Payroll legislation is constantly changing and keeping fully up to date can be challenging. Our Taunton payroll and auto enrolment manager, Kirsty Small, will present a comprehensive update and will guide you through all the recent legislative changes and those that will be coming up in the near future. She will also draw your attention to common problems and pitfalls that clients regularly need help and advice with. Topics covered will include: • Legislation changes – recent and to come • GDPR • Auto Enrolment – triennial review and update • General update • Apprenticeship levy

1. 1
Kirsty Small, Payroll and Auto
Enrolment Services Manager
Payroll Update Seminar

2. Housekeeping

3. Payroll Update
• Tax allowances and threshold changes
• National Insurance threshold and rates
• Statutory Payments
• Childcare vouchers & Tax Free
Childcare
• Expenses and Benefits
• Auto Enrolment – update
• Re-enrolment
• Holiday Pay
• GDPR
• Apprenticeship Levy
• Other Items

4. 4
Tax Allowances
Personal allowance increasing to £11,850
Personal Allowance - £11,850
Basic Rate Limit - £34,500
Higher Rate Threshold - £46,350
Tax Threshold 2017-18 (£) 2018-19 (£) Change (£)
Basic @ 20% 0 – 33,500 0 – 34,500 + 1,000
Higher @ 40% 33,501 –
150,00
34,501 –
150,000
- 1,000
Additional @ 45% Over 150,000 Over 150,000 0

5. www.website.com
Tax Codes
Employer Actions 2018/19 Year Start
• Drop W1/M1 codes
• L suffix codes + 35 points
• M suffix codes + 39 points
• N suffix codes + 31 points
• Apply any P9 code notifications
Check all prefix “S” coding notices!

6. Scottish Income Tax
Scottish taxpayers have five rates of tax as of 6 April 2018
* Assumes individuals are in receipt of the Standard UK Personal Allowance.
** Those earning over £100,000 will see their personal allowance reduced by £1 for every £2 earned over £100,000.
Starter Rate
@ 19%
Basic Rate
@ 20%
Intermediat
e @ 21%
Higher Rate
@ 41%
Top Rate**
@ 46%
Thresholds £11,850* -
£13,850
£13,851 -
£24,000
£24,001 -
£44,273
£44,274 -
£150,000
£150,001
and above
Bands £2,000 £10,150 £20,273 £105,727

7. National Insurance Thresholds
NICs Thresholds Tax Year Weekly Fortnightly Four-weekly Monthly Annual
Lower Earnings Limit
(LEL)
17/18 £113 £226 £452 £490 £5,876
18/19 £116 £232 £464 £503 £6,032
Primary Threshold (PT) 17/18 £157 £314 £628 £680 £8,164
18/19 £162 £324 £648 £702 £8,424
Secondary Threshold
(ST)
17/18 £157 £314 £628 £680 £8,164
18/19 £162 £324 £648 £702 £8,424
Upper Earnings Limit
(UEL)
17/18 £866 £1,732 £3,464 £3,750 £45,000
18/19 £892 £1,783 £3,566 £3,863 £46,384
Upper Secondary
Threshold (UST) &
Apprentice Upper
Secondary Threshold
(AUST)
17/18 £866 £1,732 £3,464 £3,753 £45,000
18/19 £892 £1,783 £3,566 £3,863 £46,384

8. Statutory Payments
National Minimum Wage – April 2018
• Apprentices – £3.70
• Under 18 - £4.20
• 18 to 20 - £5.90
• 21 to 24 - £7.38
• 25 and over (National Living Wage) - £7.83
• Accommodation offset - £7.00
• Voluntary Living Wage (Nov 17) - £8.75

9. 9
Statutory Payments
Statutory Sick Pay
Daily
Rates
QDs
in
Week
Number of days due
1 2 3 4 5 6 7
£ £ £ £ £ £ £ £
13.15 7 13.15 26.30 39.45 52.60 65.75 78.90 92.05
15.3416 6 15.35 30.69 46.03 61.37 76.71 92.05
18.41 5 18.41 36.82 55.23 73.64 92.05
23.0125 4 23.02 46.03 69.04 92.05
30.6833 3 30.69 61.37 92.05
46.0254 2 46.03 92.05
92.05 1 92.05

10. Statutory Payments
Student Loans
• Plan 1
- Loan taken before September 2012 and home address was
England, Wales, Northern Ireland or Scotland.
- Threshold increased to £21,000
• Plan 2
- Loan taken from September 2012 and home address in
England and Wales.
- Threshold increased to £25,000

11. www.website.com
Statutory Payments
Maternity & Paternity Pay
Rates effective from week
starting on or after Sunday 2 April 2017 1 April 2018
Earnings Threshold (LEL) £113 £116
SMP/SAP weekly rate for first 6
weeks
90% of AWE 90% of AWE
SMP / SAP weekly rate for up to
next 33 weeks
SPP / Shpp weekly rate
Lower of 90% of AWE
or £140.98
Lower of 90% of AWE
or £145.18
SMP, SAP, SPP and ShPP
optional daily rates
£20.14 £20.74
Percentage of amount recoverable 92% 92%
Percentage of payment
recoverable (Small Employer’s
Relief)
100% 100%
NI Compensation recoverable
under Small Employer’s Relief
3% 3%
Annual NICs threshold for Small
Employer’s Relief
£45,000 £45,000

12. Childcare Vouchers
• Unavailable to entrants as of April
2018.
• Existing scheme members will
continue to benefit.
• Should employees put vouchers on
hold?
• Multiple PAYE schemes, What
happens if an employee is
transferred?
Donaldson v Peninsula Business Services

13. Tax Free Childcare
• Commenced April 2017, as of April
2018 it will be the only scheme
available to new joiners.
• Parents open an online account, per
child
• Receive 20p (maximum of £2,000)
for every 80p saved
• Will be able to pay registered
providers directly through account
• No employer involvement!

