains tax treatment of main residences. Both are due to take effect from 6 April 2020.
Ahead of the Budget, the government confirmed at the end of January a ‘tax cut’, mentioned in the Conservative party manifesto, of an increase in the starting point for national insurance contributions (NICs) from the current £8,632 to £9,500 a year – a maximum individual saving of £2 a week.
The Budget unknowns include what the Chancellor might do about pensions tax relief. He already faces a growing problem with the impact of the annual allowance on NHS senior staff, which has been fixed temporarily, but only until April. There are already calls for the Chancellor to overhaul the system, something he could do while simultaneously raising more revenue.
One consequence of the Budget date is that any year end tax planning – especially on the pension front – now potentially has a deadline date of 10 March. 

​Several large companies affected by the extension of the off-payroll IR35 rules next April have started to curtail their use of contractors working through personal service companies (PSCs) as the landscape of freelance working looks set for a seismic shift.

With six months to go, Barclays has now joined HSBC in reviewing its “third-party resourcing arrangements” in the light of the rules changes. HSBC contacted contractors earlier in the year to say they would no longer engage those working through limited companies. Existing contractors will need to choose either to move to PAYE employment or cease working for the bank.

It’s not just the large firms themselves who are reviewing these working relationships. HMRC wrote to around 1,500 contractors working for GlaxoSmithKline through PSCs telling them to check their status and ensure they are genuinely self-employed and meet the determining requirements.

With the new rules falling on larger companies initially, some may shift the responsibility for contracting workers to managed service providers, who can take on contractors working through PSCs and would be responsible for paying tax and NICs. The anxiety for many freelancers now is that the complexity of the rules, and potential burdens for non-compliance, mean that companies affected may simply opt to avoid any direct personal service company contracts.


Meanwhile the tribunals have been busy again, with the implications of their decisions adding to the confusion. Where earlier in the year some presenters who had worked for the BBC won their tribunal cases appealing against HMRC’s IR35 determinations, most notably Lorraine Kelly, the tables have now been turned. In September three different presenters working for the BBC through PSCs lost their cases, to the tune of £300,000 of tax owed, largely as employers’ national insurance contributions.
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While the three judges didn’t entirely agree about the IR35 status of the three presenters, they were clear that the ‘imbalance of bargaining power’ was an important determinant in the case. Despite the losses, the judgement stated that the presenters and their advisers had acted in good faith.
The range of different judgements from tribunals, lack of trust in HMRC’s status determinations and potential liabilities mean that many contractors may find the employment landscape difficult to navigate in the next year. If you may be affected, please get in touch about your options.

A recent report looking at who pays the most income tax reveals some interesting findings.​

The Institute for Fiscal Studies (IFS) published a briefing note in early August with a detailed answer to the question of what it takes to enter the 1% club. Around 310,000 people make up this cohort, with some predictable and not so predictable traits:

• They have taxable income of at least £160,000 in 2014/15. The historic nature of the data reflects both HMRC’s systems and the fact that the 2015/16 numbers were distorted by the introduction of new dividend tax rules in the following year.


• Typically, they are male aged 45–54 based in London, with an additional £550,000 of income. To quote the IFS, the 1% club is “disproportionately male, middle-aged and London-based”.


• They live in 10% of the 650 parliamentary constituencies, which contain half of the top 1% population. In 2000/01, 78 constituencies were needed to reach the halfway mark.


• They have over a quarter of their income made up from partnership and dividends, as the pie chart shows. This reflects the fact that many are business owners.
• They manage fluctuating income levels. The top 1% is not a stable group, which may be some solace if you do not currently have the necessary membership credentials. The IFS found that roughly a quarter drop out each year and only half remain for five consecutive years. The corollary is that there is a much higher chance of being in the top 1% at some point in your life than in any given year. The IFS calculated that 3.4% of all people (and 5.5% of men) born in 1963 were in the top 1% at some time between 2000/01 and 2015/16.
• However, being a member of the 1% taxpayers club also means accounting for 27% of all income tax collected by HMRC. So failing to qualify may reflect some careful and expert financial planning.