The Salary Calculator

What is the ‘Way to Work’ initiative, and how will it affect you?

by Madaline Dunn

At the end of January, the Department for Work and Pensions published its new plan to move “half a million people into jobs by the end of June.” The campaign is called ‘Way to Work’ and supposedly will “support people” back into work “faster than ever before.”

However, as positive as this sounds, the reality of the initiative is very different. Critics of the new campaign have called it “dangerous” and say that it “misses the point.”

So what exactly is the campaign all about and who will be affected by it? At The Salary Calculator, we’ll walk you through:

• What the ‘Way to Work’ initiative is
• Why the government has introduced it
• What the impact of the scheme will be

What is the ‘Way to Work’ initiative 

The Way to Work initiative focuses largely on Universal Credit (UC) claimants who are looking for jobs and will be facilitated at UK Jobcentres by claimants’ Work Coaches. The initiative will see the introduction of new rules whereby claimants will have to expand their job search and apply for job vacancies outside of their preference zone at four weeks of unemployment. Currently, the period at which claimants must expand their search is three months. 

As outlined by Thérèse Coffey, the Work and Pensions Secretary, the drive behind the initiative is to get people into “any job,” rather than a job that fits their skills set, qualifications, or interests. 

Now, under the new initiative, Universal Credit claimants will face tough sanctions if, after four weeks, it is deemed they have failed to make “reasonable efforts” to secure a job or if they turn down any offer. Claimants will ultimately lose part of their universal credit payment.

The amount of Universal Credit benefit claimants receive varies depending on their personal circumstances, but already, the TUC has outlined that it’s not enough to live on, especially in light of rising energy costs and the soaring costs of living. 

Why has the government introduced this initiative?

According to the government, the initiative is a response to the number of job vacancies in the UK, which is now at a ‘record high’ at 1.2 million vacancies, a figure that’s 59% higher than pre-pandemic levels.

Speaking about the motivation behind the initiative, Coffey said: “As we emerge from COVID, we are going to tackle supply challenges and support the continued economic recovery by getting people into work. Our new approach will help claimants get quickly back into the world of work while helping ensure employers get the people they and the economy needs.” 

What will the impact be of the scheme?

Although the UK government argues that this initiative will help to fill vacancies and kickstart the economy, experts argue that the move is doomed to fail, and that coercion into jobs has been proven not to work. Regardless, with over 200,000 new claims per month, many people across the UK will find themselves impacted by this initiative. 

Elizabeth Taylor, CEO of the Employability Services Related Association (ERSA), outlined that a “one-size-fits-all” approach is ineffective, and the initiative, as a whole, is “at odds with the people centered methodologies that employment support providers apply.” Adding: “Individually tailored support which meets personal and local labor market needs must remain front and center of any quality employability provision.”

Taylor, writing in Forbes, says that rather than coercing individuals into jobs they aren’t suited to, providing “quality employment support” and finding ways to get people into the “right job” is not only better for the employer and the employee, but the economy as a whole, too. 

Likewise, Ruth Patrick, a senior lecturer in social policy at the University of York, states that pushing people to apply to any job, “underpinned” by the threat of benefit sanctions, is, in fact, damaging and “corrosive” to relationships between claimants and advisers. Patrick explains that this approach risks pushing people into “insecure and unsuitable employment.”

A review by a University of Glasgow team also found that overall, the kind of sanctions proposed by the UK government has detrimental effects on health and wellbeing, leading to material hardship, unemployment and economic inactivity. Moreover, while in the short term, sanctions can boost employment levels, job quality and stability are negatively affected in the long term. 

According to a statement by the Minister for Employment, Mims Davies MP last week, there are now “positive signs of recovery,” with unemployment “continuing to drop,” however, for the time being, it looks as though the tough sanctions of the new Way to Work initiative are here to stay.

Tags: Economy, Jobs, unemployment, Universal credit

The National Insurance hike: What, How and Why

by Madaline Dunn

In another financial blow to many, the government has announced that the National Insurance (NI) hike will, in fact, go ahead. This comes at the same time as energy bills skyrocket, food costs rise, and interest increases, leaving many concerned about what it will mean for them and the general cost of living. 

