Payroll

The P9X form is used to notify employers of the tax code to use for employees. The form shows the tax codes to use from 6 April 2019. The basic Personal Allowance for the tax year starting 6 April 2019 will be £12,500 and the tax code for emergency will be 1250L. The basic rate limit is £37,500 except for those defined as Scottish taxpayers who have a lower basic rate limit as well as an intermediate rate.

As a result of the increase in the basic Personal Allowance, there will be a general uplift of tax codes with suffix ‘L’ which have increased by 65. Employers should add 65 to any tax code ending in L, for example 1185L will become 1250L. The new form P9X is available online on GOV.UK to download or print.

The P9X (2019) form also includes information to help employers in the new tax year. The document reminds employers that have new employees starting work between 6 April and 24 May 2018 and who provide you with a P45 to follow the instructions atwww.gov.uk/new-employee

Following the written ministerial statement published in November 2018 announcing the proposed new rates for Statutory Maternity Pay (SMP), Statutory Adoption Pay (SAP), Statutory Paternity Pay (SPP), Statutory Shared Parental Pay (ShPP) and Statutory Sick Pay (SSP) for tax year 2019/20, the government has now published the draft Social Security Benefits Up-rating Order 2019 which confirms the figures.

The standard weekly rates of SAP, SPP and ShPP will increase from £145.18 to £148.68 from 1 April 2019, the weekly rate of SSP will increase from £92.05 to £94.25 from 6 April 2019 and the standard weekly rate of SMP will increase from £145.18 to £148.68 from 7 April 2019. Note that the draft Order provides a different effective date for the increases in SAP, SPP and ShPP to that for SMP. The increase to SSP always takes effect from the start of a new tax year.

The draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019 confirm that the lower earnings limit, below which employees are not entitled to SMP, SAP, SPP, ShPP and SSP, will increase from £116.00 to £118.00 per week from 6 April 2019.

The draft Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2019 has now been published. As expected, it freezes the earnings trigger, which determines when an eligible worker is entitled to be automatically enrolled into a qualifying workplace pension scheme, at £10,000 from 6 April 2019. It also continues to align the qualifying earnings band with National Insurance Contributions from 6 April 2019, so the lower limit of the band will increase from £6,032 to £6,136 and the upper limit will increase from £46,350 to £50,000. The qualifying earnings band is used to calculate minimum contribution levels for money purchase schemes.

In addition, the minimum total contribution to a workplace pension scheme will increase from 5% to 8% of qualifying earnings from 6 April 2019. At least 3% of this (up from 2%) must come from the employer. The remaining contribution must come from the worker, so if the employer pays the minimum 3%, the worker’s minimum contribution will be 5% of qualifying earnings (up from 3%).

When a new employee is added to the payroll it is the employers’ responsibility to ensure they meet the employees’ rights and deduct the correct amount of tax from their salary. This includes any employees who are family members.

It is possible to employ young people if they are 13 or over but there are special rules about how long they can work and what jobs they can do. Children younger than 13 can work in certain areas such as television, theatre and modelling but their employer will need to apply for a child performance licence. There is no National Insurance for children under 16 and they would only need to be included on a payroll if their total income is over their Personal Allowance.

Young workers (aged 16 to 17) have different rates from adult workers for the National Minimum Wage. The current hourly rate for this age group is £4.20 and will increase to £4.35 from 1 April 2019. Any payments to young workers need to be handled through the payroll. If the workers earn more than £116 a week, then the employer will also need to do other regular PAYE tasks like making deductions.

There are different rules if you take on volunteers or voluntary staff, but the employer is still responsible for health and safety and must give inductions and training in the tasks they’re going to do.

The Employment Allowance of £3,000 per year is available to most businesses and charities to be offset against their employers Class 1 NIC bill. The allowance can be claimed as part of the normal payroll process.

An employer can claim less than the maximum if this will cover their total Class 1 NIC bill. Eligible employers that have not yet done so can still claim for the current tax year (as well as make a backdated claim for one further tax year).

The eligibility to claim the Employment Allowance was removed for limited companies with a single director and no other employees in April 2016. As the allowance was introduced as an inventive to take on staff, it was felt unfair that companies with a single director and no employees should benefit from the allowance.

There are a number of other excluded categories where employers cannot claim the Employment Allowance.

These include:

• Persons employed for personal, household or domestic work, such as a nanny or au pair (unless they are a care or support worker);
• a public body or business doing more than half their work in the public sector;
• a service company working under ‘IR35 rules’ and your only income is the earnings of the intermediary.

The Living Wage Foundation (an initiative of Citizens UK) recently announced Living Wage rates for London and the UK at £10.55 an hour and £9 an hour respectively. These Living Wage rates are not statutorily binding but represent an increase of 25p in the UK and 35p in London over the current rates. The new Living Wage rates were announced on the 5 November 2018 and all of the accredited employers have committed to implement them by the end of the financial year.

The Living Wage is an independent calculation that reflects the real cost of living. The London rate is set by the Greater London Authority and is based on a combination of a basic living costs approach and income distribution, with respect to a variety of household types which takes account the unique circumstances of living in London.
There are now over 4,700 Living Wage accredited organisations across the UK, who have committed to pay these higher rates with 1,200 of these employers signing up in the last year.

Tess Lanning, Director of the Living Wage Foundation said:

‘The Living Wage campaign is about tackling the rising problem of people paid less than they need to live. Responsible businesses know that the government minimum is not enough to live on, and today’s new Living Wage rates will provide a boost for hundreds of thousands of workers throughout the UK.’

The legal current National Minimum Wage (NMW) hourly rate is £7.38 for adults 21-24 years old and the National Living Wage (NLW) is £7.83 for those aged 25 and over. From 1 April 2019 the NMW will increase by 32p to £7.70 and the NLW will increase by 38p to £8.21.