To mark National Payroll Week, our Payroll Manager Sara Maxfield shares 7 important areas to manage in payroll today.
It is important to stay up to date with the complex and changing landscape of payroll legislation. It’s always a challenge to keep a constant eye on payroll-related changes and undertake training updates. However, doing so ensures you and your employees contribute the appropriate level of income tax and National Insurance to the UK’s coffers. It also helps you avoid the negative impact on your business of a poor payroll experience for your employees.
Here are 7 of the key areas you need to get right, which my team and I are currently managing for our clients:
1. Health and Social Care Levy changes
The Health and Social Care Levy was introduced in April 2022, to bolster social care and increase funding for the NHS in England.
During the current tax year, this levy is being taken through payroll and the self-assessment system, in the form of a 1.25 percentage point increase in National Insurance (NI), paid by both employers and working adults.
From the beginning of the 2023/24 tax year, the NI contribution rates will go back down to 2021/22 levels and the levy will become a separate tax on earned income – called the Health and Social Care Levy. It will then be shown separately on payslips and ringfenced to fund health and social care costs.
Unlike NI, this levy will also be paid by people who continue to work beyond retirement age.
UPDATE 23rd SEPTEMBER: The Chancellor has announced that the above 1.25 percentage point uplift in NICs will end on 6 November 2022. The Health and Social Care Levy (HSCL) due to be introduced from April 2023 will also not go ahead. These changes should be reflected in your payroll.
2. Pension auto re-enrolment
The Government began introducing laws for employers to contribute to a pension scheme for employees in 2012.
Since then, these laws have been introduced for all businesses, with every employer obliged to contribute at least 3% of qualifying earnings into a workplace pension and the employee contributing at least 5%, through the payroll system.
Employers are also obliged to repeat the process of enrolling employees into the workplace pension every three years.
This process of ‘re-enrolment’ involves putting eligible employees back into the pension scheme and formally advising them they have been re-enrolled in writing, before sending a re-declaration to The Pension Regulator.
3. Employer Allowance
The Employment Allowance can be claimed by many businesses and charities, with NI liabilities less than £100,00 in the previous tax year being one of the criteria that needs to be met.
It reduces annual NI liability by up to £5,000 and is claimed through your payroll system.
4. Claiming back National Insurance (NI) for military veterans
Employers do not pay NI for earnings up to the Upper Secondary Threshold, currently at £50,270 for apprentices under 25, veterans, or employees who work in a freeport.
Employees who are working in their first job since leaving the Armed Forces (veterans), now have a separate NI category letter which we use to work out the appropriate NI contributions.
5. National Minimum Wage
We continue to check and make appropriate amendments for our clients in line with the National Minimum Wage (NMW) for workers under 23 and the National Living Wage (NLW) for workers age 23 and over.
The hourly rates for both continue to rise and the latest rates came into force on 1 April 2022. The next rate change is expected in April 2023.
6. Extension to scope of parental leave and pay
Parental leave and associated pay now includes:
- Shared parental, and
- Parental bereavement (introduced on 6 April 2020)
7. Calculation of holiday pay for workers without fixed hours or pay
The law on holiday pay for the above workers changed on 6 April 2020.
Changes included a longer ‘reference period’ (now 52 weeks) from which holiday pay is calculated, and a limit on how far back employers should look to get the 52 weeks’ of pay data.
This is a complex area that needs to be managed confidently and carefully.
Sara Maxfield MAAT ACIPP
To discuss how Clear Vision Accountancy’s team can manage your payroll, call Sara Maxfield on 01249 712074.
Want to get our news updates and insights for business owners straight to your inbox? Sign up to receive our emails.