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Calculating your Holiday Entitlement

How much holiday you are entitled to is normally set out in your contract of employment. The legal minimum holiday entitlement you are entitled to is 5.6 weeks, which can include bank and public holidays. Below you can find out how to calculate your entitlement, including calculations for part-time work and other working patterns.

Basic Calculation

For a basic calculation of your leave allowance multiply the number of days you work a week by 5.6. For example, if you work a five day week you would be entitled to 28 days’ annual leave a year:

5 days x 5.6 weeks = 28 days

Regardless of your working pattern, the minimum leave entitlement is capped at 28 days. So if you work a six day week, the statutory entitlement of 5.6 weeks will still be 28 days.

Part-time Workers

If you are a part-time worker, you are still entitled to 5.6 weeks’ holiday – 5.6 of your normal working week. For example, if you work two days a week you would be entitled to 11.2 days’ annual leave a year:

2 days x 5.6 weeks = 11.2 days

You should be treated no less favourably if you are a part-time worker than an equivalent full-time worker. This means that if your employer gives extra days off to full-timers they may have to give extra time off to part-time workers as well.

Casual or Irregular Working Patterns

If you work casually or irregular hours it may well be easiest to calculate the holiday entitlement that accrues (accumulates) as hours are worked. The holiday entitlement of 5.6 weeks is equivalent to 12.07 per cent of the hours you worked. The 12.07 per cent figure is:

5.6 weeks’ holiday, divided by 46.4 weeks (being 52 weeks – 5.6 weeks) multiplied by 100 = 12.07 per cent

The 5.6 weeks have to be excluded from the calculation as you would not be present during the 5.6 weeks in order to accrue annual leave. For example, if you had worked 10 hours, you would be entitled to 72.6 minutes’ paid holiday:

12.07 per cent x 10 hours = 1.21 hours = 72.6 minutes

The holiday entitlement is just over seven minutes for each hour worked.

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Employment Law: Holiday Entitlement

Holiday Entitlements: The Basics

All workers have a right to at least 5.6 weeks’ paid annual leave, but your employer could offer you more than that. Your employer may control some things about your holiday, including when you should take it and whether they include bank holidays.

The basics of holiday rights…

The main things you should know about holiday rights are that:

  • you are entitled to a minimum of 5.6 weeks paid annual leave – 28 days for someone working five days a week (capped at a statutory maximum of 28 days for all working patterns)
  • part-time workers are entitled to the same level of holiday pro rata (so 5.6 times your usual working week, eg 22.4 days for someone working four days a week)
  • you start building up holiday as soon as you start work
  • your employer can control when you take your holiday
  • you get paid your normal pay for your holiday
  • when you finish a job, you get paid for any holiday you have not taken and if you have taken more holiday than you were entitled to you will owe this back to your employer
  • bank and public holidays can be included in your minimum entitlement
  • you continue to be entitled to your holiday leave throughout your ordinary and additional maternity leave and paternity and adoption leave

What if you are Self-Employed?

In order to qualify for the right to annual leave you need to be classed as a worker. If you are self-employed, you have no statutory right to paid annual leave.

Contractual holiday rights

Your employer may give you more than the minimum 5.6 weeks’ leave as part of your terms of employment. You can check how much leave you are allowed by referring to your contract or company handbook.

You have no right to additional holiday, even if it’s unpaid, unless your contract provides for it. Your employer can set their own rules on any holidays they give over and above the legal minimum. Your employer is not allowed to give you less than the legal minimum.

Public and bank holidays

You do not have a statutory right to paid leave on bank and public holidays. If your employer gives paid leave on a bank or public holiday, this can count towards your minimum holiday entitlement. There are eight permanent bank and public holidays in England and Wales.

If you work on a bank or public holiday, there is no automatic right to an enhanced pay rate. What you get paid depends on your contract of employment.

If you are part time and your employer gives workers additional time off on bank holidays, this should be given pro rata to you as well, even if the bank holiday does not fall on your usual work day.

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When is a Hobby considered to be a Trade?

HMRC is actively searching the internet for evidence of eBay traders who are consistently selling goods on eBay. They are known to be exploring the use of ‘internet robots’ to scour cyberspace!

And this activity is not necessarily restricted to eBay traders. What about car boot sales, sales via classified ads? Which raises an interesting question – when does a hobby become a trade, and more importantly, when do any surplus funds become subject to tax?

Generally speaking if you are selling your own private possessions you will not be trading. However you may be considered ‘in business’ if you habitually buy and sell goods on eBay and/or at car boot events.

The list that follows is the published ‘badges of trade’ that HMRC uses when considering this matter.

