Further to our briefing paper published in July 2017, this update aims to clarify the current position for shoots that use beaters on ensuring they are eligible to work, how much they should be paid to comply with the National Minimum Wage (‘NMW’) and National Living Wage (‘NLW’), and what and when shoots have to report to HMRC to comply with the Real Time Information rules.
The rules on these issues are complicated and they are also subject to change. HMRC is currently conducting a number of inspections of shoots to assess whether the minimum wage rules are being correctly applied. These investigations can be intrusive and take a significant amount of time to settle, not to mention the financial implications, so it will be key for shoots to ensure that that they are compliant in order to avoid an investigation in the future.
In order to ensure that they comply, we know that some shoots work out a typical day for their beaters/pickers-up/loaders and ensure that the pay per day equates to the NMW (currently £9.00/hour (gross)) or more, treat them as employees of the shoot or estate and deal with their tax deductions. Pickers up are also paid mileage when they use their own vehicles. Whilst this of course increases the cost to shoots, it does ensure compliance.
Many beaters and pickers-up do not view what they do as a job or employment but do it as a hobby and for pure enjoyment. Even where this is the case, the rules on minimum wage apply unless the arrangement between the beater and the shoot would be considered to be a ‘very casual arrangement’ (see the third bullet point under National Minimum Wage and National Living Wage). Many consider the rules unreflective of how shoots, and beaters, operate and hope for a change in them.
In July 2017, a report titled Good Work: The Taylor Review of Modern Working Practices was published. This recommended updating the three-tier approach to employment status (which currently includes employees, workers, and self-employed individuals), by renaming those who are not employees but are eligible for workers’ rights, as ‘dependent contractors’. The new definition is designed to reflect more casual employment relationships while supporting those who are not genuinely self-employed. However, to date, this recommendation has not yet been implemented.
From 1 January 2021, a new points-based immigration system applies to all individuals arriving in the UK. There will be a ‘grace period’ between 1 January 2021 and 30 June 2021, during which EU, EEA, and Swiss citizens who are already resident in the UK will continue to be able to prove their right to work by providing:
For EU, EEA, and Swiss citizens travelling to work in the UK on or after 1 January 2021, they will most likely require a visa under the new Immigration Rules. There is significant concern that the Immigration Rules do not include provision for low-skilled work, and that this will be problematic for many employers who have historically relied on Free Movement within the EU. The Immigration Rules are notoriously complex and difficult to navigate – if you require specific advice in this regard, please contact Alice Spicer Edwards at Michelmores (contact details below).
All ‘workers’ on a shoot are entitled to receive at least the NMW or NLW for each hour that they work. This is a legal requirement for all workers and cannot be opted out of. Failure to comply is a criminal offence1. The minimum rates, set out in the table below, are gross of tax and are the minimum that should be paid regardless of taxpayer status.
Who is a ‘worker’ is widely defined, and likely to cover most beaters and, in particular, those operating on formal commercial shoots. The only exemptions are:
|£ / Hour Minimum
(NB gross, before tax and NI deductions)
|From 6 April 2020|
|25 and Over||NLW2||£8.72|
|21 to 24||NMW||£8.20|
|18 to 20||NMW||£6.45|
The government accepted the Low Pay Commission’s recommended increase to the NLW and NMW and, from 6 April 2021, the NLW will be extended to 23 and 24-year-olds for the first time.
|£ / Hour Minimum
(NB gross, before tax and NI deductions)
|From 6 April 2021|
|23 and Over||NLW3||£8.91|
|21 to 22||NMW||£8.36|
|18 to 20||NMW||£6.56|
1 The penalty for non-payment of the minimum wage is 200% of the amount owed, unless the arrears are paid within 14 days, up to a maximum of £20,000 per worker, and employers can be banned from being a company director for up to 15 years.
2 National Living Wage (NLW) applies to over 25s and has the same effect as the National Minimum Wage (NMW).
3 National Living Wage (NLW) will apply to over 23s from 6 April 2021 and has the same effect as the National Minimum Wage (NMW).
For all types of work, working time includes time spent:
Advice from accountants is that shoots should keep detailed records of the working time for all workers.
Lunch and the option to take a brace of birds do not count as pay and cannot be used to reduce the amount that needs to be paid to meet NMW or NLW4.
