More than a million of the lowest-paid workers in the UK will receive a financial boost from 2025.

New Government legislation just published confirms that around 1.2 million low earners who save for their pension through a Net Pay Arrangement (NPA) will get the same level of government top-up as those who use Relief at Source schemes.

For NPAs, pension contributions are deducted before income tax is calculated, whereas with Relief at Source it is after.

Take home pay boosted

Around 200,000 workers will receive a £100 increase in their take-home pay. The average beneficiary will receive an extra £53 a year, with 75% of affected workers being women.

The number of people eligible for a top-up of £100 or more is based on the total number of people in the UK who contribute at least £500 every year into their NPA pension but have no tax relief on that contribution.

Financial Secretary to the Treasury Lucy Frazer said: “A quirk in our pensions tax system has meant that over a million low-earners have lost out on government top-ups to their pensions, resulting in comparatively less take home pay.

“We are correcting this injustice so low earners will get the same level of Government support, no matter what type of pension they use.

Since 2015, people saving through an NPA have had less take home pay compared to similar-earning savers who use a Relief at Source scheme. Those using the latter type of pension scheme receive a 20% top-up from the Government on their savings, while those using NPAs receive tax relief at their marginal rate – 0%.

Professional advice

The Government has published legislation confirming that it has rectified this anomaly, and low-earning pension savers will receive similar top-ups regardless of what pension scheme they are using. Beneficiaries will receive their top-ups directly into their bank accounts from 2025 and HMRC will be notifying those who are eligible then.

There are several different types of pension contributions. If you would like pension advice, we would recommend seeking professional guidance.

Hospitality staff will be able to keep their well-deserved tips from grateful customers under new legislation that has been backed by Government.

Although customers may leave cash to say thank you to their waiter staff, many employers still keep the money for themselves. For card payments, it is even harder to keep track of where the money has gone. Staff, many earning National Minimum Wage, may see a small percentage, but in too many cases are likely to be left empty-handed.

The Employment (Allocation of Tips) Bill, introduced by Dean Russell MP and backed by the Government, will ensure that all tips go to staff by making it unlawful for businesses to hold back well-earned service charges from their employees.

This overhaul of tipping practices is set to benefit more than 2 million UK workers across the hospitality, leisure and services sectors – who tend to rely on tips the most – and will help to ease pressures caused by global inflation and an increase to the cost of living.

Fair deal for millions

Dean Russell, Conservative MP for Watford, said: “I am delighted that my Tips Bill has passed second reading in Parliament. It is fantastic that we are on track to securing a fair deal for millions of people working in hospitality across the country.

“It has always felt wrong that some employers have retained tips intended for their staff. This new legislation will halt this practice, particularly given the current challenges around the cost of living. I would like to thank all of the businesses and stakeholders that have got in touch to voice their support.

“The move towards a cashless society has exacerbated the problem of companies keeping card tip payments for themselves, and these measures, once in law, will ban that practice.

Business Minister Jane Hunt said: “At a time when people are feeling the squeeze with rising costs, it is simply not right that employers are withholding tips from their hard-working employees.

“Whether you are pulling pints or greeting guests, these reforms will ensure that staff receive a fair day’s pay for a fair day’s work – and it means customers can be confident their money is going to those who deserve it.”

Request for information

Through the Bill, a new statutory Code of Practice will be developed to provide businesses and staff with advice on how tips should be distributed. On top of this, workers will receive a new right to request more information relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal.

UK Hospitality Chief Executive, Kate Nicholls, said: “Tips and service charges provide a significant and welcome boost to hospitality employees’ take-home cash. So we’re delighted to see this proposed legislation recommend that employers can set a fair distribution policy for staff, meaning they all benefit. This should also reassure prospective hospitality sector workers at a time when the industry is seeking to fill vacancies.”

People who are worried about the impact of rising prices and its effect on household incomes are being urged to seek support.

Speaking to a trained and experienced debt adviser about your situation could help you decide what to do before the situation gets out of control.

Having early conversations is the best first step to resolving your money issues and avoiding missing payments. If you already have an Individual Voluntary Arrangement, Income Payments Agreement or Income Payments Order, this is what you could do:

Individual Voluntary Arrangements (IVA)

If you are in an IVA, you can ask your supervisor to review your income and expenses to see if you are eligible for a reduction in payments or payment break.

You will be required to provide evidence of your income and expenditure to support a change to your contributions. This could include providing payslips, statement of benefits or utility bills.

Any amendments to your contributions into your IVAs would need to be agreed with your creditors.

Your supervisor has been provided with the latest guidance on adjustments to payments, via the IVA Standing Committee, and they will also be aware of alternative solutions to help you resolve your debt issues and can help you find further information where appropriate.

Income Payments Agreements and Income Payments Orders

If you have an Income Payments Agreement or Income Payments Order, you can ask for a review of your income and expenses to see if you are eligible for a reduction in payments, or payment break.

