How will payroll change in 2020?
In addition to upcoming legislative changes, the Conservative government has a variety of proposed policies that are going to shake up payroll.
However, due to the late call for the general election, the release of the budget for financial year 2020/2021 has been delayed, meaning that businesses can’t be as proactive in their preparation as they’d like.
Don’t worry this blog will delve into some of the new legislation to examine how the upcoming changes will impact your payroll and what you can do to prepare.
On 29th October, Chancellor Philip Hammond announced that IR35 which came into action for the public sector in April 2017 would be extended to the private sector in April 2020.
IR35 will allow HMRC to collect additional payment where a contractor is an employee in all but name.
The initiative is intended to reduce tax avoidance off-payroll contractors who avoid paying National Insurance contributions.
If you don’t check the status of your employees and HMRC determines that they should be inside IR35, the back tax will fall on you rather than the worker.
The Conservative government has made promises to keep the popular “triple lock”, guaranteeing a state pension of at least 2.5%.
Critics have stated that keeping the “triple lock” in place is unaffordable and does nothing to help the poorest and oldest pensioners.
In response to critics, the Conservative government is putting an initial review in place to resolve this tax issue.
Payroll professionals will have to be ready to accommodate the changes to pensions and make the appropriate deductions following the review.
We can expect to see the National Insurance threshold increase from £8,632 to £9,500.
This change is expected to create a tax cut for approximately 31 million workers.
To add some context to this change, someone on £25,000 a year will see about a £104 return.
As a payroll professional, you need to be ready to make the alterations to your employees’ pay, ensuring they receive the correct amount.
What solutions are available to support?
The upcoming changes are going to create an enormous number of added tasks for payroll, taking professionals away from other business-critical responsibilities.
So, why not let us do it for you?
By outsourcing to our IRIS Managed Payroll service, you entrust the task of managing the upcoming changes to our team of highly experienced CIPP-Accredited payroll managers.
We can meet the needs of any business, offering both fully managed and tailored services.
For more information on how the IRIS Managed Payroll service can support your business and to request your personal quote, click here.
More information on the upcoming changes
Are you looking for more information on the Conservative’s proposed policies?
We recently created a comprehensive guide, analysing the upcoming policies, changes and how they will impact payroll.
To download your FREE guide, click here.