  • An intention to make a profit supports trading.
  • The number of transactions involved – systematic and repeated transactions support trade.
  • The nature of the goods sold – are the goods only capable of being turned to advantage by being sold? Or do they yield income, or give enjoyment through pride of ownership?
  • Existence of similar trading transactions – was this a one-off transaction or part of a pattern that suggests trading?
  • Changes to the goods – were the goods repaired, modified or improved to sell them more easily?
  • The way the sale was carried out – were the goods sold in a way that indicates trading, or to raise cash in an emergency?
  • The source of finance – was money borrowed to buy the goods? Were any profits to be used to repay the loan?
  • Interval of time between purchase and sale – goods being traded are usually bought then sold quickly.
  • Method of acquisition of the goods – goods acquired by an inheritance, or as a gift, are less likely to be the subject of trade.

 

As you can see one or more of these cases could apply to most hobbies.

The current penalty regimen adopted by HMRC precludes sticking your head in the sand. Don’t wait for the brown envelope to appear. If you are uncertain about the tax status of your money making hobby get advice today.

Can unused holiday leave be carried over to the next year?

Q… What is the minimum statutory provision for paid holiday? Can any unused holiday just be carried over to the next year?

A… All employees must take at least 4 weeks’ statutory holiday (out of the 5.6 week week minimum entitlement) as leave each year.

Under the Working Time Regulations, employees cannot carry over any unused days from this four week period to the following holiday year.

Only the additional entitlement, over and above the four weeks, can be carried over, provided that both the employer and the employee agree.

Employers are not allowed to pay employees in lieu of any statutory holidays, except where their contract of employment has terminated.

Taxing Times – How the Taxman treats Investments

Different investments are subject to different tax treatment. The following is based on our understanding, as at 6 April 2011, of current taxation, legislation and HM Revenue & Customs (HMRC) practice. all of which are subject to change without notice. The impact of taxation (and any tax relief) depends on individual circumstances.

Unnecessary Tax on Savings

If you or your partner is a non-taxpayer, make sure you are not paying unnecessary tax on bank and savings accounts. Avoid automatic 20% tax reduction on interest by completing form R85 from your bank or product provider, or reclaim is using form R40 from HMRC.

Individual Savings Accounts (ISA’s)

You pay no personal Income Tax or Capital Gains Tax (CGT) on any growth in an ISA, or when you withdraw your money. You can save up to £10,680 per person in an ISA in the 2011/12 tax year. If you invest in a Stocks and Shares ISA, any dividends you receive are paid net, with a 10% tax credit. The tax credit cannot be reclaimed by anyone including non taxpayers. There is no further tax liability. The impact of taxation (and any tax reliefs) depends on your individual circumstances.

National Savings & Investments (NS&I)

You can shelter money in a tax-efficient way within this Government-backed savings institution. During Budget 2011 it was announced that NS&I is to relaunch index-linked savings certificates. Returns will be tax-free and maximum that can be saved is £15,000 per individual per investment. Learn more about NS&I

New Company Mileage Rates for 2011

Many employers pay a standard rate of mileage to all employees who use their own cars for business. The maximum rates that can be paid tax-free have increased from 6 April 2011, although many employers appear to be unaware of the increase.

The new rates as of 6 April 2011 are as follows:

Car

Up to 10,000 miles – 45 pence per mile (previously 40 pence)
Over 10,000 miles – 25 pence per mile

Furthermore, the employer is able to pay an additional 5 pence per mile tax-free to the employee if they take a fellow employee on a business journey as a passenger.

Motorcycles and Cycles remain the same as previous years at:

Motorcycles – 24 pence per mile
Cycles – 20 pence per mile

If you are paid for business miles at less than the authorised rate, you can write to HMRC and ask for tax relief on the difference.

 

National Minimum Wage to rise 2.5% to £6.08

National minimum wage to rise 2.5% to £6.08 (Full Article).

The national minimum wage for adults will increase by 15 pence from October 2011 to £6.08 an hour, the government has said.

The 2.5% increase was recommended by the independent Low Pay Commission (LPC).

The rate for apprentices will rise by 10p, for 16-17 year-olds by 4p and for 18-20 year-olds by 6p.

Business Secretary Vince Cable said the changes would help more than 890,000 of Britain’s lowest-paid workers.

The LPC was unanimous in its recommendations “despite all the economic uncertainties” according to its chairman, David Norgrove.

The complete set of changes are:

  • over-20s: up 15p (2.5%) to £6.08
  • 18-20 year-olds: up 6p (1.2%) to £4.98
  • 16-17 year-olds: up 4p (1.1%) to £3.68
  • apprentices: up 10p to (4%) £2.60.