The spending guidelines have been updated for inflation in the current financial climate and if you feel you need a review, you should contact the organisation you make payments to.

Other payment agreements

If you currently have an agreement to pay the Official Receiver as trustee in bankruptcy or liquidator of a company and are concerned about future payments, email the DART Team via mailto:dart.post@insolvency.gov.uk.

The Government’s MoneyHelper has lots of free information and resources to help you manage your money in uncertain times and how to keep up with essential bills and payments.

If we can help you with any money concerns, get in touch.

Around 30 million people across the UK will be looking forward to seeing extra cash in their pocket after the biggest personal tax cut in a decade came into force.

Some lucky workers will be saving £330 a year, with around 2.2 million no longer having to pay tax.

The £6 billion tax cut will see the level at which people start paying National Insurance rise from £9,880 to £12,570.

How much are you saving?

The threshold change means that 70% of UK workers will pay less National Insurance, even after accounting for the Health and Social Care Levy that is funding the biggest catch-up programme in NHS history.

Workers can check their salary in the government’s online tool to estimate the amount they could save between July 2022 and July 2023.

The last major personal tax cut of this magnitude was nearly 10 years ago, when the income tax personal allowance increased by £1,100 in 2013. This threshold change is more than double that, as working people are now able to hold on to an extra £2,690 free from tax.

The increase to the National Insurance thresholds will leave around 76% of National Insurance payers in the North East better off, 75% in the North West and Merseyside, and 62% in London.

The landmark personal tax cut came as the Government launched a new Help for Households campaign designed to raise awareness and signpost people to the £37 billion in support on offer and targeted at those most in need. The support provides millions of the most vulnerable households at least £1,200 of support in total this year to help with the cost of living, with all domestic electricity customers receiving at least £400 to help with their bills.

Income tax cut to follow in 2024

It also includes a 5p fuel duty cut – the biggest cut ever to fuel duty rates, a rise in the national living wage to give full-time workers an extra £1,000 and a cut to the Universal Credit taper rate to provide more than one million families an extra £1,000.

The change to National Insurance thresholds comes as part of the wider vision for a lower tax economy. At the Spring Statement, then Chancellor Rishi Sunak announced a 1p income tax cut in 2024 – which will be the first cut to the basic rate in 16 years and will save the average taxpayer a further £175 a year. The former Chancellor also committed to cutting and reforming business taxes later this year in the autumn, to help spur business growth and productivity. In the light of recent events, there has to be uncertainty around what happens next.

Online retail giant Amazon is being investigated by the Competitions and Markets Authority (CMA) over concerns its practices could result in a worse deal for customers.

It is understood the investigation will be looking at how Amazon’s operations affecting sellers on its UK Marketplace may be anti-competitive.

This new investigation follows a current European Commission probe looking into similar concerns. With the UK no longer part of the European Union, the original enquiry does not cover issues within our borders.

How Amazon works

Amazon’s Marketplace sells a percentage of products through its own retail business. However, a large proportion are supplied by third-party sellers. Amazon provides services to these sellers, including those that are essential to make sales, such as matching sellers with consumers. It also offers optional services that incur additional fees, such as Amazon’s ‘Fulfilment by Amazon’ service. This handles some aspects of the sales process, including storage, packaging, and delivery.

The CMA investigation will consider whether Amazon has a dominant position in the UK and whether it is abusing that position and distorting competition by giving an unfair advantage to its own retail business or sellers that use its services, compared to other third-party sellers on the Amazon UK Marketplace.

The investigation will focus on three main areas:

• How Amazon collects and uses third-party seller data, including whether this gives Amazon an unfair advantage in relation to business decisions made by its retail arm.
• How Amazon sets criteria for allocation of suppliers to be the preferred/first choice in the ‘Buy Box’. The Buy Box is displayed prominently on Amazon’s product pages and provides customers with one-click options to ‘Buy Now’ or ‘Add to Basket’ in relation to items from a specific seller.
• How Amazon sets the eligibility criteria for selling under the Prime label. Offers under the Prime label are eligible for certain benefits, such as free and fast delivery, that are only available to Prime users under Amazon’s Prime loyalty programme.

No conclusions reached

Sarah Cardell, General Counsel at the CMA, said: “Millions of people across the UK rely on Amazon’s services for fast delivery of all types of products at the click of a button. This is an important area so it’s right that we carefully investigate whether Amazon is using third-party data to give an unfair boost to its own retail business and whether it favours sellers who use its logistics and delivery services – both of which could weaken competition.

“Thousands of UK businesses use Amazon to sell their products and it is important they are able to operate in a competitive market. Any loss of competition is a loss to consumers and could lead to them paying more for products, being offered lower quality items or having less choice.”

The CMA has not reached any conclusions at this stage as to whether or not competition law has been infringed.