April 02.2019, 8.30am
6 UK year-end payroll changes you need to know about for 2019
If there’s one certainty in the UK nowadays, it’s that the year’s payroll ends in early April.
The 2018/2019 tax year finishes on 5 April 2019 and the new 2019/2020 tax year will start on 6 April 2019, but that’s not the only change that HR teams will have on their plate.
A host of compliance changes are set to come into effect for the new year, including new payroll reporting requirements, a minimum wage increase and the Welsh tax devolution.
Take a deep breath; it’s not as overwhelming as you think. In fact, our payroll software even does some of the heavy liftings for you. But if you want to make sure you’ve left no stone unturned, we’ve gathered the six UK year-end payroll changes that you’ll want to be aware of.
1. Itemised payslip reporting introduced
Industries like retail will often have variable pay rates that bolster regular earnings to compensate for working on holidays or taking other unique shifts. Now, HR teams will be tasked with itemising those payslips to make it easier to understand what hours are attributed to which wage rates.
Starting in April 2019, companies will need to report the specific hours worked in accordance with the wage that was applied to each individual payslips. If the wage doesn’t vary by the amount of time or time period worked, or if the period of pay took place before 6 April 2019, then this regulation doesn’t apply.
2. Minimum wage increase takes effect
The National Living Wage (NLW) and National Minimum Wage (NMW) are set to pick up slightly in April 2019. The NLW, which is applied to workers who are 25 years or older, is jumping from £7.83 to £8.21.
The NMW hourly rates that are rising include:
- Apprentices: Now £3.90 from £3.70 previously.
- 16 to 18 years old: Now £4.35 from £4.20 previously.
- 18 to 20 years old: Now £6.15 from £5.90 previously.
- 21 to 24 years old: Now £7.70 from £7.38 previously.
3. Welsh income tax devolution kicks off
The Welsh and UK government kicked off Welsh tax devolution in 2018 with a separation of tax rates in 2018. This led to the revision of stamp duty land tax (which is now called Land Transaction Tax in Wales) and the Landfill Tax (which is now called the Landfill Disposals Tax in Wales).
Now, HR teams will have to account for the Welsh Income Tax rate change in their employees’ payrolls. Starting in April 2019, the basic, higher and additional income UK tax rates will be reduced by 10 percent for Welsh taxpayers. While this will initially result in no change on the income tax rate, the Welsh government will announce in 2020 whether this will be further reduced or raised.
The goal behind the Welsh tax devolution is to add Welsh tax rates on top of reduced UK tax rates. Eventually, this may mean different tax brackets for Welsh and UK employees. CoreHR’s year-end payroll solution will cater to the Welsh tax devolution by updating the following components:
- P6 and P9 load.
- Employee tax code validation.
- Welsh tax rates.
- RTI scheme changes.
4. Disguised remuneration and optional remuneration arrangements slightly modified
Employers should be aware of the changes the HM Revenue and Customs (HMRC) is taking to cut down on tax evaders using the disguised remuneration scheme. Companies must comply with new reporting requirements, which are supported by CoreHR’s platform.
In regard to the optional remuneration arrangement scheme where a vehicle is supplied to an employee, HR teams must report the larger amount between the value of the vehicle versus the amount of cash given up because of it.
5. Postgrad loan reporting changes go live
Postgraduate Loans (PGL) are due for repayment through the PAYE process from April 2019. The repayment threshold for 2019/20 is set at £21,000 and loans will be repaid at a rate of 6%.
Employers that have employees subject to postgraduate loan repayments will see a number of changes to facilitate the reporting of this information to HMRC via the Full Payment Submission (FPS) and Earlier Year Update (EYU).
6. New P60 and P11D templates available
Employers are required to send the workforce its P60 forms by the end of May. This year, they’ll look slightly different.
The HMRC has introduced a new paper and digital template for the P60, which will be available following the start of the new tax year on 6 April 2019. The template now allows companies with active, unpaid employees on the roster to opt out of providing a P60 for them.
Similarly, the template for the new P11D schema – which is for reporting end-of-year expenses and senior-level benefits – is also available after the introduction of the new tax year in April 2019.
Make next year’s payroll a whole lot easier
Compliance can make or break a company and there’s never a shortage of requirements and revisions for HR teams to keep in mind. Running payroll manually can be a waste of resources, but it can also create unnecessary risks for the business.
Switch to CoreHR payroll software to enter the world of automation and get rid of the stress surrounding compliance. With every new template pre-loaded onto the platform, it has never been easier to ensure that your team is following the most up-to-date regulations. Contact us today to book a demo and find out for yourself.
By Darren Brennan