Payroll Changes for Tax Year 2017/18
This coming tax year looks to be another busy one with more significant employment law changes coming into force. I have highlighted some of the key changes, which range from the introduction of gender pay gap reporting to the introduction of an apprenticeship levy for large employers.
The Apprenticeship Levy is being introduced to help young people get into apprenticeship schemes. The money will go towards funding the education within apprenticeships in the UK. The new tax will only apply to companies that have a pay bill over 3 million per annum. The tax will be based on 0.5% of your pay bill. However, there will be an allowance of £15,000 for all employers. So your tax will be: 0.5% of your pay bill – £15,000.
Some employers will be liable to pay the levy in some periods and not in others. The calculation will take this into consideration and make sure that you are paying the correct amount of tax. This would apply to a seasonal business that would have a higher pay bill at certain times of the year.
When this comes into place, if you use QTAC Software the apprentice levy will be sent up with your normal RTI within a pay period.
Restrictions on Salary Sacrifice Schemes
From 6 April 2017 some salary sacrifice schemes will no longer continue to offer the same savings on tax and National Insurance contributions. Exempt from this will be schemes related to pension savings (including pensions advice), childcare, cycle-to-work and ultra-low emission cars. Schemes in place prior to April 2017 will be protected until April 2018.
Gender Pay Gap Reporting
New gender pay gap regulations which are due to come into force on 6 April 2017 mean that private and voluntary sector organisations employing 250 or more people as of 5 April 2017 must publish the details of their gender pay gap by 4 April 2018.
Employers will need to use data from 2016/17 for the first reports which will require median and mean information relating to employee pay and bonus pay to be published; together with details of the number of men and women in each quartile of the organisation’s pay distribution.
National living wage changes
The national living wage for employees aged 25 or over will rise from £7.20 an hour to £7.50 an hour from April 2017.
IR35 in the public sector
From 6 April 2017, a new duty will require tax and national insurance contributions (NICs) to be deducted on all payments made by public sector organisations to workers supplied by personal service companies on short-term assignments. This is because such payments will be treated as payments of employment income upon which either the engager or third-party intermediary will be required to account for tax. It is possible that similar changes may follow in the private sector.
Benefits in Kind
Although introduced in April 2016, Payrolling Benefits in Kind is now available in QTAC Software as of 2017/18. ‘Payrolling Benefits in Kind (PBIK)’, changes the way in which expenses and benefits are taxed and reported to HMRC.
Benefits in Kind are payments made to employees that are not a part of their normal salary or wage. These payments still need to be taxed in some cases. From the start of the 17/18 tax year users of QTAC payroll software will be able to Payroll your Benefits in Kind instead of submitting P11d’s. When you are payrolling the benefits you need to declare them up front before the start of the tax year so that HMRC amend the employee’s tax code appropriately. You would need to declare them online using HMRC’s service here.
You then need to add the benefits onto the payroll in each pay period so that the tax can be added. You must continue to payroll that benefit until the end of the tax year or until the benefit is stopped.
End of Year Company Declaration Abolished
RTI Declarations will no longer be necessary. You will not be able to submit your EOY declarations from the software anymore.