Three important non-tax changes to note as we head into the new tax year
This April, a number of new employment law changes come into effect that you need to be aware of, in addition to all the usual tax and National Insurance changes!
From April 2019, payslips are required to state number of hours being paid where wages vary according to time worked; either as an aggregate number of hours or as separate figures for different types of work (or rates of pay). This means that if you pay your PA on an hourly basis, all the hours worked in their pay period must be included on their payslip, because they are all paid on the basis of how much time they worked. Government guidance on the new requirements, including examples, is available on GOV.UK.
If you use our payslip tool, we will give you instructions on how to edit the PDF payslip to insert hours worked, in the coming days. In the meantime, as a workaround, we suggest that you print off the payslip, write the hours in by hand and then physically give the payslip to your PA.
From 1 April 2019, the minimum wage rates have gone up. The rates that you need to ensure you are paying are:
- £8.21 for workers aged 25 and over (up from £7.83)
- £7.70 for 21 to 24 year olds (up from £7.38 per hour)
- £6.15 for 18 to 20 year olds (up from £5.90 per hour)
- £4.35 for 16 to 17 year olds (up from £4.20 per hour)
- £3.90 for apprentices (up from £3.79 per hour). An apprentice qualifies for the lower apprentice rate if he or she is under 19, or is still in the first year of his/her apprenticeship contract. Apprentices who are over 19 and not in the first year of an apprenticeship contract are paid at the minimum wage rate appropriate to their age.
The maximum offset rate for accommodation is £7.55 a day or £52.85 a week.
The new pay rate will only affect the first full pay period starting on or after the 1 April 2019.
For example, if your PA is paid weekly on a Monday to Sunday basis, the first full pay period on or after 1 April 2019, will be the week 1 to 7 April 2019. Similarly, if your PA is paid calendar monthly, their first full pay period on or after 1 April 2019 will be the month 1 to 30 April.
However if your PA is paid, say, from the 16th of one month to the 15th of the next, they will only be due the new rate from 16th April 2019.
Further guidance on the minimum wage can be found on our website.
What if I can’t afford the increase?
If you receive money from the government to pay your PA (for example through direct payments from your Local Authority) then you should speak to the team who deal with your payments to see if they can be increased to cover any additional costs, including minimum wage increases, but also auto enrolment – see below.
It is your legal duty to make sure that you are compliant with employment law. If you don’t do this, it could result in fines.
From 6 April 2019, you will be required to increase the amount of your minimum contributions into your PA’s automatic enrolment pension from 2% to 3% of their ‘qualifying earnings’. The minimum employer contribution of 3% will be set on earnings over £118 per week up to an upper limit of £962 per week (£512 and £4,167 a month, £6,136 and £50,000 a year).
You have the ability to pay more than 3% if you wish. If you contribute the total minimum contribution (8% from 6 April 2019) then your PA will have to contribute nothing. If you contribute more than the required minimum amount – but less than the total minimum amount – then your PA only needs to make up the shortfall between the total minimum and the employer contribution.
How to implement the increases
If you use payroll software that helps you with auto enrolment duties, then the increases should be automatically built into their systems. It is worth speaking to your payroll software provider to make sure this is the case, so that you remain compliant.
If you use Basic PAYE Tools, which does not handle auto enrolment, then you will have to factor in the new percentages into your manual calculations of contribution amounts. The Pensions Regulator (TPR) have a basic tool to help with these calculations.
You should be aware that the 6 April 2019 increase may occur part way through your PA’s pay period. For example, your PA may have a pay period of 1 to 30 April, with the increase effective from 6 April.
This means that a pro-rated pension contribution deduction may be required for a pay period which includes 6 April 2019. If this is the case, the contribution for the pay reference period up to 6 April would be calculated based on the old rates, and from 6 April up to the end of the pay reference period being based on the new rates.
However, many pension providers will put in place administrative easements, for example the new rates could be applied to the full 1 to 30 April pay period. If you are unsure what to do, check any information your pension provider has sent about the increase or, if there isn’t any information, check with the pension scheme provider.
What do I need to tell my PA?
Unless you pay the total minimum contribution amount (i.e. and pay their contributions for them), your PA will probably also need to pay more into their pension come 6 April 2019. As such, you should let your PA know about the increases so that they can prepare for this and to help minimise queries.
The TPR have an example letter template you can use:
If you are already paying above the increased minimum amounts, you do not need to take any further action. For more information go to The Pensions Regulator website.