Changes to Legislation from April 2018

27 February 2018

There are various changes coming into effect from April 18, which will affect your payroll and employees.

The first of those changes are an increase to the National Minimum Wage and Living Wage as follows:

  • Apprentices £3.70
  • 16 to 17 £4.20
  • 18 to 20 £5.90
  • 21 to 24 £7.38
  • 25 and over £7.83

The annual student loan thresholds will increase as follows:

  • Plan 1 £18,330.00
  • Plan 2 £25,000.00

Statutory Sick Pay will increase from £89.35 per week to £92.05 per week.

Statutory Maternity, Adoption, Paternity and Shared Pay will increase from the first Sunday in April to £145.18 per week.

The Lower Earnings Limit (LEL) will increase to £116.00 per week.

The Apprenticeship Levy Allowance remains at £15,000.00 and the Employment Allowance at £3000.00.

Changes to childcare vouchers will effect employees that want to sign up for childcare vouchers. From April employees will not be able to join the current scheme and will automatically go into the new scheme. The current scheme sees childcare vouchers deducted through payroll where the new scheme will be an online account that employees pay into. For every 80 pence paid by the employee the government will pay 20 pence with the maximum being £10,000 (£8000 by the employee and £2000 by the government). If you have employees in the current scheme they can remain in it until their child turns 15, however if they leave the scheme or change employer they will not be able to re-join.

Changes to the tax system from April 18 will see significant changes on how Income Tax is calculated in Scotland.

The Scottish government will introduce a tax system that has five tax bands. The personal allowance is reserved and set by HMRC which will remain at the same rate as the rest of the UK, which for the new tax year will be 1185L.

The new bands, band names and rates are as follows:

Bands

Band Name

Rates (%)

Over £11,850* - £13,850

Starter Rate

19

Over £13,850 - £24,000

Basic Rate

20

Over £24,000 - £43,430

Intermediate Rate

21

Over £43,430 - £150,000**

Higher Rate

41

Above £150,000**

Top Rate

46

  

For the rest of the UK the tax bands will increase as follows:

Bands

Band Name

Rates (%)

Over £11,850* - £46,350

Basic Rate

20

Over £46,350 - £150,000

Higher Rate

40

Above £150,000**

Additional Rate

45

 

* Assumes person is in receipt of the Standard UK Personal Allowance

**Personal Allowance is reduced by £1 for every £2 earned over £100,000

 

Operational Remuneration Arrangements (OpRA)

New Rules came into effect from 6th April 2017 where employers that provided Benefits in Kind (BIK) or car allowances to employees via salary sacrifice / flexible arrangements were largely withdrawn.

The rule is designed to readdress the Income Tax / National Insurance advantages that arose when certain non-cash benefits were provided as part of a salary sacrifice / flexible arrangement.

The following BIKs are excluded from the rules and are not affected even if provided via an OpRA:

  • Pension savings under registered and qualifying overseas plans;
  • Tax Exempt Childcare (includes qualifying nursery provisions and childcare vouchers);
  • Cycle-to-work schemes.

If the following BIKs were entered pre 6 April 2017 then ‘grandfathered’ rules apply until 6th April 2021:

  • Living Accommodation
  • School Fees
  • Company Cars / Vans

Care should be used when dealing with any grandfathered OpRA as any “variation” to the terms may lead to the grandfathering status being lost when the variation takes place and the benefit is then under new rules and cannot be under OpRA.

Any other benefits that were entered pre 6th April 2017 are not impacted until 6th April 2018. If employers have placed employees into an OpRA scheme post 6th April 2017 that should not have been, then this would require to be disclosed to HMRC.

If you require any further information or have any questions regarding statutory payments, please contact payrollclientsupport@aab.uk or your usual AAB contact.

 

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