The co-investment rate for smaller businesses taking on apprentices will halve from 10% to 5%. It is expected that the change to a 5% contribution will only apply to new starters from April 2019. But it is not yet known if this reduced contribution will also apply to levy-paying employers when their levy pot is empty.
Employer-designed apprenticeship standards
The government will also provide up to £5 million to the Institute for Apprenticeships and National Apprenticeship Service in 2019-20, to identify gaps in the training provider market and increase the number of employer-designed apprenticeship standards available to employers. All new apprentices will start on these new, higher-quality courses from September 2020. CIPP comment With the number of new apprentices falling far below the numbers hoped for when introducing the apprenticeship levy, these changes are welcome. However, we understand that the government intends to consult with businesses about further changes to the levy from 2020, following the slow take up and employer criticisms.
Improvements to the PAYE special arrangements
Following the consultation held during the Summer on the tax and administrative treatment of Short Term Business Visitors (STBV) from overseas branches of UK headquartered companies the government has made two proposals, in response: • The UK workday rule will be increased from 30 days or less to 60 days or less. The result being to open up the PAYE special arrangement to a greater number of STBVs from branches and reduce the need for employers to monitor or restrict business travel when STBVs approach the 30 workday limit. • The existing PAYE reporting and payment deadlines of 19 April and 22 April will be changed to 31 May to allow employers more time to gather relevant information about their STBVs to operate PAYE accurately. It was clear that these deadlines are too restrictive to businesses and are making it difficult for them to comply with their obligations.
The aim being to reduce administrative burden on UK employers with effect from April 2020. The government has published a summary of responses to the consultation.
CIPP comment The slight extension to the reporting and payment deadlines is welcome but sadly doesn’t go far enough in achieving a reduction to the administrative burden caused in gathering all data to report in a timely manner.
National Insurance contributions
Limits and thresholds National Insurance contribution limits and thresholds for 2019-20 were published in associated documents. The weekly Lower Earnings Limit (LEL) increases to £118 (from £116) and the weekly primary and secondary thresholds (PT, ST) increase to £166 (from £162). The Upper Earnings Limit (UEL), Upper Secondary Threshold (UST) for under 21s and Apprentice Upper Secondary Threshold (AUST) for under 25s increase to £962 a week (from £892). NICs rates remain unchanged. Employment Allowance The Employment Allowance is an annual amount that is currently available to all businesses and charities (with some exclusions) to offset against their Class 1 secondary NICs bill. It remains at £3,000 for 2019-20. It was introduced in April 2014 to support employers to grow and hire new staff. However, it is a flat rate regardless of the size of the employer and is therefore less likely to be an incentive for larger employers. Therefore, the government has decided to target this allowance at smaller businesses. From April 2020, the Employment Allowance will be restricted to organisations with a NICs bill below £100,000 in the previous tax year. Draft National Insurance contributions Bill The draft National Insurance contributions Bill contained measures to abolish Class 2 NICs – as previously announced, this change will not happen take place following concerns raised that they would have an adverse impact on the lowest self-employed individuals. Other proposals in the draft Bill will go ahead from April 2020: the introduction of employer NICs on termination payments and on income from sporting testimonials.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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