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Advice on Soletrader employing an apprentice please

  • 43 posts
  • # 101752

Hello,

 

I've met with a potential client today who is a Soletrader, he's a Gardener. He has taken on an apprentice to help with high demand which I guess would be kind of seasonal..

 

He is also quite behind on the books as he started in business in 2013 and his tax return/self assesment needs to be done.

 

They're paying the apprentice any expenses, clothing etc.. plus a wage of £120.00 per week. This is the only member of "staff" he has.

My question is does he need to go through PAYE and do they have to pay employers NIC's? I have never dealt with apprentices at all so a grey area for me.

If I took on their Bookkeeping I guess they would need to do the PAYE themselves or use someone else until I take my payroll exam?

 

Cheers
hdodsworth
  • 69 posts
  • # 101755

Hi Shar,

I believe that apprentices are employees, and should be treated as such for tax purposes. Your client would need to register as an employer and operate a PAYE scheme if they pay any employee a salary/wage more than than the NI Lower Earnings Limit (£111 per week for 2014/2015).

https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

I wouldn't offer any payroll services until you are qualified to do so.

Hope this helps.



Edited at 30 Sep 2014 03:22 PM GMT
  • 51 posts
  • # 101759

Hi Shar

Apprentices are employees and they cannot be 'taken on to help with high demand'.  They have to be employed via the apprentice scheme.  Their training and progression is monitored and their pay is determined by the minimum wage rules, which from tomorrow, 1st Oct, are: any apprentice in the 1st year is paid £2.73 per hour (£109.20 per 40 hour week) All apprentices in the 2nd year and over for longer apprenticeships who have reached the age of 19+ have to be paid the standard minimum wage which is £5.13 ph for 18-20 year olds and £6.50 ph for 21 year olds.

HMRC's website gives more details about what constitutes a recognised apprenticeship scheme, but unless your prospective client's employee is only working approx 23 hours per week, your client is underpaying them.  

A PAYE scheme would have to be set up by the employer.  Tax and NI will be applicable, although probably with nothing to pay but if NI is payable then ERNI will also be payable and in 2016-17 Auto Enrolment pension becomes applicable.
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  • 36 posts
  • # 101767

Hello Shar

 

How did your meeting go?  Mine went well although I was very nervous and did get caught out with a couple of questions!

 

Regards

 

Karen
  • 43 posts
  • # 101769

Hi Kasey,

 

It wasn't too bad thanks. I had a few questions but they were very personal tax specific so I said I wasn't the right person to askand that she should speak to a specialist.

 

It was one of those cases where it's all a last minute panic so the books need to be done from November 2013 in time for Self Assesment in January.

 

But it's nice that I will be starting the books from Start up. The most complex part is that they have employed an "apprentice" which I was unware of before our meeting and I don't think they have dealt with it properlybut still need to find more info on that.

 

Looks like I have got the job though.

 

Keep in touch and let me know how it goes for you.  Are there areas discussed that you're not sure on?  Are you going to take on the client?

 

 

 

 
  • 43 posts
  • # 101813

Hi,

 

Ok so I have checked regarding the apprentices pay etc and all seems to be in good order.

My next question is, if they need to run PAYE for the 1 apprentice does the Director's (Owners) salary need to also go through PAYE aswell or can this all go through drawings? I guess he has to have some kind of salary or can he choose to not be paid?

 

Thanks

Michelle
hdodsworth
  • 69 posts
  • # 101817

Hi Shar,

I am a bit confused by your last question. Is your client a sole trader or a director of a limited company?

As a sole trader, your client would take money from the business as drawings, whereas a director is typically paid a small salary up to the NI threshold and receives dividends.
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