The Chancellor presented his Budget to parliament yesterday, there is much of interest to us in the payroll world. As is the case nowadays, some of the announcements are made in advance and some of the announcements cover the upcoming tax year and some the following tax year.

Here is a quick summary of payroll related changes and some that will be of interest to many readers!

Income Tax

Good news for all taxpayers, personal allowances will increase to £12500 from 6 April 2019, a year earlier than planned. The personal allowance represents the amount all taxpayers receive against their income before tax is paid.  The Higher Rate threshold, the level at which taxpayer pay the higher rate of tax of 40%, will also increase on 6 April 2019 to £50000.

Living Wage

The living wage will increase from 6 April 2019 from the current rate of £7.83 to £8.21. The National Minimum Wage rates will increase in line with inflation.

Employment Allowance

The Governments’ intention is to target the £3000 employment allowance at smaller employers. The employment allowance can currently be claimed by the vast majority of employers against their employers NIC bill. From 6 April 2020 the allowance will only be available to employers with an employers’ NIC bill below £100000 in the previous tax year.

Apprenticeship Levy

Very few changes here, although good news for those employers that so not qualify to pay the levy. Such employers currently pay 10% towards the cost of apprenticeship training, this charge will drop to 5%, a substantial saving

Off Payroll Intermediaries (IR35)

One of the most difficult and contentious areas for employment status in recent times. I will put out a more detailed blog on this because it is such a wide ranging subject. However, following a consultation period, the Government have announced that ‘deemed employment’ rules will apply to the private sector in respect of workers working through their own Limited Company but should be taxed as employees from 6 April 2020. Onto slightly less important matters, or not as the case may be, beer cider and spirit duty has been frozen, May help a little for the Christmas party. Fuel duty has also been frozen for the 9th year running.

For more details please contact Paul Chappell on 03331 123456

Written by Paul Chappell
Published on October 30, 2018