Auto-enrolment ‘blind-spot’ could be the end of your business!


Sage, the accounting the popular software company, has issued warnings that thousands of UK SMEs could be caught off guard by what has been termed the auto-enrolment ‘blind-spot’ because of the new National Living Wage changes.

With only six months until the new National Living Wage changes come into effect, Sage is advising small businesses to make significant preparations as the auto-enrolment contributions for over one million employees is set to dramatically increase.

The changes to National Living Wage means that small businesses will need to budget for a wage cost of over £5,000 per employee.

Staff are eligible for auto-enrolment if that are more than 22 years of age, less than the state pension age, are primarily UK based and are earning over £10,000 per year. As of yet over 5 million UK professionals have been placed on the auto-enrolment pension scheme. Which is a scheme that is required for any workplace that has more than one member of staff.

Lee Perkins, managing director, Sage UKI, said: “Business owners are bracing themselves for the impact of increased staffing costs with the NLW.

The managing director of Sage UKI said that in his opinion businesses are ready for the increase in staffing cost but are not currently preoccupied with preparing for the impact that the, “increased pension contributions required for a tranche of employees that will be earning an additional £5,000”.

Overall this means that by October 2018 small businesses will have to contribute 3% of an individuals annual salary into the pension scheme.

Small business owners need to be aware of this unexpected cost and act as soon as possible. If you need help preparing for these unforeseen changes please speak to one of our payroll advisors. If you aren’t currently a client please take advantage of a free no-obligation consultation to find out more about these changes.



Employment Costs Rocket!

Liverpool accountants take on national minimum wage increase

Andrew Keates Accountants we are continuing our explanation of July’s Announcements George Osbourne and their effects on Liverpool’s Small businesses,

In July Chancellor declared a 50% raise to the national insurance employment allowance coming from £2, 000 to £3, 000, which will support small enterprises to decrease their wage bill and may even offset the elevated Living Wage charge.

The decrease to corporation tax may also aid in relieving the cost demand of the wage increases but a lot depends on the amount of low-paid employees a company has and its particular degree of profitability.

As outlined by accountancy firm BDO, the Employment Allowance is only going to allow business employers (who are paying minimum wage) to balance out the cost of the Living Wage increases approximately up toTwo Thousand hours. From then on, the company will be a net loser unless of course it is profitable enough to take advantage of the cut in the rate of corporation tax.

Many small company pundits were not impressed from the announcement.

Philip Salter, director of the Entrepreneurs Network, explained: “The Government should keep the decision of exactly what level to set any wage floors in the hands of the professionals at the Low Pay Commission, making sure that companies aren’t compelled to sack personnel if payroll costs climb an excessive amount.

“If the Chancellor wished to help the lower paid workers, he needs decrease Employers’ National Insurance, 70% of which is taken care of by the employees, as opposed to just raise the Employment Allowance from £2, 000 to £3, 000 per year.

For more information from Liverpool Accountants Andrew Keates and how the employment cost changes will affect your business please call one of our advisor for no obligation chat today!

National Miminium Wage Increase

National Minimum Wage

As from 1 October 2014, the national minimum wage (NMW) is due to increase to:

  • £3.79 for workers aged under 18 but above the compulsory school leaving age and who are not apprentices; and
  • £2.73 for apprentices aged under 19 or over 19 but in the first year of their apprenticeship.
  • £5.13 for workers aged between 18 and 20;
  • £6.50 for workers aged over 21;

To ensure that there are no unintentional breaches of the national minimum wage legislation employers are advised to make the increases at the same time.