As we are approaching the 2024/25 tax year, enclosed is a summary of what is changing, together with a recap from a payroll perspective in the key areas that will affect your business.
Tax & National Insurance Thresholds
HMRC have confirmed the standard personal allowance for 2024/25 will remain at £12,570. This has been frozen until 2027/28.
There is also no change to the thresholds at which national insurance is due. This remains at £9,100 for employers and £12,570 for employees.
The rate of employee’s national insurance will reduce from 6 April 2024 from 10% to 8%.
Statutory Payments & Leave
SSP is increasing to £116.75 per week from 6 April 2024
SMP and SAP pay is increasing to £184.03 per week or 90% of Average weekly earnings, whichever is the lower. This rate is the same for statutory paternity, parental bereavement pay and shared parental leave.
Carers leave from 6 April 2024 is an unpaid entitlement to 1 week’s leave which can be taken in one block or flexibly.
From 6 April 2024, paternity leave can be taken in one or two-week blocks, a change from the previous legislation of two consecutive weeks.
Statutory redundancy pay will increase to a maximum of £700 per week from 6 April 2024.
Minimum Wage
New rates apply from 1 April 2024 as well as the age at which the living wage rate applies reducing from age 23 to 21. If any wages need increasing due to these changes, please inform your payroll contact: –
| 21 and over | 18 to 20 | Under 18 | Apprentice
(if Under 19 or Over 19 & in first year of apprenticeship) |
||
| £11.44 | £8.60 | £6.40 | £6.40 |
Apprenticeship Levy and connected companies
If you have connected companies that together the pay bill is £3 million per year, then all companies are liable to pay the apprenticeship levy. You only have one apprenticeship allowance of £15,000 but can split the levy over the different entities. The levy is calculated on each payroll individually and dependant on how the levy allowance has been distributed, will affect how much each connected company will pay. If this applies, do let your payroll contact know how it should be allocated.
Employment Allowance
Employment allowance remains as £5,000 per annum for 2024/25.
The allowance is limited to businesses and charities, as well as connected companies with an employer Class 1 national insurance liability in the previous tax year of £100k or less.
In addition, the employment allowance is operated as de Minimis State aid. In these circumstances, employers must have space to accommodate the full £5k employment allowance within their relevant de minims limit. Full details of the criteria can be found on the attached link: –
https://www.gov.uk/claim-employment-allowance/eligibility
If you think you may be entitled to the allowance, speak to your payroll contact if you want to claim for 24/25.
National Insurance Relief
• Veterans National Insurance Holiday – employers NIC relief will continue to be available from April 2024 to employers of qualifying veterans.
• Freeports National Insurance Holiday – came into effect from 6 April 22 and will continue to be available from April 2024.
• Apprentice National Insurance Relief – available to employers if an apprentice is under 25, on an approved UK government apprenticeship and earns less than £967 per week. If using this relief, your payroll contact must be advised once the apprenticeship ends to avoid any underpayments.
• Investment Zones – 13 new investment zones launched across the UK, Liverpool City Region being one of these. This allows a reduction in the rate of employers NIC like freeports.
HMRC PAYMENTS – PAYING PAYE BY DIRECT DEBIT
A reminder there is an added function so employers’ can pay their PAYE liabilities by direct debit. You only need to set this up once and payment will be automatically collected going forward.
This is restricted to employers only and there is no scope for agents to do this on your behalf.
HOW CAN YOU SIGN UP FOR THIS?
This service can be access through Pay employers’ PAYE or through the business tax account dashboard.
Payrolling Benefits
Payrolling Benefits will become mandatory from April 2026.
If you intend to start payrolling benefits prior to this and don’t already have an agreement in place with HMRC, you need to register before the start of 6 April 2024. You can currently payroll all benefits except employer provided living accommodation and beneficial loans so be aware you will still need to submit P11D’s if any of these apply.
https://www.gov.uk/guidance/paying-your-employees-expenses-and-benefits-through-your-payroll
Salary Sacrifice
A salary sacrifice arrangement can increase an employee’s net pay, as well as reducing the amount of National Insurance employers must pay.
Employees agree to forego part of their salary in return for non-cash benefits which can enable tax and national insurance savings.
Since April 2017 HMRC have restricted what can be offered via salary sacrifice but examples that can be effective are pensions, ultra-low emission cars, cycle to work schemes, holiday purchase schemes.
Careful consideration is also needed to ensure any salary sacrifice scheme does not reduce an employees pay below minimum wage.
If you are interested in implementing a salary sacrifice scheme, do get in touch for further advice.
Holiday Pay
Changes to the Working Time Regulations were introduced from the start of this year, simplifying calculations of holiday pay for irregular hours and part year workers.
For leaver years starting on or after 1 April 2024, these worker categories will now have their holiday pay calculated as 12.07% of actual hours worked for a pay period.
Further guidance is available via the attached link.
https://www.gov.uk/government/publications/simplifying-holiday-entitlement-and-holiday-pay-calculations/holiday-pay-and-entitlement-reforms-from-1-january-2024
Pension Re-enrolment & Declaration of Compliance
Automatic re-enrolment occurs every 3 years and is similar to the duties conducted at your pension staging date. Employees must be assessed and re-enrolled into the pension scheme if applicable. In addition, employers have an obligation to complete a Declaration of Compliance, this must be submitted no later than 5 months after your re-enrolment date. You will be fined if you fail to complete this accurately and on time.
Your payroll contact can provide a quote for processing the Declaration on your behalf or you can complete this via the attached link.
https://www.thepensionsregulator.gov.uk/en/employers/re-enrolment
If you would like any further information, please get in touch.