January Newsletter

January is always a time of reflection for me – looking back on 2024 at the challenges and opportunities that I’ve embraced as a business owner and looking forward to what’s to come in 2025.

Adapting to change isn’t always easy but I’ve found that it can often lead to unexpected and positive outcomes. I try to look at change as an opportunity, rather than an obstacle.

If you’re finding yourself in a similar position, please know that my team and I are here to support you and your business with whatever challenges may lie ahead. We can listen to you and suggest actions to alleviate those challenges as we continue to take care of your financials, providing clarity on how your business is doing.

How ever you need us to support you through your journey as a business owner, we’re here for you!

New Services

We would really like to proactively help you with business hints and tips in the coming months, including telling you all about our new Leadership Support service.

If you would like to receive business hints and tips then please reply to this email saying ‘count me in.’

Important Deadline Reminder

2023/24 self-assessment tax returns must be submitted to HMRC by 31 January 2025.

If you still haven’t signed off your personal tax return, please do so as soon as possible, as the deadline is fast approaching. We pride ourselves on submitting all of our clients’ tax returns on time but can only do so with your support.

Please remember that tax returns filed after the deadline will automatically incur a late filing penalty of £100.

Unused Holiday at the End of the Leave Year

Our payroll team often receive queries from clients about processing unused annual leave at the end of the leave year.

Firstly, employees’ line managers should ensure that annual leave is used throughout the year, in line with The Working Time Regulations 1998. This is important because taking time off work helps employees to have sufficient rest breaks, which can aid their physical and mental health.

The minimum amount of annual leave an employee should receive in the leave year is 5.6 weeks. This is made up of four weeks, plus 1.6 weeks of additional annual leave.

If an employee hasn’t been able to take annual leave due to absence or statutory leave (for example, maternity leave), they will be able to carry over their unused entitlement into the following holiday year.

Also, if an employee’s employment ends during the course of their leave year then accrued/untaken holiday entitlement may be paid.

What Can’t be done in Relation to Unused Annual Leave

If an employee hasn’t used all of their leave at the end of the holiday year, employers are not allowed to pay any of this unused annual leave entitlement in the form of a ‘bonus.’

For anyone who is unsure about the rules regarding unused annual leave, you can seek guidance here – GOV.UK  and use the free online tool to calculate your leave entitlement.

Have you Awarded a Pay Rise to any Employees on Maternity Leave?

What is the Alabaster Ruling?

The Alabaster ruling is something that employers need to be aware of when employees are on, or due to be on, maternity leave and have been awarded a pay increase any time between the start of the eight week ‘relevant period’ for calculating Statutory Maternity Pay (SMP) and the end of the employee’s statutory maternity leave.

The CIPP’s advisory service receive regular questions around this ruling and what pay needs to be taken into consideration.

Pay Increase on Maternity Leave

If an employee has been awarded a pay increase but they’re on maternity leave, you’ll need to recalculate the employees SMP, considering the pay increase and pay the difference in SMP.

Now you may be thinking, “the pay increase is from now (let’s say 1 July) but my employee went on maternity leave in April, surely this doesn’t apply?” It does and you will need to recalculate the SMP but base the eight week calculation on the new rate of pay the employee is entitled to, as if they were in receipt of the increased pay in the eight week relevant period.

The difference between the SMP already paid and the new rate of SMP will need to be paid to the employee. In most cases it will only be the difference between the rates during the first six weeks which need to be paid. It will not affect an employee’s payment if they have received full Occupational Maternity Pay (OMP), unless the first six weeks of SMP is higher than the OMP amount.

If an employee was not entitled to SMP at the time of going on maternity leave, the recalculation will still need to be carried out. The situation may arise that the employee may now be eligible for SMP. In this case SMP should be paid minus the amount of maternity allowance they received.

Scope of the Alabaster Ruling

The Alabaster ruling only impacts the rate of SMP the employee receives, it doesn’t therefore impact anything like their pension contributions or salary sacrifice arrangements.

Remember, for a salary sacrifice arrangement to be successful, the money must be foregone before it is due, therefore you cannot amend a salary sacrifice deduction in the instance on Alabaster, which is a retrospective calculation/entitlement. This means Alabaster focuses solely on the rate of SMP an employee is due.

Umbrella Company Payslip Checking Tool

HMRC has released an online tool that will allow workers engaged with an umbrella company to spot signs of fraud and avoid tax avoidance schemes.

The tool requires the user to input data from their payslip. This will then generate an estimate for HMRC on what should have been paid and will highlight any areas where any incorrect deductions have been made. It will then aim to assist the user in correcting their tax position.

The tool has been designed for individuals but can also be used by employment businesses and umbrella companies to check their own systems. There is a form within the tool to highlight any issues or suggestions users may have

How We Can Help

At Clear Vision, we’re always eager to guide and assist our clients – how ever you need us to support you through your journey as a business owner, we’re here for you!

If you have any specific questions about any matters within this month’s newsletter and how they may affect you or your business, do please get in touch with us.