The introduction of the UK’s National Minimum Wage (NMW) in 1999 is the single most successful economic policy in a generation, according to the Resolution Foundation.

The NMW has increased the pay of the UK’s lowest paid workers by £6,000 a year compared to their earnings simply rising in line with typical wages, says a report from the think tank.

The report notes that the policy was introduced 25 years ago against a backdrop of rising pay inequality. 

Between 1980 and 1998, hourly pay growth in the UK was twice as fast for the highest earners as it was for the lowest earners.

But since 1999 – when the NMW was brought in – this trend has reversed, and hourly pay inequality has fallen with pay growth for the lowest earners five times that seen by the highest earners.

Nye Cominetti, Principal Economist at the Resolution Foundation, said:

‘The policy was introduced in the face of fierce opposition, but now experiences strong cross-party support. With its current remit ending this year, now is the time to discuss the future of the minimum wage and low pay more widely ahead of the election.

‘Politicians should reflect on why the minimum wage has been so successful – such as the combination of long-term political direction and independent, expert-led oversight – and whether this approach could be broadened to tackle some of the UK’s other low pay challenges.’

Internet link: Resolution Foundation website

HMRC’s decision to halt its plans to restrict taxpayer helplines and direct people to online services instead has been met with relief by the Federation of Small Businesses (FSB).

The tax authority had announced that it was closing its self assessment helpline for six months every year. It was also restricting the opening times of its VAT helpline and the usage of its PAYE helpline.

HMRC says it is halting these plans ‘in response to the feedback while it engages with its stakeholders about how to ensure all taxpayers’ needs’.

The FSB says that more investment in digital and telephone is needed – not a reduction in service.

Tina McKenzie, Policy Chair, FSB said:

‘Small businesses will definitely be relieved that the drastic reduction in HMRC’s helpline opening hours has been paused. We are very glad that HMRC has listened to the chorus of dismay which greeted its initial announcement.

‘While online services are a key part of the communications mix for the tax authority, sometimes there’s just no substitute for a real human on the end of a phone line who can listen, engage, and help untangle issues.

‘Before phone line cuts are considered, HMRC needs to build capacity in its digital services, as if those are improved – with real people online to offer help instead of chatbots – many small firms like to interact with the tax authority this way, as it can be more flexible and available out of hours.’

Internet link: GOV.UK FSB website

Uncover the effects of Conservative Party Chancellor Jeremy Hunts’ 2024 Spring budget.

Many changes may well unlock benefits to you and your business. We are here to help you review the changes made in the budget and explain these and answer any questions you may have.

In the meantime here are downloadable summaries covering:

Guide to SDLT rates for 2024

Spring Budget Tax Rates and Allowances

Guide to Spring Budget 2024

The government has named and shamed over 500 UK employers for underpaying their employees.

524 businesses were named for failing to pay the minimum wage to pay 172,000 workers, with offending employers ordered to pay nearly £16 million plus an additional financial penalty.

The National Living Wage (NLW) is set to rise to £11.44 an hour from 1 April 2024.

Offending employers include major high street brands, the government said. It stated that anyone entitled to be paid the minimum wage should receive it, and that enforcement action will be taken against employers who do not pay their staff correctly.

Patricia Rice, Independent Commissioner at the Low Pay Commission (LPC), said:

‘Since its introduction nearly 25 years ago, the National Minimum Wage (NMW) has played a vital role in protecting the earnings of the lowest-paid workers in the UK. At a time when the cost of living is rising, it is more important than ever that these workers receive the pay to which they are entitled.

‘NMW underpayment not only cheats workers of their rightful due, it leaves compliant firms undercut by those who do not abide by the law. By naming the firms responsible for significant underpayment, we raise awareness of the nature and the scale of underpayment and encourage all employers to ensure that they fully comply with the law.’

Internet link: GOV.UK

Just a week after HMRC released new guidance that classed double-cab pickups as cars rather than vans, the government reversed the decision.

On 19 February, HMRC confirmed that it’s reversing the updated guidance announced on 12 February, meaning that double-cab pickups will continue to be treated as goods vehicles rather than cars.

The government said it reversed course after listening to concerns from farmers and the motoring industry on the impact of the changes to the tax treatment.

The government has acknowledged that the 2020 court decision and resultant guidance update could have an impact on businesses and individuals in a way that is not consistent with the government’s wider aims to support businesses

Double-cab pickups will continue to be goods vehicles for tax purposes and the tax on benefits in kind will not increase when employers provide these vehicles to their employees.

Nigel Huddleston, Financial Secretary to the Treasury, said:

‘We will change the law at the next available Finance Bill in order to avoid tax outcomes that could inadvertently harm farmers, van drivers and the UK’s economy.’

Internet link: GOV.UK