At The Salary Calculator, we’ll help you get to grips with the upcoming changes and explain:

• What the National Insurance hike is all about 
• How much more money you can expect to pay
• Who will be affected most by the hike

The National Insurance hike 

On 28 January, Chris Philip, Minister for Technology and the Digital Economy, announced that the planned National Insurance increase would indeed go ahead in April, much to the dismay of millions in the UK. 

This move goes against the Conservative Party’s 2019 election manifesto, and according to the government, is expected to raise £36 billion over a three year period. The hike is reportedly in response to Covid and the pressure it placed on the NHS. A portion will also be dedicated to reforming the social care system.

Defending the hike, in The Sunday Times, Prime Minister Boris Johnson and Chancellor Rishi Sunak called the policy “progressive,” adding: “We must clear the Covid backlogs, with our plan for health and social care – and now is the time to stick to that plan. We must go ahead with the health and care levy. It is the right plan.”

How much money you can expect to pay

The changes to National Insurance will come into effect on 6 April 2022 and according to reports for many across the country this hike is the equivalent of a 10% increase in deductions from pay packets. The rate of dividend tax will also increase by 1.25 percentage points. 

Those earning £9,880 a year, or £823 a month, won’t have to pay National Insurance, but those earning £12,875  or more will see their NIC increase. For example, basic-rate taxpayers will see their NIC jump from 12% to 13.25%. So, those earning £24,100, will say goodbye to an additional £180 a year which translates to £3.46 a week, or £13.84 a month. Meanwhile, those on £50,000 will pay £505 more a year. 

Those who are higher-rate taxpayers and on a salary of £67,100 will pay £715. While those on £100,000, will pay £1,130 more.

Who will be affected the most by the hike?

Although the tax will be progressive, with those who earn more paying more, those on £100,000 a year will pay just 7% of their overall salary in NIC, which is the same proportion as those on just £20,000 a year. Moreover, the NI hike means that someone on £50,000 a year will pay £5,086, around 10% of their gross salary.

With so many families already struggling to make ends meet, many argue that the NI increase should be postponed. Commenting on this, Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Now is not the time for a tax hike: the National Insurance rise in April needs to be shelved.”

This is something echoed by Laura Suter, head of personal finance at investment platform AJ Bell, who said poorer families will be hit the hardest: “For a much bigger proportion of low-income families, monthly costs go on things like energy bills and food bills, who tend not to have the same ability to cut back as wealthier families.”

Tags: Economy, living costs, national insurance, salary

Cryptocurrency: how to report and pay the right amount of tax

by Admin

Article by GoSimpleTax

In October 2021, HMRC was reportedly planning to send out “nudge letters” to holders of cryptocurrency (also called cryptoassets or just crypto), reminding them to check that they were reporting correctly and paying the required amount of tax.

Obviously, HMRC wants to prevent tax underpayment by the 2.3m people in the UK now believed to have crypto holdings. You may be among them and want to be sure that you’re reporting properly and paying the right amount of tax. Or you could be thinking about investing in cryptocurrency and want to know what your obligations would be regarding reporting and paying tax.

This guide explains:

• What cryptoassets and cryptocurrency are.
• When cryptocurrency is subject to Capital Gains Tax.
• When cryptocurrency is subject to Income Tax.
• What records you need to keep for tax purposes.
• How to report crypto gains or income.

What are cryptoassets/cryptocurrency?

HMRC defines cryptocurrency/cryptoassets as: “Cryptographically secured digital representations of value or contractual rights that can be transferred, stored and traded electronically.”

Chances are you’ve heard of Bitcoin, the world’s best-known and most widely held cryptocurrency. More than 60% of UK cryptocurrency investors have Bitcoin holdings, but other examples include Ether, Litecoin and Ripple.

Cryptocurrencies are digital assets, they’re not physical currency. You can’t buy things in the shops with them and they have no inherent value, they’re worth whatever someone is willing to pay for them. A cryptotoken is a denomination of a particular cryptocurrency and they each have different values. As with other assets, cryptocurrency value can go up or down.

Cryptocurrency is bought and sold via secure peer-to-peer online networks or exchanges. According to HMRC, the tax treatment of cryptocurrency depends on its nature and use. Basically, if you’re given crypto or earn income from crypto trading, it can be subject to Income Tax. If you dispose of crypto by selling, exchanging or giving it away, it can be subject to Capital Gains Tax.

