DG writes: I run a restaurant and want to know if tips contribute towards
the national minimum wage? Are employers penalised if they pay a basic wage
that is below the minimum wage?
The national minimum wage went up on October 1,writes Peter Done, managing
director of Peninsula.The hourly rate for workers aged 22 and over went up
from £5.52 to £5.73 and for 18 to 21-year-olds and accredited trainees from
£4.60 to £4.77. The rate for those over compulsory school age but not yet 18
rose from £3.40 to £3.53.
The government has said it aims to amend legislation to remove the confusion
over tips. The change will ensure that tips or service charges can no longer
be used to meet an employer’s minimum-wage obligations. At present, when
tips are given directly by a customer to a worker, the money does not count
towards minimum pay. But the regulations allow other tips, such as those
paid to the worker through the employer’s payroll – for instance, tips added
to a credit or debit-card bill – to count towards minimum-wage pay. This
means that the worker’s basic pay is often below the minimum wage but
lawfully topped up by tips.
At present, where it is found that a worker has not been paid the minimum
wage, he or she should be given the difference between the actual pay and
what he or she should have received. Under the present regime, bosses are
given an enforcement notice to pay the arrears within 28 days and 95% of
underpaying businesses comply with this.
However, the rules coming into force next year aim to restore the loss of
“purchasing power” of the worker. The employer will have to give the arrears
to the worker and, in all cases, pay a financial penalty, whether the
underpayment was deliberate or a genuine misunderstanding of the law.
CAR EXPENSES FOR DOCTORS
DP writes: I am about to become a partner in a medical-practice partnership
and am familiar with most expenses that can be claimed for tax purposes. I
will be using my own car for work and have previously received a fixed
mileage rate. I understand this is not normal for a GP. What records should
I keep for my motor expenses and what can I claim for tax against my share
of profits?
You will need to keep detailed records of your car usage and expenses,writes
Jon Sutcliffe, partner at Kingston Smith LLP.
You should keep a mileage log to record the business and private journeys you
make, which will establish what proportion is for business purposes. This
log should be maintained for the whole year, although Revenue & Customs
has often accepted a mileage log for a typical month as representative of
the whole year.
Business mileage generally excludes journeys between the home and the surgery.
However, if you are on call and travel direct to a patient from your home,
then the trip would be regarded as a business journey.
The expenses claim should include all vehicle running costs such as the
road-fund licence, insurance, repairs, fuel, cleaning, breakdown-cover
premiums and finance costs. (Make sure you keep all the relevant
documentation.)
Capital allowances on the cost of the car are also available and, like the
expenses, are restricted by the business-use proportion for the vehicle. The
same calculation can be done for a second vehicle if it is also used for
business.
The motor-expenses claim is made through the medical-practice partnership tax
return. It is therefore important that each partner prepares his or her
expenses claim in good time so as to avoid any delay in the tax affairs of
the partnership or those of their practice partners.
Kingston Smith LLP, the chartered accountant, and Peninsula, the
employment-law firm, can advise owner-managers on their problems. Send
questions to The Business Doctor, The Sunday Times, 1 Pennington Street,
London E98 1ST, or fax to 020 7782 5765. Advice is given without legal
responsibility.
bizdoc@kingstonsmith.co.uk
