19 March 2019
Most businesses are gearing up for the start of the new tax year and preparing for the many changes to the rates and thresholds that are soon to be introduced. Below is an overview of the main changes that you should be aware of.
National Minimum Wage and National Living Wage
National Minimum and National Living Wage rates are increasing from 1 April 2019 as follows:
|Year||25 and over||21 to 24||18 to 20||Under 18||Apprentice|
Statutory payments are increasing again for the new tax year. The first six weeks of SMP and SAP will be paid at 90% of average weekly earnings and thereafter will be paid at £148.68 for the remainder. SPP and ShPP will be paid at a rate of £148.68 per week. The SSP rate will rise to £94.25 per week.
Rates and Thresholds
The personal allowance is increasing to £12,500, a year earlier than expected which is good news for individuals. The basic rate limit has been increased to £37,500 meaning individuals can earn £50,000 before paying 40% tax.
6 April 2019 also sees the introduction of Welsh tax rates which will follow the same band rates as England and Northern Ireland.
The Scottish starter and basic tax rate bands have been increased, though the higher rate tax band has been lowered meaning individuals with a Scottish tax code will still pay a higher rate on earnings over £43,431.
Class 1 NIC thresholds have changed with individuals now able to earn £719 per month before making NI contributions. The upper earnings limit has been raised to £4,167 meaning individual NI contributions will be calculated at 2% above this income level.
2019/20 sees the introduction of the last planned increases to the auto enrolment pension contributions, although we are certain this won’t be the last. Contribution rates for the 19/20 tax year must equal 8% with a minimum employer contribution of 3%. This means typical contribution rates will be 5% for employees and 3% for employers.
Post Graduate Loan Recovery
With the introduction of the postgraduate student loan in the 2016-17 academic year, this year will see the introduction of the recovery on these loans. From 6 April postgraduate student loans will be recovered alongside the current student loan system, meaning that some employees may have two types of student loan. Postgraduate loans will be deducted at a rate of 6% of an employee’s earnings above the threshold of £21,000.
Payslips – New Legislation
New Legislation coming into effect from April 2019 means workers will have the statutory right to see what hours make up their pay. If their pay varies depending on the number of hours they work in a period, a worker’s payslip must be itemised. If a worker is salaried, however, with no variation in their pay, an itemised payslip is not necessary. Hopefully this won’t have too much of an effect for most employers, as it is good practice that where possible any payment or deduction that is outside of an employee’s normal salary is itemised. It allows for transparency for employees and helps reduce the queries that employers receive.
The Department for Business, Energy and Industrial Strategy (BEIS) has recently published a guidance document, which clarifies how employers will need to comply with the new legislation.
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