Timelines and guidelines
01 September 2019
This article was featured in the September 2019 issue of the magazine.
Liz Lay MSc FCIPPDip FHEA ACIPD, CIPP board director and tutor, provides a useful summary of some recent and impending changes that will affect you and your employer
Working in the world of payroll there are always changes which can be both expected and unexpected that payroll professionals will continue to face. It feels, however, that changes over recent, current and forthcoming tax years are numerous – and that it can be a struggle within our busy processing schedule to try and remember them all.
This article is aimed at highlighting some of the main areas of change and related key points as a reminder for easy reference in one place.
The given yearly changes for tax, National Insurance contributions (NICs) and national minimum wage (NMW) rates are not included.
Changes from case law are only included where they indicate significant change, and payrolling of benefits and optional payroll remuneration arrangements are also not covered.
The information below identifies the effective date, the source (e.g. legislation, court case name), the subject, and the scope/effect.
6 April 2018 — Income Tax (Earnings and Pensions) Act 2003 — Post-employment notice pay (PENP)
All payments in lieu of notice (PILONs) are now taxable and NICable. The PENP calculation ensures that even where an employer tries to hide the PILON payment in an ex-gratia payment it will still be subject to tax and NICs.
4 October 2018 — http://bit.ly/334kgGE — Childcare voucher scheme (CCV), directly contracted childcare scheme
The tax advantages available to new entrants to a CCV scheme or a directly contracted childcare scheme from the 4 October 2018 onwards have been removed. Parents can now apply for tax-free childcare (TFC) on-line which is outside the scope of employment. A parent will however have to tell their employer if they have signed up for TFC and are already receiving CCVs or directly provided childcare as they cannot receive both.
...changes over recent, current and forthcoming tax years are numerous...
1 January 2019 — Companies (Miscellaneous Reporting) Regulations 2018 — Chief executive officer (CEO) pay gap reporting
Companies must start reporting their CEO pay ratio in 2020 (covering CEO and employee pay awarded in 2019). The new requirements apply to companies reporting on their financial year starting on or after 1 January 2019. The requirements apply to large UK listed companies with over 250 employees. The first statutory disclosures will make companies justify the pay for top managers, who must be reported even if they are not a director on the board of the company, accounting for how their salaries relate to wider employee pay. Companies are to disclose annually the ratio of their CEO’s pay to the median, lower quartile and upper quartile pay of their UK employees.
13 February 2019 — The Social Security (Contributions) (Amendment) Regulations, SI 2019/85, Finance Act (No 2) 2017, Schedule 11 — Loan charge, disguised remuneration
Payments made to employees by third parties are to be reported in real time information returns. (HMRC will recover pay as you earn income tax from the employer.) SI 2019/85 ensures that amounts which are caught under the ‘loan charge’ legislation in Schedule 11, in the form of loans provided through third parties and which remained outstanding on 5 April 2019, create liability to class 1 NICs.
14 February 2019 — Mencap v Tomlinson Blake [2018] EWCA Civ 1641 — NMW
The case relates to social care workers on ‘sleep-in shifts’ where they provide overnight on-call support to patients but are expected to sleep through the majority of the shift, and whether the shift is working time for the NMW or whether a lower rate can be paid. Following the Court of Appeal ruling in favour of the charity the Supreme Court decided to hear the appeal which is unlikely to be before October 2019. Whilst any challenge is ongoing, employers must continue to comply with the law as it currently stands.
6 April 2019 — Pensions Act 2008, and the Employers’ Duties (Implementation) (Amendment) Regulations 2016 — Automatic enrolment (AE) contributions
The total minimum contributions for AE schemes increased to 8% of employee’s pay with effect from 6 April 2019. At least 3% must come from the employer with the employee making up the difference between the employer’s contribution and the minimum 8% requirement.
6 April 2019 — The Wales Act 2014, The Devolved Income Tax Rates (Consequential Amendments) Order 2018 — Welsh income tax
Introduction of the Welsh rate of income tax which for the 2019/20 tax year remains the same rate as for the rest of the UK.
