April makes the start of the new tax year and as always Employers need to prepare for the changes. Here are 5 key payroll changes;
1. Parental Bereavement Leave and Pay
From April 6th 2020 all employees will be entitled to 2 weeks unpaid leave if they lose a child under the age of 18, or suffer a stillbirth from the 24th week of pregnancy. This can be taken in either a 2-week block or 2 single week blocks. Workers with 26 weeks service will be paid the same statutory rate of £151.20.
2. Extension to IR35
The off payroll working rule has been extended to the private sector from 6th April 2020. This means it will be now the responsibility of the end employer to decide if a limited company contractor falls within IR35 and if necessary, deduct appropriate tax and NIC. For more details click here.
3. Agency Workers
Repeal of Swedish Derogation – Swedish Derogation is a clause which some recruitment agencies have used to allow workers to fall outside of the Agency Worker Regulations. As a result of the appeal these agencies will not have to monitor length of service of agency workers who will now, after 12 weeks of service, be entitled to parity pay and the same holiday accrual rates as the equivalent permanent workers.
4. Employment Allowance
The employment allowance allows employers to reclaim up to £3000 of their Employers National Insurance Contributions. From the 2020-21 tax year this will be restricted to employers with class 1 (employers and employees NIC combined) is below £100,000 for the previous tax year. Its worth checking you are claiming your employment allowance currently. If you have not claimed it and your company is eligible you can backdate your claim up to 2015-16 via an EYU if completed prior to the end of the current tax year.
5. Updated Rates; NMW / SSP / SMP / SAP / SPP ShPP
The National Living Wage is increasing from £8.21 to £8.72 per hour as of 1st April 2020. The rise is four times the rate of inflation (yay for them!) and is up by 6.2%, increasing an average living wage worker’s annual salary by up to £930 per year. National Minimum Wage will also be increasing;
- 21 – 24-year old’s £8.20 per hour (a 6.5% increase)
- 18 – 20-year old’s £6.45 per hour (a 4.9% increase)
- 16 – 17-year old’s £4.55 per hour (a 4.6% increase)
- Apprentice rate £4.15 per hour (a 6.4% increase)
Statutory rates are also increasing. Family related statutory rates will increase to £151.20 per week. The weekly SSP will increase to £95.85.