When is cryptocurrency subject to Capital Gains Tax?

Obviously, people invest in cryptocurrency hoping that its value will increase over time. If it does, you make a gain, that’s why Capital Gains Tax can be payable if you dispose of cryptocurrency tokens by:

• selling them
• exchanging them for other cryptoassets
• using them to pay for good or services
• giving them away (unless it’s to your spouse or partner) or
• donating them to charity.

Your gain is the difference between how much you bought the crypto for (including any transaction fees) and sold it for. If someone gives you cryptocurrency tokens upon which you later need to pay tax, to work out your gain, you must find out their market value when they became yours.

How much Capital Gains Tax is payable on cryptocurrency?

After your total taxable gains go over the Capital Gains Tax tax-free allowance threshold – £12,300 for the 2021-22 tax year – you’ll be taxed as follows:

• If you’re a basic rate Income Tax payer (ie with taxable earnings of £12,571-£50,270 a year) you’ll pay Capital Gains Tax of 10%, then  20% on gains that take you above £50,270 in taxable earnings.
• If you’re a higher or additional rate Income Tax payer (ie with taxable earnings of more than £50,270 a year) you’ll pay 20% CGT on your crypto gains over and above the CGT threshold.

To find out whether Capital Gains Tax is payable after selling cryptocurrency, you need to calculate your gain for each transaction.

Some allowable expenses are deductable for Capital Gains Tax, including (according to HMRC):

• “transaction fees paid before the transaction is added to a blockchain”
• “advertising for a buyer or seller”
• “drawing up a contract for the transaction”
• “making a valuation so you can work out your gain for that transaction”
• “a proportion of the pooled cost of your tokens when working out your gain”.

Need to know!

• Capital Gains Tax is obviously not due on crypto losses, but you can use these to reduce other crypto gains and any tax liability, providing you first report them to HMRC. Losses aren’t capped.

How to report and pay Capital Gains Tax on cryptocurrency

To report and pay Capital Gains Tax on cryptocurrency you can either complete a Self Assessment tax return following the end of the tax year or use the real-time Capital Gains Tax service to report and pay straight away.

You must keep separate records for each cryptocurrency transaction detailing:

• token type
• disposal date
• number of tokens disposed of
• tokens remaining
• value of the tokens in pound sterling
• bank statements and wallet addresses
• pooled costs before and after you disposed of them.

Need to know!

• HMRC can ask to inspect your cryptocurrency records if it decides to carry out a compliance

When is Income Tax rather than CGT payable on cryptocurrency?

Income Tax and National Insurance contributions (NICs) can be payable on cryptocurrency if your employer gives you them as a non-cash bonus or benefit (this could apply to those who mix employment with self-employment). If you need to pay Income Tax on income from crypto for this or other reasons, you’ll need to register for Self Assessment, if you’re not already registered.

If you occasionally dabble in crypto, you’ll probably only have to pay Capital Gains Tax on disposal. However, if you trade regularly, HMRC will consider you to be a crypto trader and you’ll need to report your income via Self Assessment and pay any Income Tax and National Insurance that’s due.

If you’ve paid Income Tax on crypto, Capital Gains Tax isn’t payable unless you later dispose of your tokens, when CGT will be due on the gain made since you reported for Income Tax.

Many cryptoassets are traded on exchanges that don’t use pounds sterling. If so, the value of any gain or loss must be converted into pounds sterling when you’re completing your Self-Assessment tax return. You’ll need to use supplementary page SA108 to detail crypto capital gains/income and losses claimed within your SA100 tax return.

Need to know!

• Fail to report cryptocurrency gains or income to HMRC and it can lead to penalties, while you’ll still have to pay tax you owe plus interest.

More information

Visit government website GOV.uk to download HMRC’s Cryptoassets Manual. It sets out the tax rules for both individuals and businesses that invest in cryptocurrency.

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Tags: capital gains, capital gains tax, cryptocurrency, investment, savings

The great resignation: What is it and what does it mean for you?

by Madaline Dunn

The great resignation is the hot topic on everyone’s lips, with millions either leaving behind their old roles, or looking to in the near future. Much like the pandemic, it was unprecedented but bound to happen eventually.