14. 14
Salary Sacrifice
• As of April 2017 salary sacrifice schemes
were removed.
• Exceptions being pensions, childcare, Cycle
to Work and ultra-low emission cars.
• Protection is given to schemes in place prior
to April 2017 and arrangements in place for
cars, accommodation and school fees are
protected until 2021.
Impact – exchanging salary for benefits will pay
the same amount of tax as those employees
who purchase from taxed income.

15. www.website.com
Expenses and Benefits
Optional Remuneration Arrangements (OpRA)
• Type A – Employee gives up the right, or
future right, to receive an amount of
earnings which would have a tax liability, in
return for the benefit
• Type B – Employee agrees to be provided
with a benefit rather than an amount of
earnings
How does it work?

16. Auto Enrolment Thresholds
• Earnings Trigger will remain at £10,000
• Qualifying earnings thresholds will increase
• Contribution rates to increase as of April 2018
Threshold 2017/18 2018/19
QEB Lower Limit £5,876 £6,032
QEB Upper Limit £45,000 £46,350
Employer
Minimum
Total Minimum
Staging – 5 April 2018 1% 2%
6 April 2018 – 5 April 2019 2% 5%
6 April 2019 3% 8%

17. Auto Enrolment
Proposed changes (mid 2020s)
• Lowering age limit to 18, currently
22
• Removal of the link to the Lower
Earnings Limited
• Government to test ‘targeted
interventions’
• Non-standard forms of employment,
ensure that those who are eligible
should be automatically enrolled i.e.
the ‘gig’ economy

18. 18
Auto Enrolment
Tax Relief on Pension Contributions
• Annual allowance remains at £40,000
• Lifetime allowance
• Fixed Protection – omit employee from the
automatic enrolment process, or employee
opts-out within 30 days
Pensions – Lifetime Allowance
2012/13/14 2015/16 2016/17/18 2018/19 onwards
£1.5 million £1.25 million £1 million £1.03 million

19. www.website.com
Re-Enrolment
Triennial Review
• Re-enrolment date three months before or
after third anniversary of original staging
date
• Re-enrol eligible jobholders into qualifying
scheme
- Opted out
- Opted down
- Ceased active membership
• Write to eligible jobholders within six weeks
• Re-declaration of compliance no later than
five months of the re-enrolment date

20. Holiday Pay
• 6 years of challenging
• To date there has been no direct change to
legislation/guidance.
• Two methods:
1. Do nothing and wait
2. Create a business based process
British Airways v Williams
Lock v British Gas Trading
Bear Scotland v Fulton, Amec v Law, Hertel v Wood
Patterson v Castlereagh Borough Council (Northern Ireland)

21. Holiday Pay
• Commission? Must be included
• Overtime pay?
- Guaranteed ~ must be included
- Voluntary ~ settled pattern has
developed over a sufficient period
of time to justify the label of
“normal”
- Non-guaranteed ~ consider
including

22. 22
Holiday Pay
• Allowances? Reimbursed expenses such as
travel and subsistence are excluded.
• Performance Type Bonus? Should be treated
in a similar way to commission. Effectively the
pay varies according to the amount of work
done.
• Annual discretionary (and other) bonuses?
This is a grey area, however there can be
seen to be a link to performance.
• Standby and emergency call-out payments?
Should be included

23. Holiday Pay
• Current entitlement is 5.6 weeks
• Holiday entitlement over four weeks may, with agreement be
carried over to the following year
• Statutory minimum entitlement will continue to accrue during
periods of absence, such as ordinary and additional maternity
leave.
• An employer must allow a worker to carry over a maximum of
4 weeks if their leave entitlement if the worker couldn’t take
leave because they were off sick.

24. www.website.com
General Data Protection Regulation
GDPR applies as of 25 May 2018
How to prepare
1. Awareness
2. Information you hold
3. Communicating privacy information
4. Individual's rights
5. Subject access requests
6. Processing of personal data
7. Consent
8. Children
9. Data breaches
10. Data Protection by Design and Default
11. Data Protection Officer(s)
12. International

25. Apprenticeship Levy
Introduced in April 2017 for employers with a ‘paybill’ of £3 million
• Levy allowance of £15,000
• Allowance can be shared amongst a group of companies
• Charged at a rate of 0.5% on earnings that attract Class 1
secondary NICs
• Reports via the EPS
• As of April 2018levy-paying employers can transfer up to 10%
of their annual fund to other employers, small employers within
their supply chain and apprenticeship training agencies.

26. Other Items
• Work experience – unpaid to be
capped at 4 weeks.
• National Minimum Wage – HMRC
Reviews
• Employees registering for Personal
Tax account
https://www.gov.uk/personal-tax-
account

27. 27
Questions?

28. www.website.com
Contact details
Kirsty Small
Payroll and Auto-enrolment
manager
Taunton office
kirsty.small@pkf-francisclark.co.uk