Budget 2018 Update

Budget 2018 Update

So this afternoon a couple of days early due to Halloween the Autumn Budget was announced.

Main Points regarding Employees

  • The personal allowance threshold, the rate at which people start paying income tax, to rise from £11,850 to £12,500 in April – a year earlier than planned
  • The higher rate income tax threshold, the point at which people start paying tax at 40%, to rise from £46,350 to £50,000 in April
  • After that, the two rates will rise in line with inflation
  • National Living Wage increasing by 4.9%, from £7.83 to £8.21 an hour, from April 2019
  • The contribution of small companies to apprenticeship levy to be reduced from 10% to 5%

(Information from BBC Website)

National Living Wage

The Low Pay Commission submitted recommendations and today the government announced that it would accept those recommendations.

Therefore if you are looking at budgets for next year you should be using the following rates.

Pension Increase

The minimum contributions that you and your staff pay into your automatic enrolment workplace pension scheme are increasing in April 2019 as well. As per the Pensions Regulators website the increase will be as follows:

What do you need to do an employer?

NLW increases – Make sure you write to your employers and advise them of their new rates of pay.  You don’t need to give them new contracts of employment but you should give them an amendment to contract.  If you haven’t updated your contracts since GDPR then this could be an opportunity to review your contracts and ensure they are still fit for purpose.

Pension Increases – You should write to your employees and advise them that there will be an increased contribution – just like you they need to budget and an additional 2% can be a lot for some families.

How I can help?

Just like your car MOT or Health, it is important to ensure you keep up to date with your HR – my Basic HR Health Check does not increase when the budgets increase as it is free!

If you would like to book an informal chat then click here.

Statutory Payment Increases 2017

Statutory Payment Increases 2017

As of April 2017, there are various statutory payments that will be increased.  It has been a few years since Maternity, Paternity, Adoption and Statutory Sick Pay has been increased so don’t forget to double-check to make sure you are paying the correct rate.  Most payroll systems will automatically calculate this rate but sometimes you need to edit in the settings, its best to double check.

From the 1 April 2017 the rates will rise for the following:

National Living Wage (NLW)

  • £7.50 p/h – workers aged 25 and over

National Minimum Wage (NMW)

  • £7.05 p/h – workers aged 21 to 24 over
  • £5.60 p/h – workers aged 18 to 20
  • £4.05 p/h – young workers aged under 19 but above compulsory school age who are not apprentices
  • £3.50 p/h – apprenticeship rate

From 6 April 2017, the statutory rates will increase as follows

  • £489 – weeks’ pay for calculating statutory redundancy pay, and the basic for unfair dismissal
  • £80,541 maximum compensatory award for “ordinary” unfair dismissal
  • £27 per day – Guarantee pay
  • £89.35 – statutory sick pay (SSP)
  • £140.98 – statutory maternity pay (SMP) and (maternity allowance)
  • £140.98 – statutory paternity pay (SPP)
  • £140.98 – statutory shared parental pay (ShPP)
  • £140.98 – statutory adoption pay (SAP)

Make sure you are paying your teams the right amount of money a happy team is a productive team.

If you want any support or advice on the above or any aspects of HR please get in touch.

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Legislation Update – Changes to Childcare Voucher Scheme

Legislation Update – Changes to Childcare Voucher Scheme

As you may or may not be aware there is quite a lot of changes in legislation in 2017.  I’ll tackle each one, in turn, the first being Salary Sacrifice Schemes.

Since their launch in 2006 Childcare Vouchers can be issued under a salary sacrifice scheme. This means an employee agrees to give up a portion of their salary and to receive childcare vouchers.  Both employee and employer end up paying less tax and NI contributions which was a win-win.

As we all see on the news the cost of childcare is ever growing.  The lower paid tax earner can get up to £55 per week, per parent in childcare vouchers.  See the childcare calculator to work out exact amounts.

As an employer, you must give the opportunity for employees to buy childcare vouchers.  There are many companies that will make the process simple for you.

Unfortunately, like many things Salary Sacrifice schemes have been a loophole for paying less tax and NI and the government has cottoned on.  There are schemes were set up for pensions, cars, bikes and computers to name a few.  A consultation commenced on in August 2016 to review these schemes and it is thought that pension and cycle to work schemes will remain but all others will cease.

In early 2017, a date has not yet been set, the current scheme will be replaced with a new government scheme.  Existing schemes will continue to operate alongside the new scheme for existing members only.

The new government scheme will be as follows

  • Online Account – there is no question that this will be the only way of obtaining an account
  • For every 80p put into the account, the government will top up by 20p
  • There will be a maximum top up of £2,000 per child or £4000 if the child is disabled.
  • This will be available for child up to 12 or 17 if disabled.
  • Available to parents/guardians who earn at least £115 per week but not more than £100,000pa
  • Anyone is able to contribute to the account e.g. Aunts, Uncles, Grandparents, Godparents
  • Available for Self Employed not just employed.

Whilst this gives greater flexibility and access to the diverse family dynamics we now have, it does mean that the tax relief that employers once obtained will be gone.

As an employer, if you wish to take up the current arrangement for childcare then you can do so just sign up with a registered supplier.  If not I will let you know when the new scheme opens.

DON’T KEEP IT A SECRET

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