Using these rates, here are some examples of what a shoot should pay its workers:
|Hours Per Shoot Day
(8.00am to 4.00pm, with 2 hours for lunch and rest)5
|£ / Hour Minimum||Pay Per Day|
|Worker aged 55||6 Hours||£8.72||£52.32|
|Worker aged 19||6 Hours||£6.45||£38.70|
4 If lunch is provided in a local pub or restaurant, it is a benefit in kind and liable to be taxed. Lunch provided by the shoot on its own premises for everyone involved in the shoot, including office staff, is not considered a benefit in kind and so is not liable to be taxed. A voluntary deduction for lunch would not reduce pay for National Minimum Wage purposes.
5 Six hours is used for illustration only as day lengths vary according to factors, such as the time of year.
Pickers up, due to the greater involvement of caring for and providing a dog and often their own transport, can fit the criteria to be classed as self-employed, particularly if they are advertising similar services generally, and/or can send a substitute, i.e. they do not have a contract to provide a personal service. Therefore, they can choose between being self-employed and being a worker on a shoot.
|Pros of Self Employment||Cons of Self-Employment|
Advice will be required when engaging a worker on a self-employed basis as there are tax and compliance risks, including penalties, of engaging a worker as self-employed when, on the facts of the engagement, they should be treated as an employee. This is a particular focus of both HMRC and the Courts following recent high profile cases on worker status, and there may well be future changes in the light of the government review into working practices.
Shoots are responsible for accounting to HMRC for PAYE and National Insurance Contributions for any permanent employees. Every time such an employee is paid, the shoot must tell HMRC how much tax and National Insurance has been deducted using the online Real Time Information (RTI) system for all employees.
For casual workers such as beaters and pickers-up, this information can be quickly and easily submitted on a RTI Full Payment Submission (FPS).
When doing so, both a start and finish date must be entered and the starter declaration ‘B’ completed. For daily paid workers, this will be the same date in each field of the FPS and the pay frequency must be shown as made on an ‘irregular’ basis. Alternatively, entries can be recorded as a ‘one off’ payment and, if further payments for the same individual are reported for a separate period, previous payment details should not be included. To indicate that no tax has been deducted, the tax code should be shown as ‘NT’.
If the daily-paid casual worker is employed on more than one occasion, shoots may be able to report their payments within a 7 day period as if there was one single payment, thereby reducing the administrative burden. For example, if each individual payment is below the National Insurance Lower Earning Limit (LEL), currently £120 per week, the FPS can be made within a 7 day period (this begins on the day after the day on which the earliest payment was made).
In this instance, the ‘starting date’ will be the first payment date and the ‘leaving date’ will be the date of the last part payment covered by the FPS. Entering these dates ensures that tax codes are not issued.
If a shoot wants to report payments for all of its daily paid casual beaters on one FPS, they must include the totals for each employee paid within the previous 7 day period.
If a shoot is reporting payments on an FPS late, but within 7 days of payment, it is important that they apply the late reporting reason code ‘F’ against each payment.
If a shoot reports the same daily paid casual beaters on more than one FPS they must:
Tip: if a shoot is reporting individual payments which are below the LEL, they should leave the National Insurance fields blank even if the total weekly amount exceeds the LEL. If their payroll software requires them to make entries, they should enter Category ‘X’ in the National Insurance category letter field and show zeros for all other NICs data items.
Shoots do not have to deduct tax and National Insurance from a worker’s pay if they employ them for two weeks or less in a tax year. However, their pay is still taxable income and the worker must ensure that any tax due is paid. Therefore, some shoots do still pay tax on behalf of the worker in order to avoid any potential underpayment.
If a shoot does not have any permanent employees, it does not have to report workers’ pay through the RTI system provided all of the criteria below are met:
Shoots must keep records of all the payments they make to workers for at least three years. This allows HMRC to track whether the worker has paid the tax he should have. As a minimum, the shoot should keep the following information for each worker:
If you would like to discuss any of the issues raised in this article please contact Ben Sharples or Andrew Tobey
This article was written in collaboration with Estate Agents and Property Consultants Strutt & Parker and UK Top 20 Accountancy Firm Saffery Champness.