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Updates to payroll in 2020
As always, the end of a tax year and the start of the new one has made the start of April a busy period for most of us, with filing deadlines to meet, new tax rules to adjust to, and records to update.
This year, things are far from business as usual, with the spread of COVID-19 putting many businesses into survival mode – but there are certain regular tasks that still need to be kept up, and one of those is payroll.
We’ve summed up the main payroll changes taking place in the 2020/21 tax year, and what you need to do as an employer.
The main change to payroll this year was an increase to the national minimum wage rates. These are different depending on the age bracket an employee falls into, and whether or not they’re an apprentice.
As of 1 April 2020, you must pay staff the following minimum hourly rates:
As of 6 April 2020, the threshold for class 1 National Insurance contributions has been raised from £8,632 to £9,500 a year.
The standard rate of statutory sick pay has also increased from £94.25 to £95.85 a week, and statutory maternity, paternity and adoption pay has risen from £148.68 to £151.20.
Aside from more routine payroll tasks, many employers will need to make adjustments as a result of the COVID-19 crisis.
The Government is offering a job retention scheme, which offers businesses a grant covering 80% of furloughed employees’ usual pay, up to £2,500 a month.
To use this scheme, you’ll need to decide which employees will be furloughed, agree that status with them and file a claim with HMRC. While furloughed, employees cannot carry out any work for you.
The scheme is available for employees who were on your payroll on or before 19 March 2020 and is open until 30 June 2020, although this can be extended.
A major change to the off-payroll working rules in the private sector was expected to come into effect from April 2020, but in light of current events, this has been postponed for 12 months.
If you’re a contractor working through a limited company or another intermediary, it’s nevertheless important to make sure you’re prepared for when the changes do come in on 6 April 2021.
Here are the main deadlines for the new tax year: