New Employment Legislation from 6th April 2024

National Minimum Wage Rates April 2024:
The age for the National Living Wage rate will reduce from 23 year olds to 21 year olds.
Under 18s and apprentice rates increase from £5.28 to £6.40 per hour
18 -20 year olds increase from £7.49 to £8.60 per hour
21 and overs increase from £10.18 or £10.42 to £11.44 per hour

Flexible Working:
From April 2024, all employees will be entitled to request flexible working arrangements from the first day of their employment rather than after 26 weeks as is currently. This includes requests for part-time, term-time, flexi-time, compressed hours and varied working locations. Before rejecting any request, employers need to be aware that they now have to explain the reasons behind their decision and are obliged to respond to flexible working requests within 2 months, compared to 3 months previously. Employees can also make 2 statutory requests for flexible working in any 12-month period, as opposed to one previously.

Carers Leave Act 2023:
The act makes provision for unpaid leave for employees with caring responsibilities. This leave is a day-one right. It applies to anyone caring for a spouse, civil partner, child, parent or other dependant who needs care because of a disability, old age or any illness or injury likely to require at least 3 months’ care. This leave is unpaid with a maximum duration of one week per year. Whilst employers can’t deny a request, they can postpone it if they reasonably consider that the operation of the business would be unduly disrupted if it were approved.

2024 Year End Preparations

We are nearing the end of the 2023-24 tax year and to help us all through a smooth year end process, there are certain things you can do to assist with your 2024 year end preparations:

Data cleansing
Check your payroll reports, payslips or employee data on the MyEpaywindow portal. Are the employees’ titles correct? Do you have the correct name spellings? Are their home addresses up-to-date? Are there any missing National Insurance numbers? Are there employees that have left your employment during the year but are still on the payroll? Once the March payrolls are finalised and the P60s are created, we CANNOT amend any incorrect data on them.

Correct March payrolls
As March is the final payroll run of the 2023-24 tax year, it is vital it is correct first time. Please try and avoid any re-runs. Ensure all timesheets are included. Ensure all starters are included. If any payments are missed, those employees will lose their March free pay allowances and could pay more tax and National Insurance than necessary. There is a short window between finalising your March payroll, closing down the tax year, creating the P60s, updating new pay rates in time for the April pay run. Once the year end process starts, any re-runs for March will take longer and will hinder the year end process.

Changes To National Insurance Rates from 6th January 2024

It was announced in the Chancellor’s Autumn Statement in November 2023 that National Insurance rates were to be cut for millions of workers.
The changes to National Insurance Rates from 6th January 2024 are as follows:
Class 1 National Insurance contributions will be cut by 2%, reducing from 12% to 10%.

There will be further changes in National Insurance from 6th April 2024:
Class 4 self-employed National Insurance cut by 1%, reducing from 9% to 8%
No one will be required to pay Class 2 self-employed National Insurance contributions. This means self-employed people with profits above £12,570 will no longer be required to pay Class 2 NIC but will continue to receive access to contributory benefits including the State Pension.
Those with profits between £6,725 and £12,570 will continue to have their contributions ‘treated as paid’ and get access to contributory benefits including the State Pension without paying Class 2 NIC as they do now.
Those with profits under £6,725 and others who pay Class 2 National Insurance contributions voluntarily to get access to contributory benefits including the State Pension will continue to do so.

An update on Fit Notes

The government announced an update to the Fit Note or Med 3 form which was published on 6 October 2023.
The fit note should allow the employer and employee to discuss the employee’s health condition and consider ways to help them stay in, or return to, work on a phased or permanent basis.
Previous updates to the form included an extension to the healthcare professionals that could issue the form, in addition to doctors which included occupational therapists, pharmacists, and physiotherapists.
An updated version of the fit note replaced the signature in ink with the name and profession of the issuer, enabling the employee/employer to receive fit notes from GP practices through digital channels (where the local IT system support this).
The latest update to the fit notes will extend availability within secondary care settings (hospitals) from later this year. In the interim, employers may receive a pre-printed fit notes for employees discharged from hospital.
In the meantime, employers should be checking that the name of the issuer, the profession and the address of the medical practice correctly entered to make it a valid form. If you receive an old template (Med3 2017) it must be signed in ink by the healthcare professional.
The guidance, together with a checklist for employers can be found here

Are you ready to submit your P11Ds?

If you’re an employer and provide expenses or benefits to employees, you must usually report them to HMRC so that tax and NICs are accounted for, unless they are subject to an exemption. It’s important you understand which exemptions apply and what needs reporting. We would recommend employers review the expenses and benefits they provide each year to establish the correct treatment and identify any changes.

Forms P11D and P11D(b) are forms employers must submit to HMRC annually to confirm the value of reportable benefits they have provided to employees. This is where the benefits are not covered by a formal payrolling arrangement with HMRC or aren’t dealt with under a pay as you earn settlement agreement (PSA). The P11D(b) form is the employer’s annual return of class 1A NICs due on those benefits. The P11D and P11D(b) deadline is 6th July following the tax year the benefits were provided in. A copy of each employee’s form P11D, or the information it contains, must also be provided to employees on this date. Any class 1A NIC payments (the employer’s NICs due on taxable benefits) are due 19th or 22nd July following the tax year, depending on how payment is made. For the 2022/23 tax year, class 1A NIC will be charged at a blended rate of 14.53% due to changes to NI rates part way through the tax year. HMRC no longer accept any paper forms P11D or P11D(b).

Currently, employers can choose to payroll certain benefits rather than report them on forms P11D. The only benefits that cannot be payrolled are living accommodation and beneficial loans. To payroll benefits, employers must formally register via HMRC’s portal before the start of the tax year they first want to payroll the benefit from. Once registered, the employer must then add the correct cash equivalent value of the payrolled benefit to employees’ taxable pay, and HMRC should then exclude the value of the benefit from the employees’ tax codes. The advantages of payroll benefits is it reduces the employer’s end of year P11D administration, plus it enables employees to pay tax in real time.

However, even if you are payrolling benefits now, you will still need to include the value of the payrolled benefits on a form P11D(b) by 6th July. This is to enable the class 1A NICs due on those benefits to be declared and paid to HMRC by 19th or 22nd July.

PSAs are used by employers to maintain compliance and reduce administration around taxable employee expenses and benefits they don’t want employees to personally pay tax and NICs on. By using a PSA, an employer can settle any tax due via an annual submission and payment to HMRC. PSA items do not then need to go through payroll or on a P11D. Rather than class 1A being due via the P11D(b), the value of the benefit is subject to class 1B NICS. To be included on a PSA, items must be minor, irregular in nature or impractable for the employer to operate PAYE on. Examples of PSA items are staff lunches, staff entertainment, non-cash awards, taxable travel costs for hybrid workers and trivial benefits over £50 such as Christmas gifts. You cannot include cash bonuses, company cars or low interest loans. A PSA must be applied for in writing. The deadline to have agreed a PSA with HMRC is 5th July following the tax year in which it relates.