UK PAYROLL UPDATE - APRIL 2019
With the introduction of Postgraduate Loan repayments from April 2019 there are further boxes to be ticked on the Starter Checklist. The new HMRC version is available here:
If you use your own version of the form for your new starters, please ensure the correct student loan/postgraduate loan boxes are replicated from this. As the current P45 form only asks for a box to be ticked for student loan to continue (without specifying which type), HMRC advice is for all new employees to complete a starter checklist, even if they have a P45.
From April 2019, an amendment to the Employment Rights Act 1996 (Itemised Pay Statement) requires employers to show on the payslip the number of hours worked for which they are being paid, but only in situations where the employee’s pay varies as a consequence of the time worked in the pay reference period. We would normally show this anyway but shall change the way we show salary for starters and leavers to show the number of days the pay represents when pro rated. Please ensure that any holiday, overtime, absence, etc is reported to us in hours/days so that we can reflect this on the payslips.
WELSH AND SCOTTISH INCOME TAX
From April 2019, HMRC will issue tax codes with a ‘C’ Prefix for all employees who predominantly live in Wales (they already issue ‘S’ Prefixed codes for Scottish residents). For the 2019/20 tax year, the Welsh tax rates will be the same as England and Northern Ireland but may be subject to change in later years. There are new rates and parameters for Scottish Tax Payers. Please ensure that HMRC have up-to-date address details for your employees so that they are paying the correct rates of income tax.
SALARY SACRIFICE PENSIONS
With lots of employers changing their pension schemes to Salary Sacrifice, just a reminder about the implications for people on Maternity or Shared Parental Leave. You cannot deduct salary sacrifice (or any other pension) from statutory payments – including SMP. If you pay Contractual Maternity Pay (CMP), you can continue to deduct pensions until the employee reverts to SMP. When an employee sacrifices salary for pension, the whole of the pension contribution is treated as an employer contribution. If the employee then goes on Maternity Leave, the employer must continue to pay the full pension amount at the rate it would have been for the whole of the paid maternity leave.
CHILD BENEFIT AND PROTECTING STATE PENSION
If parents are part of a couple and one works and pays National Insurance Contributions (NIC) and the other stays at home to look after the child the person who is not paying NIC can protect their State Pension by completing the Child Benefit form. Completing this also helps a child to automatically get their National Insurance Number at 16.
In some circumstances there could be tax charges as a result of claiming Child Benefit. HMRC advice is to complete and send the Child Benefit form even if you decide not to take the payments as this could protect your entitlement to State Pension and ensure the child is automatically sent their NI Number when they reach 16. More information can be found at:
https://www.gov.uk/child-benefit and https://www.gov.uk/child-benefit-tax-charge.