As we write this column we are still several weeks away from the budget which will determine what tax we shall be paying from 5th April.
Normally, in recent years the budget is held some time in November giving at least three months’ notice of its provisions. For various political reasons, the government has delayed the budget. This year it is being held on 11th March, which is 5 weeks before the end of the tax year, and as we write the Chancellor has just resigned and a new one appointed giving yet more uncertainty.
There are some things which we do know, mainly payroll matters. We know, for instance, the new National Insurance thresholds. From April, employees will start paying National Insurance on wages above £9,500 per annum, or £183 per week. This is line with promises made by the government in its election manifesto. However, employers will start paying once wages rise above £8,788 per annum, or £169 per week. There will be no changes in the rates of National Insurance for employers or employees, nor in the level at which contributions cease for employees.
Also in the election manifesto was a commitment not to increase the rate of income tax, and the increase in the personal allowance to £12,500 in 2019 was announced as a two year measure. In view of these facts, as well as the fact that the upper earnings limit for National Insurance has remained at the same level, it would seem reasonable to assume that income tax rates and thresholds will remain unchanged.
One very important change is to the Employment Allowance. This is currently an allowance which means that employers can retain the first £3,000 of employers National Insurance that would be payable in the tax year. At present, this is an automatic entitlement. However, from 2020-21 this allowance is only available to employers whose employers National Insurance in 2019-20 totalled less than £100,000. This has resulted in several new questions on the Employer Payment Summary (EPS) and if these are answered incorrectly then the allowance will be lost.
From April, student loan repayments will start once income is £19,390 per annum under Plan 1 and £26,575 per annum under Plan 2. Currently the thresholds are £18,924 and £25,716 respectively. The repayment rate remains at 9% of salaries above these thresholds.
Finally, the level of Statutory Sick Pay will be £95.85 per week from April. All other Statutory Payments, including Statutory Maternity Pay and Statutory Paternity Pay, will be £151.20 per week from April.
Confused? If you are and have employees then why not see how we can help you get this right?
WatkinsonBlack have considerable experience in all areas of taxation and business services, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.