VAT and employment law changes

VAT regulation changes have been announced by HMRC, which will alter the format of invoices from 1 October. The changes are most likely to affect firms selling second hand goods, travel related supplies, as well as food and services across the European Union (EU), and those supplying customers who are responsible for paying the VAT. HMRC has produced detailed guidance about the changes on its web site.

The National Minimum Wage is due to increase in October 2007 to £5.52 for over 21’s; £4.60 for 18-21 year olds; and £3.40 to 16/17 year olds. The accommodation amount increases to £4.30 per day.

Increase in annual holiday entitlement - currently, employees have a statutory right to a minimum of 20 days paid annual leave. This is set to increase to an ultimate 28 days in two phases. Firstly, an increase to 24 days on 1 October 2007 and an increase to 28 days on 1 April 2009. The holiday increase is to be pro rated for part time employees and can still include any time off for bank or public holidays.

The increases from October 2007 and April 2009 will be calculated proportionally depending on when the employers leave year starts. An online calculator will shortly be available from the DTI to assist in calculating new holiday entitlements.