Tackling the Important Issues
27th April 2017
Welcome to the first quarterly information bulletin from Dutton Recruitment. The bulletin is designed to keep you up to date with new rules, new legislation and other important issues that impact on the work we do together. It will also keep you up to speed with developments regarding Dutton Recruitment.
As this is the first bulletin, we intend to look at a few different areas in brief, some if not all of which we will no doubt revisit in future bulletins.
SELF-EMPLOYMENT AND THE ‘GIG’ ECONOMY
As long as we can remember “self-employment” has been a bone of contention. It probably doesn’t help that it has no definition in law. There is a very brief definition of “employment” and this has been fleshed out by countless Lords and Supreme Court determinations, but as far as self-employment is concerned, it is just anything that isn’t employment.
It’s also worth noting this is an increasingly important sector of the economy. Recent figures show that the number of self-employed people in the UK has grown by 114,000. This means there are now 4.78 million self-employed and this is 15% of the UK workforce.
Recently a new phrase has appeared; the Gig Economy. Basically this phrase applies to people who turn up, do a gig and get paid. Nowadays though you really don’t need a guitar…the rise of the internet particularly has led to what some have described as an explosion in this economy. That maybe a little melodramatic and realistically it’s an area where temporary work agencies have existed for many years.
Some very large businesses are finding that picking their way through employment status and worker status is not as straight forward as they thought it was and we could fill any number of bulletins alone with this topic. We will though return to it as we put into focus the trials and tribulations of Uber and assorted delivery businesses et al…
IR35 IN THE PUBLIC SECTOR
“IR35” is another moniker that may have suddenly appeared on the horizon. It’s actually been around since the year 2000 and has never really been popular with anyone. It takes its name from the document that introduced it… the (as was) Inland Revenue document number 35.
It is only relevant to circumstances where someone is doing some work for a company, but instead of working for the company directly or working as an individual, they have their own limited company and are normally the employee and director and owner all in one (often known as a Personal Service Company, PSC). The simplest way to describe it is that the legislation allows HMRC to disregard the PSC, and any other companies involved and simply look at the individual worker’s relationship with the company that benefits from the work they do (known as the end-client) and if that relationship would have been employment, then IR35 applies and income is taxed as if it was income of employment. You may just be getting an idea of why the legislation has always been so unpopular.
This year there has been some serious reform. But only where the work is being done for the benefit of an organisation in the public sector. So whilst at the moment this is only having implications only where it bites (where public sector clients are involved), we do believe that it may well provide a blueprint for the future of compliance in all sectors. If it already impacts on you, no doubt we are already dealing with it, however with the likelihood of it moving into the private sector it is something to which we will no doubt return.
APPRENTICESHIP LEVY
As many of you may have noted there is a new tax (well “levy”) on the books from April 2017, the Apprenticeship Levy. Whilst we are very much aware there are opportunities to be gained from the levy and more on that will follow later, we appreciate that the first priority is the correct application and transparent costing of the levy. The levy is set at 0.50% of earnings attributable to Employers National Insurance, so essentially if it attracts NI then it attracts the levy. By virtue of an allowance the levy only affects companies with a payroll in excess of £3 million per year, however due to the nature of work we do, the levy will have some small impact on our business and those we work with.
OTHER RELEVANT TAX CHANGES ANNOUNCED THIS YEAR
Personal Allowance; For the 2017/2018 tax year, the standard personal allowance — the amount of income you don’t have to pay tax on — has increased from £11,000 to £11,500. In addition, the basic rate limit for 2017/18 has increased from £32,000 to £33,500. This means earnings between £11,500 and £45,000 will be taxed at 20 per cent. Earnings from £45,000 to £150,000 are charged at 40 per cent and earnings above £150,000 at 45 per cent.
Dividend Allowance; The Spring Budget announced the dividend allowance will reduce from £5,000 to £2,000 from April 2018.
National Insurance (Self-employed rates); Disregarding the spectacular U-turn in Class 4 National Insurance (paid on profits), Class 2 National Insurance, a fixed weekly charge of £2.80 for businesses with profits exceeding £5,965, will be abolished from April 2018. Anyone hopeful that a continued promise not to raise National Insurance in this Conservative manifesto may well be disappointed.
Making tax digital for small businesses; Extensive changes to how taxpayers record and report income to HMRC are being introduced under the Making Tax Digital for Business proposal. Businesses, self-employed people and landlords who have a turnover above the VAT threshold (now set at £85,000) will be required to use the new digital service from April 2018.
Minimum wage; The Chancellor also announced an increase of 30p per hour to the National Living Wage, rising from £7.20 to £7.50 an hour in the 2017/18 tax year. This aligns with the Government’s long term target of increasing the minimum wage to £9 an hour by 2020. All other rates from the 16-17 to the 21-24 age group have also increased in line with inflation.
WHAT’S NEW AT DUTTON RECRUITMENT?
We are pleased to announce the appointment of Adam Sheekey as CEO of Dutton Recruitment in January 2017. Adam joined Dutton Recruitment in 2000 as the Branch Manager of our thriving London office and during this time went on to successfully grow the branch through its M&E and construction sectors. In May 2015, Adam joined the board as Operations Director and has since played a key role in taking the company forward.
This month we have also held another of our highly successful trainee consultant open days, this time at our Head Office in Sheffield. It was a fun and constructive day which gave an overview of the recruitment industry in 2017, what the future of recruitment may look like and the useful role recruitment consultancies play in the modern economy. The group was encouraged to participate in various ice breaker activities, real time typical recruitment exercises and a Dutton favourite, ‘Dutton’s Den’. Feedback from candidates was more than complimentary with attendees noting the interactive, informative content and real time exercises giving them a 'real' insight in to the industry.
Sheffield: 0114 2200888 London: 01708 728826 Cardiff: 01443 844477 Rotherham: 01709 794000 Leeds: 0113 3877340 Hull: 01482 337800
27th April 2017