BDO Payroll Newsletter - April 2020

BDO Payroll Newsletter - April 2020

PAYROLL ON POINT APRIL 2020

CONTENTS X National MinimumWage X Statutory Sick Pay X Statutory Maternity, Paternity, Shared Payments (SMP, SAP, SPP and ShPP) X Pension contributions X Employment allowance X Parental Bereavement leave X Holiday Pay Reference period for flexible working hours X IR35 private sector reforms postponed X Share plan reporting 2020 X Class 1A National Insurance on Termination Awards X Importance of cash flow forecasting X Coronavirus – impact on Payroll

Welcome to the spring edition of Payroll on Point. This newsletter is designed to help you keep up to date with legislative changes, new developments and key dates in the future. We hope you will find Payroll on Point informative and if you have any questions on the topics raised please don’t hesitate to get in touch. Kind regards,

MARIA MASON DIRECTOR

NATIONAL MINIMUMWAGE

The Government is again increasing the National Minimum and National Living Wage rates on 1 April 2020. These changes are being made in line with the Low Pay Commission recommendations, which is an independent body made up of employers, trade unions and experts whose role is to advise the Government on the minimum wage.

A new rate applies when the next pay reference period begins on or after the date a rate increase begins, or, an employee reaches a new age bracket. The apprentice rate applies to apprentices under the age of 19 or those on the first year of their apprenticeship, only. Those who fall outside this criteria must receive the rate applicable to their age group.

As an employer, it is your responsibility to ensure your employees are paid in accordance with the guidelines provided, as BDO will not make automatic changes to staff members’ salaries to accommodate these changes. Therefore, you must advise us of any changes to rates of pay, or annual salary, effective from April 2020.

25 AND OVER

YEAR

21 TO 24 18 TO 20 UNDER 18 APPRENTICE

April 2019 (current) £8.21

£7.70 £8.20

£6.15 £6.45

£4.35 £4.55

£3.90 £4.15

April 2020

£8.72

IDEAS | PEOPLE | TRUST

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PAYROLL ON POINT | APRIL 2020

STATUTORY SICK PAY (SSP) Revised rates of SSP are payable from the first day of the new tax year (6th April 2020).

The changes detailed below apply to the average weekly earnings (AWE) at or above the Lower Earnings Limit, which is £120 per week in 2020/21:

NUMBEROF QUALIFYING DAYS INWEEK

1 DAY TO PAY £13.70 £15.98 £19.17 £23.97 £31.95 £47.93 £95.85

2 DAYS TO PAY £27.39 £31.95

3 DAYS TO PAY £41.08 £47.93

4 DAYS TO PAY £54.78

5 DAYS TO PAY £68.47

6 DAYS TO PAY £82.16

7 DAYS TO PAY £95.85

UNROUNDED DAILY RATES

£13.6928 £15.9750 £19.1700 £23.9625 £31.9500 £47.9250 £95.8500

7 6 5 4 3 2

£63.90 £79.88 £95.85

£38.34 £57.51

£76.68 £95.85

£95.85

£47.93

£71.89

£63.90 £95.85

£95.85

1

Whilst SSP is always payable from the first day of the new tax year, other statutory payments apply from the week that commences the first Sunday in April (April 5th 2020): STATUTORYMATERNITY, PATERNITY, SHARED PAYMENTS (SMP, SAP, SPPANDSHPP)

RATES EFFECTIVE from week starting on or after Sunday

5THAPRIL 2020

Earnings Threshold (LEL)

£120

90% of average weekly earnings (AEW)

SMP / SAP weekly rate for first 6 weeks

X SMP weekly rate for up to next 33 weeks X SAP weekly rate for up to next 33 weeks

£151.20 or 90% of employees AEW whichever is lower

X SPP weekly rate X ShPP weekly rate

SMP, SAP, SPP and ShPP optional daily rate Percentage of payment recoverable

£21.60

92%

APRIL 2020 | PAYROLL ON POINT

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PENSION CONTRIBUTIONS

The minimum contribution levels will not be changing from April 2020. Therefore, the following rates will still apply:

