National Minimum Wage (Amendment) (No.2) Regulations 2010
The National Minimum Wage (Amendment) (No.2) Regulations 2010 came into force with effect for pay periods starting on or after 1st January 2011 and means that travelling and subsistence expenses eligible for tax relief under section 338 Income Tax (Earnings and Pensions) Act 2003 will overall not count when calculating National Minimum Wage pay.
For guidance on the application of these Regulations see: National minimum wage – what counts as NMW pay, benefits in kind and accommodation
The Department for Business, Innovation and Skills (BIS) and HM Revenue & Customs (HMRC) are aware that a number of travel schemes and umbrella business models are being marketed which claim to continue to provide savings for the employer and be compliant with the NMW from 1 January 2011. These include:
- paying subsistence expenses rather than travelling expenses
- classifying workers as directors
- holiday pay adjustments
- under recording hours worked
None of the models seen by BIS and HMRC, including those listed above, would comply with the requirements of NMW legislation for workers paid at, or close to, the NMW. They have clearly been constructed with the express intention of operating contrary to the intention of Parliament and as such HMRC will identify businesses seeking to circumvent the NMW and take appropriate action.
Where compliance action also identifies non-compliance with tax legislation, Employment Businesses and umbrella companies run the risk of having their dispensation revoked in addition to paying arrears of tax and National Insurance together with interest and, where appropriate, penalties.
HMRC will work with the Gangmasters Licensing Authority in the GLA-licensed sectors to address issues of non-compliance in those sectors.
Workers who believe that the business paying them is doing so in a manner which may contravene national minimum wage or tax legislation are advised to provide details, in confidence, to HMRC at: email@example.com . Similarly, Employment Businesses which believe competitors may be contravening national minimum wage or tax legislation are also advised to provide details to HMRC.
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