If, the clocks going forward has put you out of kilter you might be putting off preparation for payroll year-end. To help you get your mind-set clear for the year-end process I’m sharing 7 things you NEED to check before your first payroll in 2019-2020. (And if you’re still stressing about payroll year end check out Abbi Piggott’s blog 10 Steps to a Smooth Year End)
1 – Pensions
Pensions increase from 6th April 2019. Contributions will rise to 8% with at least 3% coming from employers contributions. But did you know that if you are paying pension contributions on all earnings the total contribution only needs to be 7% (although at least 3% must still come from the employer). Don’t forget to communicate the changes with your employees.
2 – National Minimum Wage (NMW) / National Living Wage (NLW)
NMW and NLW increases for 2019 as follows;
• 25 year old and above = £8.21 per hour
• 21 – 24-year old = £7.70 per hour
• 18 – 20-year old = £6.15 per hour
• 16 – 17-year old = £4.35 per hour
• Apprentice rate = £3.90 per hour
The changes come into force from 1st April 2019 so only impact on pay periods that start on or after 1st April 2019. To check when this will impact your payroll you need to consider your pay period or timesheet dates. If your timesheet dates run Monday – Sunday and you pay a week in hand, your payroll paid on Friday 5th April will be for the pay period 25th March – 31st March, so can be processed at the old 2018-19 NMW rates.
3 – Tax Codes part I
The tax free allowance will increase to £12500 for 2019-20. All tax codes ending in L need to be increased by 65, those ending in M and N (for the shared marriage allowance) need to increase by 71 and 59 respectively. The emergency tax code will now be 1250L on a week 1 / month 1 basis.
4 – Tax codes part II -prefix of C
For the first time you will start receiving tax codes beginning with a C. Don’t be alarmed this is to be expected for any Welsh Resident employees. Following in the footsteps of Scotland, the Welsh Government now has the power to set their own tax thresholds. For 2019-20 the tax thresholds will remain the same as the English tax bands.
5 – Tax Codes part III – Scottish tax bands
For the first time Scottish Government are using their devolved power to change the tax thresholds and have introduced a new intermediate tax rate. Any employees with tax codes beginning with an S should use these new rates for 2019-20.
6 – Postgraduate Student Loans
From April 2019 there will now be a third option for Student Loan deductions – this one is for Postgraduate student loans again with its own threshold and percentage deductions (why make payroll simple!?) Make sure you’ve downloaded the updated new starter checklist to include information about postgraduate student loans.
7 – Breakdown of hours on payslips
From 6th April 2019 employees paid by the hour must receive a breakdown of hourly paid work on their payslip clearly showing the number of hours worked. The aim is to allow employees to more easily check their pay and to be able to check that they are being paid over NMW.