The 6th April 2019 brings the start of the new payroll year and employers should be aware of a number of changes in the legislation. Read our latest payroll update to get an overview of the areas that you will need to consider.
- Automatic Enrolment Pension Increases
- Minimum Wage Increases
- Post Graduate Loan Repayments
- Personal Allowance
- Tax-Free Childcare
Automatic Enrolment Pension Increases
Automatic enrolment pension contributions for employers and employees will increase from April 2019. The minimum employee contributions will go from 3% to 5% and the minimum employer contributions will go from 2% to 3%. Your pension provider should have notified you of these changes allowing you to highlight this to your employees ahead of the year end.
|Date||Employee minimum||Employer minimum||Total minimum contribution|
|06/04/18 to 05/04/19||3%||2%||5%|
|06/04/19 to 05/04/20||5%||3%||8%|
Minimum Wage Increases
The minimum wage that your staff are entitled to depends on their age and whether they are an apprentice. National Minimum Wage rates for all ages and apprentices will increase on 1 April as follows:
|From||25 & over||21 - 24||18 - 20||< 18||Apprentice < 19||Apprentice 19 & over,
(in the first year of their apprenticeship)
|1 April 2018||£7.83||£7.38||£5.90||£4.20||£3.70||£3.70|
|1 April 2019||£8.21||£7.70||£6.15||£4.35||£3.90||£3.90|
Employers must check the hourly pay rate for each employee to ensure that the correct amount is being paid based on the age of their employee. The onus is on the employer to do this. Statutory payments such as sickness and maternity are also due to increase for 2019/20.
Please note that it is a criminal offence not to pay your employees the National Living Wage or National Minimum Wage.
Post Graduate Loan Repayments
From the 6th April 2019, employers could receive notice from HMRC to deduct repayments for Postgraduate Loans. These can be for either Postgraduate Masters Loans or Postgraduate Doctoral Loans. Repayments will start when the employee has annual income in excess of £21,000. Repayments will be calculated at a fixed rate of 6% on any income over the £21,000 threshold. HMRC is currently preparing changes to the New Starter Checklist to include Postgraduate Loan repayments.
New legislation comes into force from April 2019 for employers who remunerate their employers based on the hours worked. Employers are required to provide payslips to all workers which provide detail where the pay varies. This means that where an employee has a fixed salary each month and on occasion works overtime with additional pay, the overtime hours and rate need to be shown separately.
The amount of income tax you deduct from your employees depends on their tax code and how much of their taxable income is above their personal allowance. The personal allowance for the 2019/20 tax year has gone up from £11,850 to £12,500. However, the personal allowance may be adjusted depending on your employee’s personal circumstances.
All employees receiving salaries above £100,000 will need to complete a Self-Assessment Tax Return. As the personal allowance starts to taper down at this point and pension contributions need to be monitored it would be advisable for these employees to engage a personal tax advisor to act on their behalf.
Additional useful information
Personal Tax Account
HMRC provide a service to allow you to manage your personal tax affairs online. The Personal Tax Account is a way to view and manage your tax affairs in one place. Once registered, there are a range of services available, for example you will be able to use your personal account to check and amend your tax code, check your state pension, tell HMRC about a change of address, check or update benefits you receive, amongst other things. To register for a Personal Tax Account please visit https://www.gov.uk/personal-tax-account
Tax Relief on Pension Contributions
Pension providers administer their schemes as either Net Pay Arrangements or Relief at Source Schemes.
Net Pay Arrangement - Contributions are deducted from pay before any tax is applied, therefore the tax relief is given immediately through the payroll.
Relief at Source Scheme – The employee pays tax on their full salary before the pension contributions are deducted. The tax relief is given at source when they pay their net pension. This means that the pension provider claims the tax relief from HMRC on the employee’s behalf.
Tax-Free Childcare became the only government scheme available to provide help for parents with their childcare costs from the 5 October 2018. The Tax-Free Childcare scheme is administered by parents through an online account which can be accessed via HMRC’s website. You may be eligible for this scheme if both you and your partner are in work and earning over £120 per week. If either of you have annual income of more than £100,000 per annum you will not be eligible.
Increase of automatic enrolment contributions
National minimum wage rates
Pension tax relief
Masters loan repayments
Payslip policy - a guide to the 2019 legislation
Income tax personal allowance and basic rate limit 2019-2020
Personal tax account
Tax free childcare
DISCLAIMER: This information is for guidance only, and professional advice should be obtained before acting on any information contained herein. We will not accept any responsibility for loss to any person as a result of action taken or refrained from in consequence of the contents of this publication.