 

List of new employment legislation due in force in April 2011

The following employment-related legislation will come into force in April 2011:

Abolition of the default retirement age

The Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011, which abolish the default retirement age of 65, will come into force on 6 April 2011. The last date for issuing a notice of intended retirement date under the current regime is 5 April 2011 and the employer can set the retirement date at any time up to 12 months later, provided six to 12 months’ notice of intended retirement is given, the statutory retirement procedure is followed correctly and the employee has attained or will attain the age of 65 (or, if higher, the employer’s normal retirement age) on or before 30 September 2011.

Any purported retirement dismissal notified from 6 April 2011 onwards will, if not objectively justified, amount to unlawful age discrimination under the Equality Act 2010. It is also likely to constitute an unfair dismissal.

Employers may also no longer prohibit job applicants from applying for a job if they are aged 65 or over, or are within six months of the age of 65.

Positive action in recruitment and promotion

Section 159 of the Equality Act 2010, on ‘positive action’ in recruitment and promotion, will come into force on 6 April 2011.  This section permits employers in their recruitment or promotion processes to treat individuals with a protected characteristic more favourably when faced with two or more candidates of equal merit, if the more favourable treatment is intended to address under-representation in the workforce or a disadvantage that is connected to the protected characteristic.

Statutory payment amounts

The standard weekly rate of statutory maternity pay (SMP) and the weekly rates of statutory adoption pay (SAP) ordinary statutory paternity pay (OSPP) and additional statutory paternity pay (ASPP) will rise from £124.88 to £128.73 for payment weeks starting on or after Sunday, 3 April 2011.  The weekly rate of statutory sick pay (SSP) will rise from £79.15 to £81.60 with effect from 6 April 2011.  Finally, the lower earnings limit for qualifying for SSP, SMP, SAP, OSPP and ASPP will rise from £97.00 to £102.00 per week from 6 April 2011.

In addition, there will be a change to the additional payment made to small employers in relation to SMP, SAP, OSPP and ASPP. Currently, employers who qualify for the small employers’ rate of reimbursement can recover 100% of the payments plus an additional amount of 4.5% in compensation for the employers’ share of National Insurance Contributions (NICs) due on the payments. From 6 April 2011, the additional amount will reduce to 3%, meaning small employers will be able to claim back a total of 103% of the SMP, SAP, OSPP and ASPP they pay out.

Additional paternity leave and pay

Although the various sets of regulations in relation to additional paternity leave and pay came into force in April last year, they only apply where the baby is due on or after 3 April 2011, or where the adoptive parents are notified of having been matched with the child for adoption on or after that date.

However, please note that the following provisions are NOT now coming into force in April 2011:

Extension of the statutory right to request time to train

The statutory right for employees to request time to train will not now be extended to cover employers who employ less than 250 employees. The right to request time to train will therefore continue to be available only to employees who work for employers with 250 or more employees.

Extension of the statutory right to request flexible working

The Government is to repeal the Flexible Working (Eligibility, Complaints and Remedies) (Amendment) Regulations 2010 that were due to come into force on 6 April 2011 extending the right to request flexible working to the parents of 17 year olds. The right to request flexible working will therefore continue to be available only to parents of children aged under 17 and disabled children under 18, and carers of certain adults.

 

PAYE codes missed out pensions

PAYE codes missed out pensions. (Full Article)

HMRC was caught up in another weekend avalanche of bad publicity as a result of PAYE codes that negelected to include allowances for people who started to receive pension payments during the past year.

In what BBC Radio 4’s Moneybox described as HMRC’s “latest tax bungle”, the department failed to take account of the state pension when it sent out tax codes to people who first drew their pension this year. As a result, it will send demands for underpaid tax to nearly 150,000 pensioners.

The same mistake happened in the two previous tax years, but was only picked up as reconciliations were finally made within the new National insurance and PAYE Services (NPS) computer system. Many of those previously affected have had their underpayments waived as a result of extra statutory concessions, but because this mistake was discovered in-year, the department said it had no power to write the payments off.

Instead, affected taxpayers will be given three years in which to settle the outstanding sums.

 

Budget 2011: Budget Calculator

BBC News – Budget 2011: Budget calculator.

How much better or worse off will you be in the coming year following the Budget?

Use this Budget calculator, developed by accounting firm KPMG LLP (UK), to find out how the measures being brought in next month will affect you.

Calculator basics:

  • The tax system is complex, and the model used below gives only an indication of the Budget’s impact
  • Your personal information is safe – all calculations are carried out on your computer
  • The calculator includes measures announced in previous budgets that come into effect in April this year

 

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