Payroll Legislation for 2018: Roundup

There’s been plenty going on over the last twelve months for payroll professionals. Make sure you didn’t miss these important changes.

Budget reminder

First, let’s remind ourselves what was announced in the Autumn 2017 budget statement which, despite plenty of ideas and discussion about what might happen, in fact turned out to be a bit of a damp squib for payroll people. You’ll probably be familiar with the elements that impacted you, but here’s a quick reminder of some of the points.

Firstly, it was no surprise that the Minimum Wage increased again - don’t confuse this with the National Living Wage (you’d be amazed how many people do!). There was also a new tax code as allowances changed again as expected. It was good news for most that NI rates were not changed; and no change to employment allowance either. One point to mention here – some sectors have apparently been abusing the employment allowance, so be aware that HMRC is now monitoring this closely.

Another hit for diesel drivers, although this was not unexpected, and employers must put their hands in their pockets and install charging points for electric vehicles if the BIK benefits are to be enjoyed. There was nothing new announced on pensions tax relief despite plenty of speculation in the press – although the government has made clear that it wants everyone to make provision for retirement.

Posted 18/01/2018

Optional Remuneration Arrangements (OpRA)

Think new policy, new jargon and new guidance with the aim of limiting tax and NIC advantages. What do you need to know? For starters, OpRA now incorporates salary sacrifice arrangements and HMRC is writing to employers who had salary sacrifice in place. It’s certainly worth taking a few minutes to check the gov.uk site as there is plenty of guidance there and you can reference the exemptions too. These changes have passed many people by so if, for example, your business offers cash options as an alternative to a company car, you will be affected. There’s a new look P11D too, where the higher of the options is taxed. So, take a look at the whole picture – and don’t forget that even contract changes for your existing staff may mean they will be caught by new rules. There is lots of guidance on OpRA the gov.uk website and in the 480 Expense & Benefits tax guide which has also been updated and is an excellent resource that gives the technical background to benefits.

PAYE Settlement Agreements (PSA)

Until now, compiling the information for these has been a nightmare, especially as you’ve been expected to know ahead of time what will be provided next year. Thankfully the government has simplified the process, and from April 2018 will allow for year-end submission, as well as ad hoc requests within the year. You will also be able to give amends to HMRC if items come up.

Class 1A National Insurance Contributions (NICs)

Termination payments were included in the 2017-2019 Finance bill and come into effect in April 2018. Key changes include the removal of the distinction between contractual and non-contractual; pay in lieu of notice is now taxable; and termination payments over £30k will be subject to employer NICs (Class 1A) from April 2019.

Are you struggling to keep pace with payroll legislation changes?

If so, have you considered using outsourced payroll services? Access HR has a team of experts who can take care of everything for you, ensuring you get payroll right first time, and remain compliant. Why not get in touch today to learn more?

https://www.gov.uk/government/publications/optional-remuneration-arrangements
https://www.gov.uk/government/publications/480-expenses-and-benefits-a-tax-guide