Employers need to be on alert for HMRC minimum wage checks

Employers are being urged to double-check that they are paying at least the level required under the National Minimum Wage and National Living Wage, which both increased on 1 April 2017.

Accountants Saffery Champness has warned that it appears that HMRC has embarked on a programme of compliance checks in the rural sector.

These checks will cover workers in agriculture, horticulture, and could include other areas, for example, the pay of casual beaters for a shoot.

See also: Introduction of Universal Credit will punish self-employed workers

Jamie Younger, a partner based in Saffery Champness’ Edinburgh office, said HMRC can ask to see records to ensure that the correct levels are being paid.

“We would urge all employers in the rural sector to be aware of the correct minimum wage levels and to ensure that their records are correct and up to date,” he said.

“There can be issues with beaters, casual workers, housekeepers and temporary staff.  Where there is any doubt then professional advice should be sought.”

Rates from 1 April 2017

The rates are for the National Living Wage (applies to people 25 and over) and the National Minimum Wage changed on 1 April. The latest rates are as follows:

25 and over £7.50/hr
21 to 24  £7.05/hr
18 to 20 £5.60/hr
Under 18 £4.05/hr
Apprentice  £3.50/hr

Possible pitfalls

Farmers who supply accommodation to workers as part of their job need to take particular care that any charge made for housing does not push wages below the minimum thresholds.

The government ascribes a monetary value to the value of accommodation – known as the offset rate – which from April 2017 is £6.40/day or £44.80/week.

If an employer charges more than the offset rate, the difference is taken off the worker’s pay which counts for the NMW or NLW.

This means the higher the accommodation charge, the lower a worker’s pay when calculating the minimum wage.

However, if the accommodation charge is at or below the offset rate, it doesn’t have an effect on the worker’s pay.

If the accommodation is free, the offset rate is added to the worker’s pay, which boosts its value.

Casual beaters

Rob Woodward, employment tax senior manager for Saffery Champness, also warned that anyone employing beaters on a shoot needed to ensure that they were paid the NMW.

HMRC has a concession that tax does not have to be deducted by the employer for casual beaters, so long as certain criteria are met, and it is down to the employee to ensure that any tax due is paid.

“But there is a misunderstanding of this concession,” said Mr Woodward. “They are not on the payroll for PAYE purpose, but employers are still bound by the terms of the minimum wage.”

Family labour

Most farmers are exempt from the NMW and NLW because they are self-employed people running their own businesses.

There is also an exemption for family labour, so long as certain conditions are met.

According to HMRC, a family member living at home as part of the family and helping out with family chores does not qualify for the minimum wage.

Similarly, work carried out by a family member, living at the family home of the employer and participating in the running of the family business, falls outside the national minimum wage provisions.

However, a limited company is a legal entity in its own right and cannot be considered to have a family, to be a member of a family or to own a family home.

Regional differences

Agricultural workers in England must be paid at least the National Minimum Wage.

Workers employed before the rules changed on 1 October 2013 still have the right to the Agricultural Minimum Wage if it says so in their contract.

Agricultural workers in Wales must be paid at least the Agricultural Minimum Wage, or the National Minimum Wage if that’s higher.

In Scotland, the minimum wage payable to agricultural workers is set by the Scottish Agricultural Wages Board.