The final instalment of Employer Focus for 2018 provides a good opportunity to dust off our crystal ball and consider some of the key employment-related legal and tax developments expected in 2019 (and beyond).
It was confirmed in October’s Budget that April 2019 will see increases in several tax rates and allowances, including:
- The income tax personal allowance increases from £11,850 to £12,500
- The income tax basic rate band increases from £34,500 to £37,500
- National Insurance Contributions limits will be uprated:
- The lower earnings limit (LEL) increases from £116 to £118 a week.
- The primary and secondary thresholds increase from £162 to £166 a week
- The upper earnings limit (UEL) increases from £892 to £962 a week.
- The car fuel benefit multiplier increases to £24,100.
- The flat rate van benefit charge increases to £3,430 and the flat rate van fuel benefit increases to £655.
One of the things which some expected to see in 2019, but which will now not be with us until April 2020, is the extension to the private sector of the public sector off-payroll working rules. These new rules will affect medium and large businesses in the private sector that engage individuals who work through their own company – often called a personal service company or PSC. From April 2020, the responsibility for determining the tax status of such an individual will shift from the individual’s PSC to the engager. We are expecting a consultation and draft legislation on this in 2019. More information on these changes can be found in November’s Employer Focus (see here).
Two changes to NICs will also take effect in April 2020:
- Restriction of the £3,000 annual Employment Allowance to employers with an employer NIC liability below £100,000 in the previous tax year.
- Application of employer NICs to termination payments exceeding £30,000.
Salaries and deductions
Both the National Minimum Wage and National Living Wage are set to increase in April 2019. The new hourly rates will be:
- National Living Wage (workers aged 25 and over): £8.21
- National Minimum Wage:
- Workers aged 21 – 24: £7.70
- Workers aged 18 – 20: £6.15
- Workers aged 16 – 17: £4.35
- Apprentice rate: £3.90
From April 2019, employers could start to receive instructions from HMRC to deduct repayments for a Postgraduate Loan on behalf of one of their employees. Employers will need to take care when calculating deductions as the minimum earning threshold at which repayment starts depends on the type of loan(s) which the employee has taken out. More information on Postgraduate Loans can be found in September’s edition of Employer Focus (see here).
Also in April 2019, the minimum contributions for auto-enrolment pension schemes will increase for both employers and employees to 3% and 5% respectively. As is currently the case, employers can decide to cover the increase in the total minimum contributions so that their employees are not required to make higher contributions. Employers should prepare for the increase in minimum contributions early and ensure that their systems are updated for when they come into effect. More information on the rules surrounding auto-enrolment and what to do ahead of the increase in rates can be found here.
Pay-gap reporting will continue to build momentum in England, Wales and Scotland during 2019, with the following key dates to bear in mind:
- 1 January 2019: Executive pay-gap reporting comes into force - UK listed companies with more than 250 UK employees will have to report annually on the pay gap between their chief executive and their average UK worker, with the first reports due in 2020.
- 30 March 2019: Gender pay-gap reports have to be published by ‘Specified public authorities’ (government departments, the armed forces, local authorities, the NHS and state schools etc.) with 250 or more employees.
- 4 April 2019: Gender pay-gap reports have to be published by private and voluntary sector employers with 250 or more employees.
Two important changes to the information included on payslips will be introduced from 6 April 2019:
- Employers must include the total number of hours worked where the pay varies according to the hours worked (e.g. under a variable or zero-hours contract).
- Payslips must be given to workers, and not just employees.
Finally, although things have been fairly quiet following the excitement surrounding the publication of the Taylor Review of Modern Work Practices, we expect to see responses in 2019 to the four Government consultations launched in Spring 2018 (covering employment status, increasing transparency in the labour market, agency workers and enforcement of employment rights).