New for 2018-19
There are various data-item and rule changes for 2018-19 and this guide provides details of some of them. We would recommend that you read the latest HMRC Employer Bulletin (www.hmrc.gov.uk/payerti/forms-updates/employer-bulletin/index.htm ) which covers many of these items in greater detail.
- Automatic Tax code increase to 1185L (uplift of L codes)
- Minimum contribution increases for automatic enrolment pension schemes
- New rates of Statutory Pay
- Change to Student Loans repayment thresholds
- Scottish Rates of Income Tax
- National Minimum wage increase
1) Automatic Tax code increases
HMRC has announced a general ‘uplift’ of all tax codes with an ‘L’ suffix by 35. This means for example that an employee with tax code 1150L in 2017-18 will have their tax code uplifted by 35, so from 6 April 2018 their tax code will be 1185L. Payroll Manager applies this uplift automatically when you use the ‘create a file for next year’ feature. If you receive separate notifications from HMRC to change an employees tax code then you should action these accordingly. There are also automatic uplifts for tax codes ending in ‘M’ (which are increased by 39) and ‘N’ (which are increased by 31).
The HMRC help sheet www.hmrc.gov.uk/helpsheets/p9x.pdf gives further guidance on 2018-19 Tax Codes.
2) Minimum contribution increases for automatic enrolment pension schemes
From 6 April 2018 the minimum contribution to an automatic enrolment workplace pension scheme is increasing to 5%, of which the employer must contribute at least 2% (so, typically the employee will contribute 3%). In previous years the minimum contribution was 2% (with employers and employees typically contributing 1% each).
If you were using Payroll Manager in 2017-18 then you will be automatically prompted to apply these increases as part of the ‘Creating a Data File for 2018-19‘ procedure.
3) New rates of Statutory Pay
- The rate for Statutory Sick Pay (SSP) is £92.05 per week from 6 April 2018 (the weekly rate was £89.35 in 2017-18).
- The standard rate of Statutory Maternity, Paternity and Adoption Pay (SMP, SPP, SAP) is £145.18 from April 2018 (the weekly rate was £140.98 in 2017-18).
Payroll Manager will automatically apply the correct rate of statutory pay.
see the HMRC publication Rates and Thresholds for 2018-19 for more information.
4) Student Loans – Plan Type 1 and Plan Type 2
From 6 April 2018 the threshold at which borrowers repay Plan type 1 student loans will increase from £17,775 to £18,330 per year – Plan type 1 loans are those issued to students before 2012.
The threshold for Plan type 2 loans (issued after 2012) will increase from £21,000 to £25,000 per year.
Payroll Manager will automatically apply the correct student loan repayment threshold and will include the correct plan type in the RTI details sent to HMRC.
For more information please refer to the HMRC guide on Repaying your student loan
5) Scottish rates of Income Tax
From April 2018 there will be 5 different income tax rates in use in Scotland, as per the table below:
|Scottish starter tax rate||19% on annual earnings above the PAYE tax threshold and up to £2,000|
|Scottish basic tax rate||20% on annual earnings from £2,001 to £12,150|
|Scottish intermediate tax rate||21% on annual earnings from £12,151 to £31,580|
|Scottish higher tax rate||41% on annual earnings from £31,581 to £150,000|
|Scottish top tax rate||46% on annual earnings above £150,000|
Payroll Manager will automatically apply the correct rate of Scottish income tax according to the tax code assigned to each employee (i.e. those employees with tax codes prefixed with the letter ‘S’).
For more information please refer to the Scottish Government guide on Scottish Income Tax
Please also refer to the following guide on Changing an employee’s Tax Code within Payroll Manager if you have been instructed by HMRC to change the tax code for an employee.
6) National Minimum Wage increases.
The National Minimum wage rates are increasing from April 2018. Payroll Manager does not automatically update these rates, so if you have employees that are subject to these minimums you should ensure that the correct rate is being paid from April 2018 onwards. More information can be found on the link below: