One more monthly payroll and we will be starting a new tax year for 2017-18. Are you aware of the changes you need to implement?
Minimum Wage increase
The National Living Wage increases from £7.20 per hour to £7.50 per hour from April 2017 for employees aged 25 and over.
The National Minimum Wage will increase from April 2017 as follows:
£6.95 to £7.05 per hour for those aged 21-24
£5.55 to £5.60 per hour for those aged 18-20
£4.00 to £4.05 per hour for those aged 16-17
£3.40 to £3.50 per hour for apprentices aged under 19 or over 19 in their first year of apprenticeship (apprentices in their 2nd or 3rd year must be paid at the rate applicable for their age).
In January the Department for Business, Energy and Industrial Strategy revealed some of the worst excuses employers gave for not paying the minimum wage. They included "they only make the tea and sweep the floor", "they don't deserve it because they are not British and therefore do not have the right to be paid it", "young workers should spend three months proving their worth before they are paid it", "they consider themselves as self-employed and it therefore doesn't apply". There is no acceptable excuse for not paying the minimum wage and employees are within their rights to contact ACAS if they feel they are being underpaid. HMRC follow up all of these calls.
The emergency and standard tax code for 2017-18 is 1150L giving employees on this code a tax free allowance of £11,500 for the year. Employers may be advised by HMRC of a different tax code for an employee and the reason for this tax code will have been set out in a letter to the employee with a calculation showing how it was arrived at.
Employees on a standard tax code will pay tax on earnings above £958 per month and will pay National Insurance at 12% on earnings above £680 per month. Employees earning below £490 per month will not be credited with any National Insurance Contributions. Employers will pay National Insurance at 13.8% for employees earning above £680 per month. Employers will not pay National Insurance ontributions for employees aged under 21 or apprentices who are under 25.
£3,000 is available to most businesses to deduct from the Employers National Insurance Contributions payable during the year 2017-18. There are some payrolls which are not eligible for this allowance - further information can be obtained from this link to HMRC.
Statutory Sick Pay
This increases from £88.45 to £89.35 per week and is payable to all eligible employees if a company scheme is not provided. HMRC set eligibility criteria even though they no longer refund SSP to employers.
Statutory Maternity, Paternity, Adoption and Shared Parental Pay
This increases from £139.58 to £140.98 per week.
Students will repay 9% of their salary above £1481 per month if they are on Plan 1, and above £1750 per month if they are on Plan 2.
Auto Enrolment Pension Contributions
The majority of small employers who have not yet reached their Staging Date will do so over the next 12 months. The minimum 1% employer and 1% employee contribution needs to be made throughout 2017 for those employees who have been enrolled into the scheme.
Expenses and Benefits
From April 2018 taxable expenses and benefits which are not exempt from being reported on a P11d should be put through the payroll. You must apply to HMRC to do this before 6th April. This will avoid the submission of a P11d after the end of the tax year but a P11d(b) calculating the Employers National Insurance Contribution on the benefits will still need to be submitted. There are a wide range of expenses and benefits, some are taxable but some not. Check out the HMRC guide to see if the reimbursements, expenses or benefits you are providing to your employees should be going through the payroll.
Getting help with your payroll
Running your payroll can become quite complex even if you have only one employee and it therefore becomes beneficial to outsource this task to ensure it is done correctly. There is nothing worse for morale than an employee being paid incorrectly. We provide a cost effective and friendly payroll service which will give you support and advice when you need it and we can set up your pension scheme too ensuring that you meet your obligations for Auto Enrolment and avoid the fines.
Give us a call to find out how we can make outsourcing your payroll the best decision you ever made.