It’s the 21st anniversary of National Payroll Week and the theme again this year is ‘Keeping the UK Paid’. With payroll getting more and more complex this is no easy feat, especially with some of the changes due to come into effect over the next few months - which will have an impact on a wide range of businesses.
One of the main changes from 6 April 2020 is the change to the IR35 off payroll working rules currently in place for the public sector, but being extended to the private sector. Employers will need to undertake the mandatory CEST (Check Employment Status for Tax) test to determine if a worker is an off payroll worker and, if so, then Tax and NICs will need to be deducted from the service amount charged. This legislation is expected to impact around 170,000 individuals who would be deemed employed if engaged directly through their own company.
Something else for employers to think about is the current proposed changes to Employment Allowance. The proposal states that from April 2020 the Employment Allowance will only be available to employers with a NIC bill of less than £100,000 in the previous tax year and will come with the definition of state aid. Different trade sectors have different thresholds and the employer must ensure they have enough space within their threshold to claim the full Employment Allowance (currently £3,000). Employers will need to notify HMRC of this via their EPS at the start of each tax year which will include the amount of de minimis state aid they have claimed in the 3 years prior to the date of the claim, this then needs to be converted into Euros using the rate proposed by HMRC. This is looking to be a very complex process but please note, this legislation has not been finalised as yet, however any major changes to this is unlikely at this stage.
These are just a couple of the changes we have to look forward to in the next few months, but with Brexit on the horizon, who knows what else will change!