Q: I have an employee who has recently returned from maternity leave. Previously she was working full-time, and is now returning to work from maternity leave on a part-time basis.

How do I work out her holiday pay entitlement?

Dennis, Liverpool

A: Employees continue to accrue both their full statutory annual leave entitlement of 5.6 weeks plus any additional contractual entitlement throughout both ordinary maternity leave and additional maternity leave.  This also applies to employees who take paternity and adoption leave.

For full-time employees who wish to return to work on a part-time basis after such leave, the holiday is calculated at their original contractual agreement and then adjusted from the date they commence the part-time employment.

Here’s an example based on the holiday year beginning from the 1st of January:

A female staff member is considered to be a full-time employee from the 1st of January to the 31st of October, when she returns from maternity leave.  However, from the 1st of November she wishes to work 2.5 days per week.

Her holiday entitlement from January to October will be 28 days / 12 months x 10 months = 23.33 days.

For November to December it will be 2.5 days x 5.6 weeks = 14 days / 12 months x 2 months = 2.33 days.

The total annual leave will be 23.33 days + 2.33 days = 25.66 days for the year.

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Payroll Accounting Advice from TaxAssist Accountants

Q: I am currently looking to take on a new member of staff. I understand the national minimum wage rules may mean I have to pay him a certain hourly rate. Is this true?

Sally, London

A: Most employees are entitled to be paid the national minimum wage and the rate at which they are paid varies depending on their age.

From 1st October 2009, the national minimum wage for adults aged 22 and over increases to £5.80 per hour. The development rate increases for 16-17 year olds to £3.57 per hour and for those aged 18-22 to £4.83 per hour. The government has also promised to reduce the qualifying age for the adult minimum wage rate from 22 to 21 with effect from October 2010.

There are a few exceptions which apply to the above rates for a small minority of workers.  Currently, apprentices under the age of 19 are not entitled to the national minimum wage and apprentices between the ages of 19 and 25 are not entitled to the minimum wage in the first year of their contract.

For this purpose, apprentices are either workers who have contracts of apprenticeship, or workers who are taking part in specific training programmes which are funded by a local development agency. You must ensure you have a written agreement between you and your new worker which confirms they are employed on an apprentice contract.

For more information on whether or not your employee counts as an apprentice you should visit www.businesslink.gov.uk or speak to your local TaxAssist accountant.

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Payroll Accounting Advice from TaxAssist Accountants

Q: I want to take on a school leaver but I’ve been told there are restrictions on when I can employ them and when they can work. Is that right?

Sarah, Sheffield

A: You may employ a school leaver on a full time basis after they reach their statutory school leaving date (the last Friday in June). This includes young people who turn 16 in July or August.

A young worker is someone who is above the minimum school leaving age and under 18 years old. Young workers are subject to stricter regulations, so they cannot exceed 40 hours a week, work more than 8 hours per day, receive a rest period of 12 hours between each working day and they must have a minimum two days complete rest per week.

In most industries young workers cannot work between 10.00pm and 6.00am, but the rules for night work are complicated so do seek professional advice.

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PAYE Accounting Services from TaxAssist Accountants

Q: I am going to build my house on a plot of land I recently inherited.  Although I will be doing most of the labouring myself I will still have to purchase the materials and equipment to build the property. I understand there is a scheme allowing me to reclaim the VAT I incur on these purchases?

Steve, Nottingham

A: A VAT refund scheme is available for individuals who build new houses for personal use who may recover VAT on certain building materials. The scheme also covers individuals who convert non-residential properties into dwellings, allowing them to reclaim VAT on certain building materials and services.

The HMRC recently reviewed the scheme, as a number of applicants were incorrectly completing the claim forms and were not supplying enough information which led to delays in issuing the VAT refunds.

With effect from 15th August 2009 there will be new forms to enable you to do this, replacing the old guidance for DIY house builders.  There is now a specific form called 431NB for newly built houses and 431C for conversions. The questions are slightly different from the current form but these are designed to deal with many of the common issues that currently arise.

For more information on the scheme, we recommend you speak with your local TaxAssist Accountant.

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Property Accounting Advice from TaxAssist Accountants