Student loans 2020
From April 2020 the annual earnings threshold at which student loans repayment deductions are calculated will increase.
Plan 1 student loans will rise from £18,935 to £19,390.
Plan 2 student loans will rise from £25,725 to £26,575.
There will be a change to the treatment of termination payments from April 2020. Currently, termination payments are subject to income tax on the excess of payments over £30,000. From April 2020, any amount in excess of £30,000 which attracts income tax, will also be liable to class 1A National Insurance Contributions (employer only). The amounts are due in the normal processing cycle of the payment to the employee and need to be recorded on the Real Time Information (RTI) submission to HMRC. The new real-time class 1A NICs will need to be paid with the normal monthly remittance (or quarterly for small employers) to HMRC, so that the RTI details match the payments.
EYU pilot extended
It had been the intention of HMRC that the earlier year update (EYU) return would cease to be a valid submission for the current year and later tax years. However, HMRC have recently announced that a final decision regarding the withdrawal of the EYU return is postponed so as to allow continuing evaluation of the ongoing pilot of using the full payment submission (FPS) for making year to date amendments to returns for prior tax years. The postponement means that FPS and/or EYU returns can be used to amend YTD values for tax years 2018-19 and 2019-20.
New rates for payroll from 6th April 2019
Budget changes come into effect 6th April including the standard tax allowance, lower earnings limit, statutory payments and National Minimum Wage. For all details click here
Workplace Pension Increases April 2019
The auto-enrolment contributions increase in April 2019. The minimum contributions increase from 2% to 3% for employers and from 3% to 5% for employees.
Itemised Pay Statements
From 6th April 2019 employers must now provide payslips to all workers, not just employees who work under a contract of employment. You must also now show the total number of hours worked for hourly paid workers clearly stating the hours they are being paid for.
New Postgraduate Loans
A new student loan for postgraduates starts in April. These can run alongside current student loans. The threshold is £21,000 per annum and the rate is 6%.
Farewell to the EYU
As of April 2019, HMRC will be extending the use of the Full Payment Submission (FPS) to enable payroll software to allow users to report revised YTD data beyond 19th April, following the end of the 2018-19 tax year. This means you won’t have to do an Earlier Year Update (EYU). Subject to your software functionality, during 2019 for the 2018-19 tax year the employer can choose which method they will use, however, HMRC will still accept an EYU return. From April 2020 the EYU will no longer be valid.
Closure of childcare vouchers
From 4 October 2018, new entrants can no longer join a childcare scheme and receive the associated benefits. As long as you continue to offer your voucher scheme, employees who joined before 4 October 2018 will still be able to use it. If you continue to offer your voucher scheme and employees join after 4 October, you will need to deduct tax and NIC on any vouchers given and pay employers NIC. However, if these employees meet the tax-free childcare eligibility criteria, they will also be able to open an online tax-free childcare account. You must stop giving childcare vouchers with tax and NIC relief to employees who join before 4 October if they wish to leave the scheme and start using tax-free childcare. Tax-free childcare was introduced in 2017 to help working parents with the cost of childcare. To be eligible, parents must earn at least the equivalent of 16 hours per week at the national minimum wage, have an eligible child (under 12 or 17 if disabled) and earn under £10,000 each per year.
The Help to Save scheme
This government backed UK scheme was launched in September. The scheme allows certain people on low income, who are entitled to working tax credit or receiving universal credit, to receive a bonus of 50 pence for every £1 they save into their Help to Save account over four years. The maximum that can be saved each calendar month is £50, but you don’t have to save every month. Savers can withdraw money from their account to their bank account. Bonuses, payable into the person’s bank account at the end of the second and fourth years, are based on the amount saved. Those choosing to close their account during the four-year life of their account lose bonus eligibility. The bonus after 2 years will be 50% of the highest balance saved and the final bonus will be 50% of savings above the highest balance in the first 2 years. Help to Save bonuses will not affect Universal Credit or housing benefit payments, and any savings or bonuses through Help to Save will not affect the amount of Working Tax Credit a person can receive.
In September 2018, the Parental Bereavement Act received royal assent. This is the first law of its kind in the UK which will support those affected by the tragedy of childhood mortality. The statutory right is expected to come into force in 2020. The Act creates a statutory right to time off for employed parents, with pay where eligibility requirements are met, following the loss of a child.
On 25th May 2018, the General Data Protection Regulation (GDPR) will be implemented in the UK. It will apply to personal data processed within the EU and to organisations outside the EU that supply goods and services to individuals within the EU. It is no longer adequate to say you comply with the regulations, you will be required to demonstrate it and appoint a data protection officer within your organisation, no matter how small. Transferring information by email will no longer be acceptable, unless it is encrypted.
New employers with instant auto-enrolment duties
Any new employers that set up their business from October 2017 will not have a staging date, so their AE duties start as soon as they take on their first member of staff. Employers with instant duties will also need to complete a declaration of compliance within 5 months of their duties start date.
From 6th April 2018, all payments in lieu of notice (PILONs) – whether contractual or non-contractual – will be fully subject to a charge of tax and class 1 NICs. This rule change is intended to end the confusion regarding the treatment of PILONs that existed before 6th April 2018. The change introduces the concept of ‘post-employment notice pay’ which represents the amount of basic pay the employee will not receive because their employment was terminated without full or proper notice given.
Gender Pay Gap
The date is fast approaching where those employers in the voluntary, private and public sector that employ more than 250 employees will be required to publish their gender pay gap figures. The snapshot date is 5th April 2018 for the private/voluntary sector and 31st March for the public sector.
Apprenticeship Levy for connected companies
If you have connected companies that together the pay bill is £3 million per year, then all companies are liable to pay the apprenticeship levy. You only have one apprenticeship allowance of £15000, but you can split the levy over the different companies. So, even the smallest companies when taken in isolation have a pay bill of under £3 million, will still pay the levy as they are a connected payroll. The levy should be calculated on each payroll individually and then depending on how the levy allowance has been split will affect how much each connected company has to pay.