Our payroll team members are all working from home and, because our processes and systems are designed to support remote working, you can continue to reach them on their usual email addresses and direct dials.
The Government have announced a range of COVID-19 support measures, including the Coronavirus Job Retention Scheme which will allow you to claim back wage costs for furloughed workers. We can help you with this and, when more details are available, we’ll be launching a fixed fee support package to cover dealing with the payroll and grant reclaim administration. One thing to consider is that furlough payments will initially need to be funded out of your cashflow, so you’ll need to think about your overall cash position.
Just get in touch with us to talk this through and we can help you consider your options, including whether or not it might be appropriate to apply for the Coronavirus Business Interruption Loan.
Furlough pay is based on February 2020 salaries, or an average of previous weeks or months if the employee usually works variable hours. The national minimum wage increases detailed below will not apply to furloughed employees and, whilst you can choose to pay the increase if you wish, you will only be able to claim 80% of the ‘old’ minimum wage rate, rather than the new one. That said, it remains to be seen if this will result in employment law or discrimination issues and you should consider the impact on employee loyalty and perceptions of fairness.
Small and medium-sized businesses will also be able to reclaim any Statutory Sick Pay (SSP) that they have paid for staff sickness absence due to coronavirus. This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of coronavirus and, when further details are announced, we’ll let you know how we can help you to take advantage of this measure.
The following legislative changes take place in April and may affect your payroll. If you are a Sagars payroll client, rest assured that we will automatically apply the new rates and thresholds, though we do encourage you to double check the payroll details at your end. If we don’t currently provide your payroll support and you have any queries about the new COVID-19 measures or the changes below, just get in touch with our payroll manager, Andrew Senior.
The standard personal allowance for the tax year will remain at £12,500. This means that the standard tax code for an employee without any benefits will remain as 1250L. Also, Scottish tax rates will be different to the rest of the UK. If you do have any employees that are classified as a Scottish Tax Payer, they may pay a different amount of tax, even if they are on the same gross salary as other employees.
National Insurance Threshold
The revised National Insurance thresholds for the 2020/21 tax year are as follows.
|Weekly||Monthly||Yearly (Directors Only)|
|Lower Earnings Limit (LEL)||£120||£520||£6,240|
|Primary Threshold (PT)||£183||£792||£9,500|
|Secondary Threshold (ST)||£169||£732||£8,788|
|Upper Earnings Limit (UEL)||£962||£4,167||£50,000|
*The LEL is the amount that an employee must earn in every pay period of the tax year to receive a full qualifying year towards their state pension. The PT is the maximum amount that can be paid to an employee before any employee’s National Insurance contributions are due and the ST is the maximum amount that can be paid before any employer’s National Insurance is due. It is important to note that for the first time in a few years, the PT and ST thresholds are different amounts. The UEL is the point at which the normal rate of deductions for an employee cease and revert to 2% rather than 12%. Employer contributions of 13.8% are due on all earnings above the ST and above the UEL.
National Living/Minimum Wage
The new minimum hourly rates that must be paid to employees from 1 April 2020 are as follows:
|Age||New hourly rate||Previous hourly rate|
*The apprentice rate only applies to apprentices aged 18 or under. The apprentice rate can be paid to apprentices aged 19 and over, but only in their first year of apprenticeship. After that, the standard rate for their age band will apply.
New rates for Statutory payments will also apply from the start of the new tax year on 6 April 2020. The new rate of Statutory Sick Pay will increase from £94.25 to £95.85 a week and the rate for Statutory Maternity/Paternity/Shared Parental/Adoption leave will increase from £148.68 to £151.20 a week.
Auto Enrolment Pension Schemes
For companies that have an Auto-Enrolment Pension Scheme, the minimum contribution rates for both the employee and employer will remain unchanged. The minimum amount the company must contribute will be 3%, and the total contribution – including the employee’s contribution is 8%.
The Employment Allowance that some employers can reclaim will increase to £4,000 for the 2020/21 tax year. The qualifying criteria has changed; a company is now only eligible to claim the allowance if the company’s total Employers NI in 2019/20 was under £100,000. If a company is part of a group of companies or has more than one PAYE scheme, then the total employer’s NI across the group/schemes is the figure that is used to determine eligibility.