Tax Q & A’s – Debbie’s monthly editorial for Grapevine readers

Every month Debbie Story answers your questions in the local Grapevine magazine.

Q: I run a café and I am employing students temporality over the summer holidays.  Do I need to deduct any tax from their wages?

A: If a student on a UK-based course only works for you during their holiday periods, and as long as their earnings remain below their Personal Allowance (£8,105 for the average person) for the tax year, you can pay them without deducting PAYE tax.

You first need to obtain a form P38(S) from The student must fill in the declaration on the form as soon as they begin working for you. You will need to obtain and complete a new form P38(S) for each tax year that the student works for you.

Q: I am budgeting my wages cost to the end of the year. When do minimum wages rates increase and how much do they increase by?

A: National Minimum Wage (NMW) Rates will increase from 1 October 2012.  There are different levels of NMW, depending on their age and whether they are an apprentice. From 1 October 2012:

  • the main adult rate (for workers 21 and over) will increase by 11p to £6.19 an hour
  • the rate for 18-20 year olds will remain at £4.98 an hour
  • the rate for 16-17 year olds will remain at £3.68 an hour
  • the rate for apprentices, for apprentices under 19 or 19 or over and in the first year of their apprenticeship, will increase by 5p to £2.65 an hour

If they are of compulsory school age they are not entitled to the NMW. Some of their other employment rights are also different.

Q: I’m going to start my own business.  Who do I have to inform and when?

A: First decide whether you want to be self-employed or trade through a limited company (see April issue for guidance or please call me). If you decide to be self employed I recommend informing HMRC as soon as you start trading.   However the latest you should register is by 5 October after the end of the tax year for which you need a tax return. The tax year runs to 5 April and therefore if you start trading now, you need to let HMRC know by 5 October 2013.  You can register on-line at or call 0845 9 15 45 15.

Q: Do I need to pay holiday pay for a person who works less than 16 hours a week?

A: Yes.  Almost all workers above school leaving age – not just employees but also, for example, agency and casual workers – are entitled to 5.6 weeks’ paid holiday per leave year.  Workers below school leaving age must have a two-week break during school holidays.