Preparing for the new tax year – part 3

In this, the final of the Preparing for the new tax year blogs, the payroll areas covered are perhaps less common, but nonetheless very important, and mistakes and non-compliance can lead to financial and reputational costs.

Apprentice levy and funding

There will be changes to the apprenticeship transfer allowance. From April 2019 the amount that can be transferred from a levy-paying employer to a non-levy paying employer increases to 25%.  The number of employers to who the funds can be transferred is unlimited.

It is worth noting though that the employer sending the transfer funds cannot receive funds from another employer, and the employer receiving funds cannot in turn transfer funds to another employer.

Currently non-levy payers must pay at least 10% of the apprenticeship training costs. This is paid directly to the training provider. In the Autumn Budget last October it was announced that the co-investment percentage would decrease from 10% to 5%. Details have yet to be announced but the change is expected sometime this year.

Finally, it is proposed that training providers will soon be able to create apprenticeship cohorts in the employer’s online service account on the employer’s behalf. The employer has first to grant the training provider access, but once done, all necessary administration can be done by the training provider. For more information on this please see the February 2019 Employer’s bulletin.

As apprenticeship funding is a devolved matter all of the above relates to employers in England only.

Changes to the benefits regime

Over the past few years there have been big changes to the benefits regime and below are some of the updates for 2019-20.

Cars

In the tax year 2019-20, there will be changes to the fuel rates and charges and to the CO₂ emission rates. There is not the space to outline the annual increases to benefit rates that the government announces, but there is space to highlight a few non-regular changes.

The good news is that the current 100% First Year Allowance on low emission cars will be maintained until April 2021. The bad news is that eligibility for this was reduced in April 2018 to cars with CO₂ emissions of 50g/km or less. The capital allowance threshold for business cars was reduced to 110g/km at the same time.

For cars emitting more than 75g/km there will be an increase of 3%, with a 3% differential between 0-50 and 51-75 g/km bands and between the 51-75 and 76-94 g/km bands.

There will be many additional updates that you should keep up to date with, such as new fuel types.

Optional remuneration

April 2017 saw the introduction of the Optional remuneration arrangements (OpRA). The arrangements saw the introduction of definitions ‘type A’ (salary sacrifice) and ‘type B’, other arrangements.

As just a reminder, most national insurance contributions (NICs) and tax advantages have been withdrawn. The only benefits that retain the NICs and tax advantages are:

• Pension contributions and advice
• Employer Supported Childcare (childcare vouchers)
• Cycle to work
• Ultra-low emission vehicles (at or below 75 g CO₂/km_.

There are also transitional provisions for cars and vans, accommodation and school fees.

From April 2019

• ancillary benefits such as insurance, MOT and such will remain tax exempt when not provided through an OpRA.
• The capital contribution towards a taxable car will be adjusted if the car is available for only part of the tax year.

Payrolling

Any employer that is registering for voluntary payrolling of benefits for the first time must do so before 6 April 2019. Once registered though the process does not have to be repeated unless the items payrolled change as there is an automatic carry forward each year.

Termination payments

April 2018 saw several changes to the treatment of termination payments. April 2019 will see more changes in that the amount calculated by the post-employment notice pay (PENP) . They will now also become subject to employers’ NICs. However,

• the employee will continue to have full exemption on any termination payments
• Secondary NICs liability will be due on amounts above £30,000 (the maximum tax free amount), but this additional cost has been deferred to April 2020.

It is to be hoped that no more changes are forthcoming in the near future as there is more than enough to be getting on with.

CEO pay ratio

For organisations with 250 or more UK employees, this is already in force as it applies to companies whose fiscal year begins on or after 1 January 2019. The report measures the Chief Executive Officer’s total pay as a ratio to

• the median (50^th percentile) employee’s remuneration
• the 25^th percentile employee’s remuneration
• the 75^th percentile employee’s remuneration

using the full-time equivalent remuneration of the company’s UK employees. There is a choice of methodology to use when calculating the ratios.

As stated, this is already in force so if no action has been taken on this yet, it is advised to ‘get a wiggle on!’ and start preparing.

Data Protection Act 2018 (incorporating GDPR)

This is now a ‘business as usual’ item. However, that does not mean that it can be ignored, or the assumption made that all staff are conversant with the requirements of the act or are meeting the requirements. ‘Refresher’ training should be regular as should reviews of workplace practices, both formal and informal.

Never take for granted that all staff are knowledgeable of the act or that they are conforming to the policies and procedures laid out. Regular training, discussions during team meetings and updates to employee contracts should be considered. A data breach is potentially damaging to the organisation’s cash flow, reputation and customer loyalty. Data protection should never be taken lightly.

Conclusion

In this last of three blogs are highlighted some of the less regular changes and increases that affect payroll. For a government that is otherwise preoccupied it has somehow found the time to play with payroll.

For more detailed information on any of the above CIPP runs half day and one day courses that cover all payroll matters.

Julie Hodgskin is a fellow member of AAT, runs a licensed accounting practice and is a technical materials author for CIPP.