National Minimum Wage and National Living Wage
The Low Pay Commission (LPC) recommendations were accepted in full, together with the acknowledgement that the LPC will need a new remit when it comes to monitoring the National Living Wage going forward following the fulfilment of the current remit of monitoring the delivery of achieving a National Living Wage rate of 60% of median earnings by April 2020. The NLW is on target to achieve this and based on current forecasts the LPC estimates that the NLW will reach this target at a rate of £8.62 in 2020.
The LPC’s rate recommendations comprised:
Current
From April 2019
Increase
NLW
£8.21
£7.83
4.9%
21-24 rate
£7.70
£7.38
4.3%
18-20 rate
£6.15
£5.90
4.2%
16-17 rate
£4.35
£4.20
3.6%
Apprentice rate
£3.90
£3.70
5.4%
Accommodation offset
£7.55
£7.00
7.9%
The LPC 2018 Report, containing the underpinning analysis and evidence used to make these recommendations, will be published on 27 November. In previous years it has been published on the same day as the rates were announced, but the early Budget means that this has not been possible this year.
Off-payroll working in the private sector
From April 2020 the government will extend reforms to the off-payroll working rules (known as IR35) in the private sector. This follows consultation held earlier this year following the roll-out of reform in the public sector. Responsibility for operating the off-payroll working rules will move from individuals to the organisation, agency or other third party engaging the worker. Small organisations will be exempt, minimising administrative burdens for the smallest engagers. HMRC intend to work with stakeholders through the delivery of another consultation in a bid to provide support and guidance to medium and large organisations ahead of implementation. The government has decided that for services provided to small businesses, the responsibility for determining employment status and paying the appropriate tax and NICs will remain with Personal Services Companies. Small businesses will not need to consider the employment status or deduct employment taxes from the fees of people they engage in this way. This will address concerns about small businesses’ capacity to implement the proposed reform, whilst ensuring that businesses which are best placed to determine whether the rules apply take responsibility for doing so. The government intends to use similar criteria to define small businesses as is found in the Companies Act 2006. As a result, over 95% of businesses will not need to apply the reform. Concerns were raised during consultation that businesses may use blanket decisions for the employment status of groups of workers in similar roles without recourse, should those decisions be incorrect. The government plans to explore options available for ensuring that, where this occurs, there are consequences to businesses for failure to use reasonable care in their decision making.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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