BASEDONQUALIFYING EARNINGS

MINIMUM CONTRIBUTION

EMPLOYEE EMPLOYER TOTAL

April 2020

5%

3%

8%

Qualifying Earnings thresholds will remain in line with the National Insurance thresholds from April 2020 (£6,240 – £50,000)

BASEDON BASIC PAY

MINIMUM CONTRIBUTION

EMPLOYEE EMPLOYER TOTAL

April 2020

5%

4%

9%

BASEDON BASIC PAY (Providing Basic Pay is at least 85% of total earnings)

MINIMUM CONTRIBUTION

EMPLOYEE EMPLOYER TOTAL

April 2020

5%

3%

8%

BASEDONTOTAL PAY

MINIMUM CONTRIBUTION

EMPLOYEE EMPLOYER TOTAL

April 2020

4%

3%

7%

EMPLOYMENTALLOWANCE From 6 April 2020 HMRC are introducing a cap on employment allowance eligibility. You will only be able to claim the allowance if the Employer Class 1 National Insurance bill was below £100,000 in the previous tax year. For connected employers, the total Employers Class 1 NI liability for all entities added together must be below £100k in the previous year to be eligible to claim employment allowance from 2020/21. For the purpose of Employment Allowance, Companies are connected if the following applies: X a company has control of another company X they are under the control of the same person or people, for example companies linked in a group If connected employers have a liability under £100,000 for the previous year, you should decide on which one payroll the claim will be made. This change will not affect any payroll that was previously ineligible to claim Employment Allowance. It is the responsibility of the employer to inform BDO how to operate the Employment Allowance through payroll from April 2020 based on the guidelines provided.

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PAYROLL ON POINT | APRIL 2020

PARENTAL BEREAVEMENT LEAVE

From April 2020, parents who suffer the loss of a child will be entitled to 2 weeks statutory leave. The Parental Bereavement Leave and Pay Regulations, known as “Jack’s Law” will implement a right to at least two weeks’ leave if a working parent loses a child under the age of 18 or suffers a still born from 24 weeks of pregnancy. The new policy for such leave is applicable irrespective of length of service, however Statutory Parental Bereavement Pay

(SPBP) will only come into effect for those with at least 26 weeks service whose average earnings are above the National Insurance Lower Earnings Limit during the relevant period. The weekly statutory payment rate will fall in line with the Statutory Maternity Standard Rate, therefore if an increase is implemented with the onset of a new tax tear for SMP, the same will apply for SPBP. Guidance relating to the employees’ relationship with the child does not

specify that you must be the biological parent of the child, but rather that the employee must be classed as the “Primary Caregiver” for that child in order to qualify for pay and leave. Leave will need to be taken within 56 weeks of the date that the child died and can be taken in either one full block of one or two weeks or in two separate blocks, each consisting of a week.

HOLIDAY PAY REFERENCE PERIOD FOR FLEXIBLEWORKINGHOURS Almost all workers are entitled to 5.6 weeks paid holiday each year. This includes agency workers, workers with irregular hours and workers on zero-hours contracts. Where a worker has fixed hours and is paid a salary, they continue to receive their salary whilst on leave. However, where workers undertake regular overtime, or have variable hours, their holiday pay should be calculated using a reference period. When calculating leave for employees with variable work hours, employers currently utilise a reference period of 12 weeks to calculate the appropriate amount of holiday pay. The average pay from the employee’s last 12 weeks of earnings (discounting weeks where no work was performed, so there were nil earnings) is utilised to determine the pay that the employees receive for their leave. From 6 April 2020, the reference period is being extended. Instead of looking back 12 weeks, employers need to calculate the average over a 52 week period. As unpaid weeks are still excluded, this can require employers to count back over a year into the past. To avoid having to go back indefinitely, a limit of 104 weeks’ worth of >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8

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