...you will (as always ) be considering the impact on your workplace...
6 April 2019 — The Education (Postgraduate Master’s Degree Loans) Regulations 2016 — Postgraduate loans
Introduction of postgraduate loans brought a new rate and threshold. An individual with either a plan 1 or 2 student loan and a postgraduate loan will repay both concurrently.
6 April 2019 — Finance Bill 2018-19 to amend Section 289A of the Income Tax (Earnings and Pensions) Act 2003 — Benchmark subsistence rates
Removes the requirement for employers to keep receipts and any other form of documentary evidence to check amounts spent by employees when using the HMRC benchmark scale rates to pay or reimburse their qualifying subsistence expenses.
The measure also enabled HMRC to bring the concessionary exemption for overseas scale rates into legislation.
No requirement for employers to keep receipts and any other form of documentary evidence to check amounts spent by employees when reimbursing expenses using the overseas scale rates. Employers will need to ensure that employees are undertaking qualifying travel on the occasions in respect of which a payment is made or reimbursed free of tax.
6 April 2019 — Autumn Budget 2018 — Apprenticeship levy
The transfer allowance increased to 25%. The percentage that non-levy-paying employers must contribute towards the cost of apprenticeship training decreased from 10% to 5%.
6 April 2020 — Draft Finance Bill legislation, which is expected to be published in summer 2019 — IR35 off-payrolling in the private sector
Individuals providing their services through an intermediary or employers contracting for services via an intermediary must be aware of the forthcoming changes.
Guidance can be found at: http://bit.ly/2ZRih6X. HMRC are advising employers to start preparing now for the changes which will impact large- and medium-size businesses.
6 April 2020 — The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 — Written statement of main terms
It will become a day-one right at the latest for a worker increases to receive a statement of initial employment particulars.
6 April 2020 — Chief Constable of Northern Ireland v Agnew — Holiday pay reference period
The current twelve working weeks’ pay reference period used to calculate the average holiday pay/entitlement for a worker increases to 52 working weeks over a maximum 104-week period. However, the outcome of this recent case could have repercussions for employers elsewhere in the UK. The Northern Ireland court ruled that the relevant ‘reference period’ was the number of days the worker had actually worked in the previous year.
6 April 2020 — Regulations will be made under National Insurance Contributions Act 2014 — Employment allowance (EA)
The EA is to be restricted to those organisations with a NICs bill below £100,000 in the previous tax year. To claim the EA the employer must have space for the full amount (currently £3,000) within their relevant de minimis state aid threshold.
HMRC has published a technical consultation which closed on 20 August 2019. Regulations and guidance expected in October 2019.
The CIPP policy team will be publishing a survey to gather the views of payroll professionals and others with a vested interest, and also plan to hold a policy think-tank roundtable which will be open to full, fellow and chartered members – to express your interest please email [email protected].
6 April 2020 — Legislation to be introduced — NICs on termination payments in excess of £30,000
At Budget 2018 it was confirmed that class 1A NICs (employer only) will be payable on any part of a termination award that is liable to income tax.
HMRC advice is that as employers already pay income tax on these payments the process for paying NICs will be broadly similar. What this means in practice is still to be confirmed.
April 2020 — Parental Bereavement (Leave and Pay) Act 2018 — Parental bereavement leave and pay
Employed parents and primary carers will be entitled to at least two weeks’ statutory parental bereavement leave and pay from April 2020 where they suffer the loss of a child and meet the qualifying conditions.
The Act will provide a day-one right for those who suffer the loss of a child under the age of 18 or where a stillbirth is suffered from 24 weeks of pregnancy. Full guidance is yet to be published.
It is highly likely that by the time you have read this article – along with any other new announcements there have been – you will (as always) be considering the impact on your workplace, what the risks are, what changes need to be made to ensure the organisation remains compliant, who you have to liaise with, and who you need to influence to ensure any required changes happen. Good luck.