The Methodist Church in Britain



10 PAY ISSUES

This section provides information on:

The Living Wage

Honoraria/Payments to volunteers

Guidelines for local pay arrangements

National Insurance and Income Tax

Sick pay calculations

Provision of accommodation

2 The Living Wage

The Living Wage Foundation (LWF) and the Methodist Conference promote the concept of the Living Wage. The November 2019 Connexional Allowances Committee confirmed the hourly rates of £9.30 per hour in all regions (including Scotland) and £10.75 per hour in London from 1 April 2020 to 31 March 2021.

Please note that the Connexional Allowances Committee (CAC) agrees these rates on an annual basis.  As long as Lay Employees’ salaries are based on this pay scale, any subsequent uplift to the pay scale on a yearly basis will be the decision of relevant budget holders. 

There is no mechanism for increments or uplifts to this scale other than adjusting the amount for the Living Wage.  Each church can apply its own cost of living increase according to affordability and sustainability. 

Living Wage

|The Living Wage |

|01 April 2020 - 31 March 2021 |£9.30 per hour in all regions (including Scotland) and £10.75 per hour in London|

See Appendix 10.1 for practical information on implementing the Living Wage.

3 Honoraria/Payments to Volunteers

The Methodist Church has a substantial number of members and others who give service voluntarily in its ministry and mission. The National Minimum Wage Act does not affect such volunteers, provided they are genuine volunteers working without pay.

In some situations, the Methodist Church has entered into agreements with ‘Time for God’ or other voluntary service agencies who provide volunteers to perform a task but who receive no ‘wage’ or ‘salary’ for performing the task. Instead they are usually provided with basic accommodation, have any expenses necessarily incurred in the course of their duties reimbursed, and are usually offered some ‘pocket money’ or minimal allowance by way of subsistence. Such workers are not subject to the provisions of the Act.

Before any charges for accommodation are imposed, advice should be sought to ensure that no tenancy is being created.

The practice of paying honoraria should be implemented with care.

An honorarium is intended to be no more than a gift for carrying out a voluntary duty. It should not be regarded as remuneration for any work done, should not be offered before the duty is undertaken, and an honorarium should not become a regular payment. In strict terms, an honorarium is a one-off ex-gratia payment, that is, there is no obligation to pay it, regardless of work being completed.

Organisations that are found to be paying honoraria inappropriately may have to pay backdated tax and National Insurance contributions.

An honorarium paid to a volunteer should be put through the books and is liable to tax and National Insurance.

10.3 Guidelines for Local Pay Arrangements – Local Religious Centres (LRC)

HMRC Guidelines for LRCs

An employee is anyone employed under a contract of service and includes casual and part time workers i.e. lay Employees and cleaners.

LRCs, which take on an employee, need to follow the HMRC guidance which is in Appendix 10.2 Guide on PAYE / NIC for Local Religious Centres or go to

HMRC Starter Checklist form needed

An LRC must establish whether the employee has another job/s and/or a pension/s, which would require the LRC to register as an employer.

Therefore, all new employees must complete the HMRC Starter Checklist (formerly P46)

See Appendix 10.3 for HMRC Starter Checklist form or download from

Contacting HMRC

As HMRC rules are constantly changing, ALL employers are advised to contact the HMRC EITHER to register OR to obtain authorisation to keep detailed records (see Appendix 10.2) for employing only one employee who earns less than £116 per week (providing that employee does not have another job/s or receive a pension/s).

To contact HMRC either telephone the New Employer Helpline on 0300 200 3211 (or 0300 123 1073) or write to: HMRC, PO Box 205, Bootle, L69 9AZ or register on line.

For comprehensive advice about registering as an employer, go to .

Payroll Arrangements

In some cases (as outlined in Appendix 10.2) the employment need not be reported to HMRC but, where it does need to be reported, LRCs have the options to:

a) Register as an employer with HM Revenue & Customs allowing it to operate the “Pay-as-you-earn” (PAYE) Scheme.

Once an LRC is registered as an employer and has an ID, payroll software can be downloaded to work out PAYE and NIC for fewer than 10 employees. Go to .

or

b) arrange to use the Payroll Bureau Service provided by the Finance Office at Methodist Church House. The Finance Office payroll team will provide full payroll service for a charge and administration fee of £480 per annum inclusive of VAT, for employees up to five. There will be additional charge over five employees based on the number of employees on the scheme. For further information please contact the payroll team

payrollbureau@.uk

or

c) Arrange for an independent payroll service to run their payroll (which is likely to be cheaper than £480 per year for a small number of employees)

[Some churches, which employ only one person, as a cleaner, for example, ask the circuit Treasurer if he/she can assist by adding the cleaner to the circuit’s payroll.]

To help an LRC make a decision go to:

Class 1 National Insurance Contributions (NIC)

The PAYE scheme allows for the collection of Class 1 National Insurance Contributions and Income Tax at source and payment over to the Inland Revenue.

Class 1 NIC is made up of two elements – employee’s and employer’s contributions. Whether or not employee’s and/or employer’s NIC is payable depends on:

The employee’s AGE which must be at least 16 years AND

The employee’s EARNINGS, which must exceed the Earnings Threshold (ET).

Employees over the State Pension Age (65 for both men and women) do not have to pay “employee’s NIC”. There is no such restriction for Employer’s NIC.

Please note: Earnings in this instance mean all payments made to an employee for service regardless how it is described i.e. Salaries, Wages, Bonus, Overtime, Commission, etc.

To calculate Class 1 NICs, two other earnings levels are relevant.

Lower Earnings Limit (LEL) - the minimum level of earnings that an employee needs to qualify for benefits such as Retirement Pension and Jobseekers Allowance. No NIC is payable at this earnings level.

Upper Earnings Limit (UEL) –the employee’s NIC is limited to 2% only for all earnings above this limit. The employer would however continue to pay NIC at the full rate of 13.8% beyond this point.

The rates for the tax year are as follows:

| |Tax Year 2020 / 2021 |

|Lower Earnings limit (LEL) |£120 per week |

| |£520 per month |

| |£6,240 per year |

|Primary Threshold (PT) |£183 per week |

| |£792 per month |

| |£9,500 per year |

|Secondary Threshold (ST) |£169 per week |

| |£732 per month |

| |£8,788 per year |

|Apprentice Upper Secondary Threshold ( ................
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