This movement of people leaving their jobs en masse includes individuals from every demographic, too, reflecting a widespread frustration with traditional work and labour models.

At The Salary Calculator, we’ll walk you through:

• What the great resignation is
• What’s driving the great resignation
• The pros and cons of the great resignation
• How it will affect you and your work

What is the great resignation?

The great resignation, a term coined by business and management professor Dr Anthony Klotz in May 2021, refers to the current mass exodus from the workforce.

A study by recruitment firm Randstad UK recently conducted a survey of 6,000 workers and found that 24% of those polled were planning a job change within the next three to six months, 69% of which felt confident about their decision. Meanwhile, 16% felt anxious or concerned about finding a new role.

Employment Hero found that young people aged between 25 and 34 are those most looking towards a change, with a whopping 77% actively looking to leave their jobs within the next year. 74% of those aged 18-24 expressed similar sentiments. These were also the demographics that reported the most’ burn-out.’ Moreover, data published in i, showed one-third of millennials will seek out new employment if forced to return to the office full-time after the pandemic.

That said, those in more senior positions have also joined the great resignation. Executive outplacement firm Challenger, Gray & Christmas, found that in December, 106 CEOs said goodbye to their senior roles, and in the final quarter of 2021, this was up 16% on a year-over-year basis

It comes as no surprise then, that in the UK in July, job vacancies were at an all-time high, crossing the threshold of one million for the first time.

What’s driving the great resignation?

The great resignation has a number of different causes. One aspect is that following nationwide government-sanctioned lockdowns; remote working became the norm for many people. This life readjustment gave people time for reflection, and when compared with office work, many found they were able to spend less time commuting and more time with their family.

Remote working is also a good move for the wallet, with fewer expenses such as travel and eating out. Likewise, many are also quitting in search of better work opportunities and higher pay. There has also been a rise in the number of people deciding to be their own boss, and go self-employed.

It’s also important to note that certain industries are seeing more workers leave than others. Specifically, leisure and hospitality, retail and healthcare are the industries that have seen the biggest departures.

Should you join the great resignation?

Of course, when mulling over whether or not to leave your job, there are many factors to consider, and as with anything, there will be pros and cons.

Leaving your job and seeking out new employment or a different kind of employment can help you access greater flexibility, secure a more healthy work-life balance, and enjoy the benefits of a bigger salary. Likewise, those looking to leave their job may have come to the realisation that their work is no longer fulfilling or aligning with their values. As such, finding a company that shares similar guiding principles can mean much more job satisfaction.

That said, quitting one’s job is not necessarily an option for everyone. When thinking about quitting, it’s important to assess key questions such as:

• Am I in a financial situation to do so?
• Do I know what you want to do next?
• Do I require further training or education?
• Am I looking to join a new field?
• What are my family obligations?

How will the great resignation affect you?

The great resignation is very much a workers revolution, and many are arguing that employees are now in the driver’s seat. That said, it’s important to note that it’s still competitive out there, and in order to succeed, you need to be able to sell yourself, negotiate and network. Keeping your Linkedin fresh, making sure your resume is updated and conducting deep job searches will help you make the most of this opportunity.

However, not everyone is quite ready to jump ship just yet. For those who are comfortable in their position, you may have questions about how the great resignation will affect you at work. Well, a study recently conducted by the Society of Human Resource Management in the US found that out of those employees who decided to stay on when their co-workers left, 52% had taken on more responsibilities, and 30% found themselves struggling to get “necessary” work done. As a result, 55% are now questioning their salary, and whether it’s enough.

So, it’s fair to say that workers are feeling the knock-on effect of their co-workers joining the revolution. However, it’s not all doom and gloom for those who wish to stay in their current job, it’s important to be assertive if you’re struggling.

Speaking to The Guardian, Rahaf Harfoush, a digital anthropologist and the author of Hustle and Float, says in the aftermath of coworkers leaving, you should: “Look at your original role,” and assess how much you’ve taken on, then spell it out: “Here’s what I was hired to do; here’s how my time is allocated now. So either we need to reprioritise or we need to reallocate.”

Moreover, during this time, negotiating power is in the hands of employees, so it could be the right time to ask for a pay rise or a loyalty bonus.

 

Tags: Employed and Self Employed, Finances, Jobs, self employed, The great resignation