6 Legislative Changes Entrepreneurs Need to Know This Month
A series of legislative and policy changes will come into effect over the next few days that will have a direct impact on construction companies.
Much has been written about banning red diesel and increasing National Insurance payments, but were you also aware of sustainability disclosure requirements and prompt payment thresholds?
Shona Frame, a partner at law firm CMS, said there was plenty for entrepreneurs to do.
“A number of these changes will either add cost or administrative burden,” she said.
“But that will be justified by whether these changes are largely driven by the sustainability agenda, which is at the heart of government policy, or by an increased focus on health and safety.”
Here’s our roundup of the six big changes you should know about this month.
1. PPE rights extended to cover more workers on site
The requirement for UK employers to provide appropriate personal protective equipment (PPE) to employees will be extended to cover more workers from April 6.
Under the Personal Protective Equipment at Work (Amendment) Regulations 2022all persons defined as “workers of member (b)” should be treated the same as those with an employment contract in terms of PPE.
So-called members (b) workers usually have occasional or irregular arrangements to perform tasks for remuneration without the same commitments or rights as employees.
The change in the law means their risk must now be assessed and then appropriate safety equipment – be it goggles, helmets or any other item – provided to them free of charge. This equipment must be compatible, maintained, properly stored and properly used after adequate training and instruction.
The self-employed remain outside the scope of this law. But the Health and Safety Executive warns that precise employment status can only be defined by a court or tribunal, and urges all companies to consider whether the change applies to them and their staff.
2. Red diesel prohibited for construction vehicles
Despite a concerted industry effort, including an ultimate letter from 15 trade bodies to Chancellor Rishi Sunak, it has today (April 1) become illegal to pour red diesel into the fuel tanks of vehicles and machinery used for construction purposes in the UK.
This means contractors must find alternative fuel sources or buy plain white diesel – which comes with a tax of almost 58 pence per liter (ppl) instead of the discount 11ppl attached to its dyed cousin.
National Builders Federation chief executive Richard Beresford has warned consumers to be prepared for rising construction costs and house prices following the change in the law.
Plants that already contain refunded fuel can still be used, but contractors have been urged by trade bodies to keep good records and keep fuel receipts, invoices, rental contracts and driver time sheets .
For more information, see NCeverything construction companies need to know about the red diesel ban.
3. Faster payment of subcontractors required to win government contracts
The amount of late payment that the government will tolerate from its suppliers has decreased.
In terms of Procurement Policy Note 08/21bidders for contracts with Whitehall departments worth more than £5million a year must now demonstrate that they have paid 90% of invoices received within a defined period within 60 days.
Additionally, if they have not paid 95% of invoices within that timeframe, companies will be required to provide a compliant action plan outlining how they will achieve this higher figure.
The latest rules today (April 1) supersede an earlier policy that allowed bidders to proceed with only 85% of invoices paid promptly and an appropriate proposal for improvement.
Electrical Contractors Association chief executive Steve Bratt welcomed the change when it announced it last year, saying prompt payment was “essential” to maintaining healthy supply chains.
4. Climate disclosure requirements for large companies
Listed companies with more than 500 employees will have to publish information related to climate change in their annual reports for the 2022/23 financial year, which starts in a few days (April 6).
Details required under the Business regulations (strategic report) (climate-related financial disclosure) include a description of governance arrangements to assess and manage climate-related risks and opportunities.
Affected companies will also need to define the targets they use to manage climate-related risks and realize climate-related opportunities, as well as performance against those ambitions.
UK-based parent companies are asked to report on their global operations, considering immediate and long-term factors affecting their various operating locations and supply chain.
5. Windfall tax kicks in on house building profits
Businesses making more than £25m a year in profit from building and selling homes in the UK will have to pay a new one-time tax from April 1.
The Housing Developer Tax, included in the Finance Bill 2021-22is part of the Government’s response to the Grenfell Tower tragedy and is seeking to raise money from major industry companies to cover the cost of removing hazardous coatings.
Figures in guidance issued by HM Revenue and Customs suggest the levy – set at 4% on all relevant profits above the £25million threshold – will bring in more than £1billion over the next five years.
Helen Coward, a partner at law firm Charles Russell Speechlys, said “start-up problems” can be expected as the sector determines “exactly how the tax will work in practice”.
“The taxpayers affected – and especially those about to be caught by it – will hopefully have already thought about how the new tax affects their business and how best to handle the additional burdens associated with it. compliance,” she added.
6. Minimum Wage and National Insurance Increases
A series of changes to minimum wage legislation will result in wage increases for all lowest paid staff.
The National Living Wage, imposed by the government for workers aged 23 or over, rose from £8.91 to £9.50 an hour today (April 1). The biggest proportional increase goes to apprentices, whose minimum hourly wage has just jumped nearly 12% to £4.81.
For more details on all the changes, see information published by the Low Pay Commission.
Meanwhile, National Insurance contributions will rise on April 6 as the Treasury raises funds to overhaul the UK’s health and social care systems.
Employers and employees will each pay an additional 1.25%. See all the details in government guidelines.