New for 2019-20
There are various data-item and rule changes for 2019-20 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 increases (uplift of L codes)
- Minimum contribution increases for automatic enrolment pension schemes
- New rates of Statutory Pay
- Student Loans – Plan 1, Plan 2 and NEW Postgraduate Loans
- Income tax rates in England, Northern Ireland, Wales and Scotland
- Welsh tax codes and rates of Income Tax
- National Minimum wage increases
- Showing hours worked on payslips for employees whose pay varies according to time worked.
1 – Automatic Tax code increases
HMRC has announced a general ‘uplift’ of all tax codes with an ‘L’ suffix by 65. This means for example that an employee with tax code 1185L in 2018-19 will have their tax code uplifted by 65, so from 6 April 2019 their tax code will be 1250L. 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 71) and ‘N’ (which are increased by 59).
The HMRC help sheet www.hmrc.gov.uk/helpsheets/p9x.pdf gives further guidance on 2019-20 Tax Codes.
Payroll Manager automatically applies these changes the to tax code of each employee as you move from 2018-19 to 2019-20
2 – Minimum contribution increases for automatic enrolment pension schemes
From 6 April 2019 the minimum contribution to an automatic enrolment workplace pension scheme is increasing to 8%, of which the employer must contribute at least 3% (so, typically the employee will contribute 5%). In the previous year the minimum contribution was 5% (with employers typically contributing 2% and employees typically contributing 3%).
If you were using Payroll Manager in 2018-19 then you will be automatically prompted to apply these increases as part of the ‘Creating a Data File for 2019-20‘ procedure.
3 – New rates of Statutory Pay
- The rate for Statutory Sick Pay (SSP) is £94.25 per week from 6 April 2019 (the weekly rate was £92.05 in 2018-19).
- The standard rate of Statutory Maternity, Paternity and Adoption Pay (SMP, SPP, SAP) is £148.68 from April 2019 (the weekly rate was £145.18 in 2018-19)
See the HMRC publication Rates and Thresholds for 2019-20 for more information.
Payroll Manager will automatically apply the correct rate of statutory pay.
4 – Student Loans – Plan 1, Plan 2 and NEW Postgraduate Loans.
From 6 April 2019 the threshold at which borrowers repay Student Loan Plan 1 (SLP1) loans will increase from £18,330 to £18,935 per year – Plan 1 loans are those issued to students before 2012.
The threshold for Student Loan Plan 2 loans (issued after 2012) will increase from £25,000 to £25,725 per year.
From 6 April 2019 a new type of student loan is being introduced – the Postgraduate Loan (PGL), the threshold for which will be £21,000 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. There is also a new ‘Postgraduate Loan Repayments’ column available in the ‘Deductions’ section of the Payroll Manager ‘Pay Details’ screen. Please see our guide on Student Loan Deductions for details of how to process student loan repayments in the software.
For more information please refer to the HMRC guide on Repaying your student loan
Payroll Manager will automatically apply the correct rates of student and postgraduate loans.
5 – Income tax rates in England, Wales, Northern Ireland and Scotland
From 6 April 2019 the income tax rates for England, Wales & Northern Ireland are as follows:
|Basic Rate||20% on annual earnings £12,500 to £50,000|
|Higher Rate||40% on annual earnings £50,001 to £150,000|
|Additional Rate||45% on annual earnings above £150,000|
(Rates assume a personal allowance of £12,500)
From 6 April 2019 the income tax rates for Scotland are as follows:
|Scottish Starter Rate||19% on annual earnings £12,500 to £14,549|
|Scottish Basic Rate||20% on annual earnings £14,549 to £24,944|
|Scottish Intermediate Rate||21% on annual earnings £24,944 to £43,430|
|Scottish Higher Rate||41% on annual earnings £43,430 to £150,000|
|Scottish Top Rate||46% on annual earnings above £150,000|
(Rates assume a personal allowance of £12,500)
Payroll Manager will automatically apply the correct rate of income tax according to the tax code assigned to each employee.
6 – Welsh tax codes and rates of Income Tax
From April 2019 the Welsh Government will be able to vary the rates of income tax paid by Welsh taxpayers. For tax year 2019-20 the Welsh Government has chosen to set income tax rates at the same level as those used in England and Northern Ireland. Employers will receive coding notices for all employees that HMRC has identified as Welsh residents, with the new tax codes beginning with the letter ‘C’. Please see our guide on the Welsh Rate of Income Tax for further information.
7 – National Minimum Wage increases.
The National Minimum wage rates are increasing from April 2019. 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 2019 onwards. More information can be found on the link below:
8 – Showing hours worked on payslips for employees whose pay varies according to time worked.
New legislation in force from April 2019 will require all employers to show ‘hours worked’ on payslips where the pay varies by the amount of time worked. This new legislation will affect those employers who have hourly paid staff, but who do not currently display the amount of hours worked on their payslips. Please refer to our guide on Hourly Pay and displaying ‘hours worked’ on a payslip for more information.