From the start of the new tax year in April there will be regulatory changes to payroll and Auto-Enrolment Pensions which you need to be aware of and take into account when planning. We are here to help if you have any queries.
National Minimum Wage
It’s no surprise that the minimum hourly rate is increasing from April. These are the new rates with the old rates in brackets:
25+ £8.21 per hour (£7.83) +4.8%
21 – 24 £7.70 per hour (£7.38) +4.3%
18 – 20 £6.15 per hour (£5.90) +4.2%
16 – 17 £4.35 per hour (£4.20) +3.6%
Apprentice NMW £3.90 per hour (£3.70) +5.4%
The Apprentice Rate only applies to apprentices aged under 19 and apprentices aged 19 and over in the first year of an apprenticeship. Thereafter the minimum wage for their age group applies.
Employer National Insurance
The level at which both employees and employers start paying National Insurance Contributions is being increased slightly from £162 per week to £166 per week. This is £719.33 per month. The deduction rates stay the same (12% for employees and 13.8% for employers), above these thresholds.
The Employment Allowance remains at £3,000. The first £3,000 of Employers’ NI, calculated at 13.8%, doesn’t have to be paid. This is intended to compensate employers for any Statutory Sick Pay (SSP) they may have to pay during the year. Central Business Services can calculate this automatically for you.
The minimum total pension contribution for staff enrolled in a Workplace Pension is increasing significantly. The current rate is a total of 5%, of which at least 2% must be paid by the employer. The new rate is a total of 8%, of which a minimum of 3% must be paid by the employer. This will happen automatically so it might be sensible to advise your staff in advance.
Re-Enrolment in Workplace Pensions
Every 3 years you must put certain staff back into a pension scheme. A large proportion of re-enrolment duties occur during the 2019/20 tax year. Any staff who “opted out” previously, and still qualify, must be re-enrolled into your Workplace Pension. They can opt out again, but they can’t opt out until they have been re-enrolled. We know this causes confusion because staff don’t necessarily understand why they can’t just say they don’t want to join. Unfortunately, it is a legal requirement that they must be put into the scheme. As part of the re-enrolment process, a new Declaration of Compliance must be submitted to The Pensions Regulator.
New legislation comes into force from April 2019 – The Employment Rights Act 1996 (itemised Pay Statement) (Amendment) order 2018. This requires all employers to Provide itemised payslips to ALL workers and Show hours on payslips where the pay varies by the amount of time worked. Note that this can apply to salaried workers if they receive an hourly rate for overtime.
The new rules have been introduced to make it easier for employees to understand their pay, ensure they are being paid correctly and challenge their employers if they feel they have been underpaid.
There is good news, at least for employees. The tax threshold is being increased by 5.5% to £12,500. An employee can earn £12,500 in the tax year without incurring a tax liability. This will help reduce or eliminate the impact of increased pension contributions for the employee, but not the employer.
We can assist with many HR issues. If we don’t have the necessary in-house expertise, our specialist associates will be able to help. Make us your first call on (01509) 816150