Accommodation For Agricultural Workers

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Farmers who provide accommodation to their employees need to make sure that the rates they charge their workers do not push wages below National Minimum Wage or Agricultural Minimum Wage.

If accommodation is provided to workers, the offset rate as provided by HMRC is £6.40 per day or £44.80 per week from April 2017.

If an employer charges the employee more than the offset rate, the difference is taken off the employee’s pay which will lower their wage and it could fall below minimum wage.

If the accommodation is free, the offset rate is added to the employee’s pay increasing their wage.

However, charging below the offset rate will have no effect on the pay.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Changes to Agricultural Minimum Wage on the Horizon

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Farm workers in Wales are set to receive a 6% pay rise by the end of this year, following the introduction of an interim Agricultural Wages Order for Wales.

It will be the first pay rise of its kind since the abolition of the Agricultural Wages Board in 2013, and will represent an annual wage increase of 2% between 2012 and 2015.

Workers on Grade 1, the lowest pay grade, will be paid at 2p above the current national minimum wage of £6.70, and this will apply to all workers over 16.

The new order is an interim measure until a new advisory panel is set up and, hopefully, fully operational by early 2016. Its aim is to ensure fair wages, combat skills and labour shortages, and offer a more attractive career path to young workers.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of jscreationzs at FreeDigitalPhotos.net

Employing Casual Harvesters & Beaters

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Farmers are being reminded by HMRC that they must ensure that they comply with the rules when employing casual workers for harvesting and shoot beating.

Firstly –  you must ensure that individuals are eligible to work in the UK by requesting the relevant documentation, checking and taking copies for your records.  There are stiff penalties if one of your workers is found to be illegal and you did not check their papers.  Details of how to find out an employee’s eligibility can be found here.

Secondly  – you must pay the workers through PAYE if:

  • They work for you for a period of over 2 weeks OR
  • They work on any other activity other than harvesting or beating OR
  • They are family members.

You may not have to deduct tax if:

  • They work for less than 2 weeks, AND
  • They have not worked for you since 6 April of the current tax year.

OR

  • They work for you for 1 day or less, AND
  • You pay them off at the end of the period, AND
  • They have no further contract of employment.

(Note in both cases, the pay is still taxable income, but it is up to the individual to ensure any tax due is paid over.)

National Insurance must be applied as normal to casual harvesters and beaters where earnings for each job exceed the Secondary Threshold (for employers) or the Primary Threshold (for employees).

In ALL cases, whether or not you apply deductions of tax and NI, you must keep a record of workers for at least 3 tax years following the employment and these details reported under RTI rules. This should include full names and addresses, date of birth, gender, NI number and how much you paid them.

If you have any doubts about how to pay your casual workers this summer, please contact us.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Budget Brings Big Changes to Farming Businesses

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The recently announced National Living Wage of £7.20 per hour is expected to hit farming businesses hard. The launch of the new wage, which is replacing the National Minimum Wage, was announced in the Chancellor’s budget and represents a jump of 11% from the current £6.50 an hour. The amount is set to rise to £9 per hour by 2020 for employees aged over 24.

For many companies, a reduction in corporation tax will help to offset the rise, but this applies to fewer than 10% of farming businesses. Henry Robinson, president of CLA which represents many rural landowners, said “As a result of this budget, farmers and other rural businesses are presented with significant inflation in wage costs and the cut in corporation tax that is supposed to pay for it will not benefit them… There are hundreds of thousands of family businesses in rural England and Wales that are unincorporated and therefore are taxed on higher tax rates.”

However, the new Inheritance Tax Relief rules look to benefit many farming families, as the Chancellor announced the creation of a £175,000 family home allowance for each individual. While many farming properties qualify for agricultural property relief from inheritance tax, claims are very closely scrutinised by HMRC and the new allowance will help some farming families. The new allowance is transferable between spouses and there will be an ability to also take advantage of the new allowance even if you downsize.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of Pakorn at FreeDigitalPhotos.net