Everything you need to know about payroll and the 2020 Budget
The first Budget of the new Conservative majority Government will be announced on 11 March.
A Budget for 2020/21 had been due in October but was put on ice due to the delay to Brexit and the calling of the General Election.
The delay added tension for businesses looking to plan for the new tax year. However, the wait is nearly over.
The new Government has promised a raft of new policies that will impact payroll professionals and we can expect to see many, if not all, of these feature in the Chancellor's statement. You can download our new comprehensive guide here for the full details.
Below, we’ve summarised a few of the key policies that are likely to feature, based on proposals in the Conservative election manifesto.
National Insurance threshold
The employee threshold for National Insurance is expected to be raised from £8,632 to £9,500, which would create a tax cut for approximately 31 million workers. To quantify this change, someone on £25,000 a year would pay about £104 less per year.
No formal announcement has been made regarding the apprenticeship levy, which stands at 0.5% at the moment. The levy allowance is £15,000 a year. We wait to see if this will be left unaltered.
It's expected that termination payments over £30,000 will require employers to conduct calculations and enter the result in the Full Payment Submission.
Employers and their connected employees who currently have an employer National Insurance liability of £100,000 or more for 2019/20, will no longer be able to claim Employment Allowance, if expected proposals are announced and then passed.
How can IRIS help with the upcoming changes?
With everything changing in the upcoming Budget, it’s easy to feel overwhelmed, as the task of managing this change will require a significant amount of time and resources.
Don’t worry though, we have a variety of solutions to meet your needs.
Whether you’re looking for best-of-breed payroll software that will streamline processes and ensure compliance, or if you want to simply outsource some of the work, IRIS has a solution to meet your needs. To see all our services, click here.
What other changes are coming?
In addition to the likely changes in the 2020 budget, a few other payroll changes are coming that you need to be prepared for.
IR35: From April 2020, off-payroll working (IR35) legislation is changing, impacting payroll processes for large private employers, recruiters and contractors.
Holiday Pay: On 6th of April 2020, Holiday Pay legislation is changing drastically, creating added pressure for businesses to remain compliant and correct.
Statutory Parental Bereavement Pay: Parents who suffer the death of a child will now have the right to two weeks leave with statutory pay.
Sporting Testimonials: Sportsman receiving income from a testimonial will receive tax relief (income tax) on the first £100,000.
Pensions: An initial review will be put in place to try fix a tax anomaly which impacts workers, mostly women earning between £10,000-£12,500, which causes them to lose pension top-ups automatically paid to the better off.
Company cars: Hybrid cars will now be treated differently based on their battery power and cars registered from April 6, 2020, will receive improved rates due to new standards (WLTP).
National living wage: Plans are in place to increase the National Living Wage to two-thirds of the average earning.
Student loan threshold: The Department of Education confirmed that the threshold will increase to £19,390 for Plan 1 and £26,575 for Plan 2.
Do you want more information on new government policies that will impact payroll?
For an in-depth look into the coming policies and how you can prepare, download our free guide.