• Black Mountain Group

UK Payroll Update - March 2020

RATES AND LIMITS FROM APRIL 2020


TAX – UK EXCEPT SCOTLAND – SUBJECT TO CHANGE IN BUDGET

Basic Personal Allowance Income: £12,500 1250L £0 – £37,500 £37,501 –

Income Limit for Personal Allowance: £100,000

Emergency Tax Code: 1250L

20% Basic Rate: £0 – £37,500

40% Higher Rate: £37,501 – £150,000

45% Additional Rate: over £150,000


TAX – SCOTLAND ONLY – SUBJECT TO CHANGE

Basic Personal Allowance: £12,500

Income Limit for Personal Allowance: £100,000

Emergency Tax Code: 1250L

19% Starter Rate: £0 – £2,049

20% Basic Rate: £2,050 – £12,444

21% Intermediate Rate: £12,445 - £30,930

41% Additional Rate: £30,931 - £150,000

46% Additional Rate: over £150,000


NATIONAL INSURANCE

Lower Earnings Limit: £120 per week

Primary Threshold (Employee): £183 per week

Secondary Threshold (Employer): £169 per week

Upper Earnings Limit: £962 per week:


Percentage Rates remain unchanged at 13.8% Employer and 12% Employee to UEL, then 2%.


EMPLOYERS NI FOR UNDER 21s AND APPRENTICES

Employers National Insurance contributions are not payable for any employees under the age of 21, or for apprentices under the age of 25 whose earnings are under the Upper Secondary Threshold (£962 per week). Earnings above this will attract Employers NI at the normal secondary rate of 13.8%.


STATUTORY PAYMENTS

Qualifying Earnings Level:

£120 per week

Statutory Sick Pay:

£95.85 per week

Statutory Maternity Pay:

6 weeks @ 90% of average weekly earnings

33 weeks @ lesser of 90% of AWE or £151.20

Statutory Adoption Pay:

6 weeks @ 90% of average weekly earnings

33 weeks @ lesser of 90% of AWE or £151.20

Statutory Paternity Pay:

2 weeks @ lesser of 90% of AWE or £151.20


RECOVERY FROM HMRC

SSP is a company cost and cannot be recovered from HMRC


SMP/SAP/SPP/ShPP – you can recover 92% of all statutory payments made. If you are a small employer with a total NI bill of less than £45,000, you can claim 103% recovery.


STUDENT LOANS

Earnings thresholds from April 2020


Plan 1 - £19,390

Plan 2 – £26,575 - deductions for plan 1 and plan 2 stay at 9%

Postgraduate Loans – earnings threshold £21,000, deductions 6%



NATIONAL MINIMUM AND NATIONAL LIVING WAGE

The new National Living Wage and Minimum Wage Rates apply from 1st April 2020;

Minimum Living Wage Rate for over 25s - £8.72 per hour (from £8.21).

Adult Rate (21 – 24 year olds) £8.20 per hour (from £7.70)

18 -20 year olds £6.45 per hour (from £6.15

16-17 year olds £4.55 per hour (from £4.35)

Apprentice Rate £4.15 per hour (from £3.90)


PAYROLLING BENEFITS

If you are going to payroll benefits to avoid the P11D process from April 2020, you must register with HMRC before the end of the current tax year.


https://www.gov.uk/guidance/paying-your-employees-expenses-and-benefits-through-your-payroll


HMRC will then strip out any benefits from employee tax codes for the new tax year. Benefits can then be taxed through the payroll ensuring that tax is paid in real time and making it more transparent for employees.


OFF PAYROLL WORKING

  • The new rules from April 2020 transfer the responsibility for operating the off payroll rules from the individual’s Personal Service Company (PSC), to the organisation or business that they are supplying the service to.

  • The rules will apply to medium and large employers who engage the services of contractors through agencies and intermediaries.

  • Small employers are outside the scope of the new regulations. This is defined in the normal way of having at least 2 of the following 3 points.

  • Annual Turnover less than £10.2 million

  • Balance sheet of less than £5.1 million

  • Not more than 50 employees

  • If a small employer is part of a group the whole group would need to satisfy the above to be exempt.

  • If a small employer becomes medium sized they would have to apply the rules in the year after the accounts submission in which they were over the limits.

  • Enhancements have been made to the ‘Check Employment Status for Tax’ (CEST) service and guidance and the CEST tool is available on HMRC website.

  • The fee payer/intermediary must provide the status determination to the next person in the supply chain so that the contractor is informed.

  • The fee payer is treated as an employer for the purposes of Income Tax and National Insurance, but does not need to apply student loans, court orders, apprentice levy or pensions auto enrollment. The contractor should complete the normal HMRC starter declaration, but it would be expected that their PSC is their main employer so they would tick box C.

  • The rules only apply if the contractor works through their own PSC or intermediary. If you have contractors that are self employed, you still need to apply the normal employment status checks to ensure they shouldn’t be treated as an employee.


EMPLOYMENT ALLOWANCE (EA)

From April 2020, the £3,000 Employer’s NI relief will only be available for organisations whose NIC bill in the previous tax year was less than £100,000.


This change means that EA will be operated as ‘de minimis State aid’.


We will automatically stop your EA claim in the new tax year if we can see that your previous NI liability exceeded £100,000, but you will need to let us know if any of the following apply.


  • You are part of a group and EA is being claimed elsewhere in the group

  • You claim the EA on behalf of a group and the total group NI bill exceeded £100,000 last tax year

  • You have other de minimis State aid


ULTRA LOW EMISSION AND DIESEL COMPANY CARS

From 6th April 2020, there will be a new zero emission mileage field shown on the P46 (car). If a hybrid car has a CO2 emission figure of 1-50g/kg you will need to provide the car’s zero emission mileage. This is the maximum distance in miles that the car can be driven in electric mode without recharging the battery.


To report diesel cars and fuel on 2019/20 P11Ds, you will need to enter the correct key letter in ‘type of fuel or power used’


  • Cars that meet the Euro 6D standard will use fuel letter F

  • Cars that don’t meet the standard will use fuel letter D

Letter F cars will not have the diesel supplement added when calculating the cash equivalent for tax.


HOLIDAY PAY REFERENCE PERIOD

Where workers undertake regular overtime or have variable hours, their holiday pay should be calculated using a reference period. Currently, employers should look back over the last 12 weeks but from April this is extended to 52 weeks. As unpaid weeks are still to be excluded, employers could have to go back more than a year so it has been capped at 104 weeks.


PARENTAL BEREAVEMENT LEAVE AND PAY

From April 2020, parents who lose a child or suffer a stillbirth will have a day-one right to take two weeks off work with statutory pay.


WITHDRAWAL OF PAPER P60 AND P45 FORMS

HMRC have announced that, after April 2020, they will no longer provide blank paper P60s or P45s. If you require paper copies, please ensure you order in March. You will also need to make provision for these to either be provided to employees electronically or ensure your software will be able to produce the correct forms from April 2020.


BACS REPORTS

As a BACS bureau, we pay many clients payrolls directly through the BACS system which is a safe, secure and time efficient way of making payments. However, as agents, we do not have access to the exception reports that may be generated as a result of us sending a payroll file. These reports (normally AWACS or ARACS reports), need to be regularly reviewed within your organisation and passed to us for action.

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© 2020 by Black Mountain Group

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