Last year was a busy one. We dealt with the introduction of GDPR, and gender pay gap reporting, alongside the usual national minimum wage adjustments and taxation changes.
And even discounting the turmoil associated with Brexit, this year looks set to be just as jam-packed.
Our specialists have identified eight key legislative changes that HR & Payroll managers need to be aware of in 2019.
XCD’s imminent 2019 winter software release will help our customers ensure they are fully compliant and able to approach April’s year end without any headaches or surprises.
Welsh Rate of Income Tax (WRIT)
From April, people who live in Wales, that is, people whose main place of residence is there and where they spend the majority of their time during the tax year, will pay Welsh income tax.
HMRC will add a new prefix, C (for Cymru), to the tax codes of individuals identified as Welsh tax payers. Those who believe they have been incorrectly allocated this prefix, who perhaps no longer live in Wales, should be advised to contact HMRC about their change of address.
The Welsh Government has committed not to increase income tax rates in Wales for the duration of the current Assembly, which is due to continue until May 2021. So, assuming the rate is not reduced, Welsh taxpayers will pay the same income tax as those in England and Northern Ireland.
Postgraduate Loans
From April, employees in England and Wales earning more than £21,000 will be required to repay their Postgraduate Loans at a rate of 6%. The employee new starter checklist from HMRC will be updated to include a section for Postgraduate Loan information.
The P45 form will not change and will continue to only indicate whether an employee is already repaying a Student Loan.
Postgraduate Loans will be payable in addition to any existing student loans, with the thresholds applied separately. Student Loans at 9% and Postgraduate Loans at 6%. Employees in England and Wales who have both loan types should be made aware that from April they will see deductions of 15% as a result.
Postgraduate Loans originating from Scotland or Northern Ireland will be added to any existing student loan debt and deducted through Student Loan Plan 1.
Payslips
From April 6 2019, employers must provide workers with a written, printed or electronic payslip that clearly states the number of hours they are being paid for.
Where individual workers’ pay incorporates variable hourly rates, or if multiple payments cover different types of work, the payslip must detail how the full amount was calculated.
This covers all workers, including for the first time, casual, contract and zero hours, as well as permanent employees.
Pensions auto-enrolment increase
Minimum contributions for auto-enrolment pension schemes are set to increase for both employers and employees.
Currently, employers must contribute a minimum of 2%, with the employee contributing 3%.
From 6 April 2019, employers will be required to contribute 3%, with workers contributing 5%.
The lower and upper levels of qualifying earnings are increasing this year in line with what we’d expect; lower from £6,032 to £6,136, and upper from £46,350 to £50,000.
For more information, see the Pensions Regulator website.
National Minimum Wage
April will see the rate increase in both National Living Wage and National Minimum Wage, as announced in the 2018 Budget.
Under the new National Living Wage rate, the hourly entitlement for workers over the age of 25 will increase from £7.83 to £8.21.
And under the National Minimum Wage update, the hourly rate increases for workers is as follows:
- Ages 21 to 24 - £7.38 to £7.70
- Ages 18 to 20 - £5.90 to £6.15
- Aged under 18 - £4.20 to £4.35
- For first year apprentices, or those under the age of 19 - £3.70 to £3.90
We understand that the department for Business, Energy and Industrial Strategy (BEIS), which is responsible for compliance and enforcement around NMW, is significantly bolstering its enforcement team this year.
It’s important to consider that NMW calculations are often not as straightforward as simply dividing salary by hours worked. Unmeasured work like travel and training time will be taken into account by enforcement officers should an investigation be triggered by a complaint.
You may also like: HR's Guide to GDPR
Disguised remuneration – ‘loan charge’
HMRC will look to reclaim unpaid tax from historic loans that have never been repaid, through a new RTI field, Disguised Remuneration, which will see these loans taxed as a one-off benefit.
The responsibility is on employees to notify their employers of any amounts outstanding, and HMRC has stated that ‘in most cases early settlement will cost less than under the disguised remuneration loan charge’.
HMRC says: “The charge will affect users of disguised remuneration schemes who haven’t repaid their loans or signed a contract for settlement with HMRC by 5 April 2019.”
For more information, see the gov.uk briefing document on disguised remuneration.
Executive pay reporting
From the start of January, organisations with more than 250 employees will be required to calculate the pay ratio between employees in the 25th, 50th and 75th percentile and their CEO, which they are already legally obliged to publish in their annual report.
This regulation applies to financial years starting after the 1 January, which means reporting on these new requirements will begin in 2020.
Statutory sick pay, maternity and paternity
On 7 April, the rates of weekly statutory maternity and paternity pay will increase from £145.18 to £148.68, or 90% of the employee’s average salary if this figure is less than the statutory. This increase also applies to the rate of statutory adoption pay.
The rate of statutory sick pay will also increase from £92.05 to £94.25.
The lower earnings limit, beneath which employees are not eligible for these statutory payments, is also increasing from £116 to £118.
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