Payroll insight
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. PAYE special arrangements Following the consultation held during summer 2018 on the tax and administrative treatment of short- term business visitors (STBV) from overseas branches of UK-headquartered companies, the government has, in response, made these two proposals: ● The UK workday rule will be increased from thirty days or less to sixty days or less. The result being opening-up the pay as you earn (PAYE) special arrangement to a greater number of STBVs from branches and reducing the need for employers to monitor or restrict business travel when STBVs approach the 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 for businesses making it difficult for them to comply with their obligations. National Insurance contributions ● Class 1 limits and thresholds – National Insurance contributions (NICs) limits and thresholds for 2019–20 were published in associated documents. The weekly: m lower earnings limit increases to £118 (from £116) m primary (employee) and secondary (employer) thresholds increase to £166 (from £162). The upper earnings limit, the upper secondary threshold for under-21s, and the apprentice upper secondary threshold for under- 25s, all increase to £962 a week (from £892). The class 1 NICs percentage rates remain unchanged. ● Employment allowance – The government has decided to target the employment allowance at smaller businesses, reasoning that 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, from April 2020, the allowance will be restricted to organisations with a NICs bill below £100,000 in the previous tax year. The rate of the employment allowance is to remain at £3,000 for 2019–20. ● Draft NICs Bill – The draft NICs Bill contained measures to abolish Class 2 NICs but, as previously announced, this change will not take place following concerns raised that it would have an adverse impact on the lowest-paid self- employed individuals. Other proposals in the draft Bill will now go ahead from April 2020: the introduction of employer NICs on termination payments and on income from sporting testimonials. ...criteria found in the Companies Act 2006 to define small businesses NMW/NLW Increases to the national living wage (NLW) and the national minimum wage (NMW) rates, which were recommended by the Low Pay Commission (LPC) and accepted in full, are shown in the table. The LPC estimates that the NLW will reach the target of £8.62 in 2020. Off-payroll working: private sector From April 2020, reforms to the off- payroll working rules (known as ‘IR35’) will be extended to the private 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. HM Revenue & Customs (HMRC) intends 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. The government intends to use similar criteria found in the Companies Act 2006 to define small businesses. As a result, over 95% of businesses will not need to apply the reform. HMRC is looking at where the CEST (check employment status for tax) tool, along with wider guidance, might be improved, both as part of normal good practice and to ensure it reflects the needs of the larger and more diverse private sector. HMRC plans to work with stakeholders to better understand the concerns about CEST raised in response to this consultation; these included saying more about mutuality of obligation, how to treat multiple contracts and clarifying the language used in places. A further consultation on the detailed operation of the reform will be published in the coming months. This consultation will inform the draft Finance Bill legislation, which is expected to be published in summer 2019. Pensions ● Lifetime allowance – The Budget confirmed that the lifetime allowance for pension savings will rise to £1,055,000 for 2019– 20, in line with CPI inflation. ● Pension dashboards – The government is taking steps to support
NMW/NLW Rates
Current
April 2019 Increase
£7.83 £7.38
£8.21 £7.70
4.9% 4.3%
25+ rate
21–24 rate
£5.90
£6.15
4.2%
18–20 rate
£4.20
£4.35
3.6%
16–17 rate
£3.70
£3.90
5.4%
Apprentice rate
£7.00
£7.55
7.9%
Accommodation offset
19
Issue 46 | December 2018 / January 2019
| Professional in Payroll, Pensions and Reward |
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