The Government has pledged to shield workers from an increase in National Insurance Contributions (NIC) and Income Tax.
Unfortunately, the same protections do not extend to employers who have seen a significant increase in the costs associated with employees.
Employer NICs have increased and this, coupled with increases to National Minimum Wage and National Living Wage, have left employers in a challenging position regarding their payroll expenses.
Changes in employee expenses
Your NIC has now increased to 15 per cent, and the threshold where you need to start paying has fallen to £5,000.
At present, the rates of National Living Wage and National Minimum Wage are:
As your employees may find themselves on a variety of different rates of pay, it is important to stay vigilant to ensure that your approach to payroll remains compliant.
In particular, businesses that employ younger staff members need to track their employees’ birthdays.
This will provide a greater benefit than knowing when to pass a card around the workplace for everyone to sign.
When an employee ages into a higher pay bracket, it is expected that they will be paid the new amount from their birthday.
This will likely make them incur to rates of pay during one pay period.
While it is possible to manually track the different expenses incurred by hiring and working with younger staff members, it may be time to consider automating or outsourcing your payroll.
If you need to consider any payroll exemptions, then it is even more important to get a solid grasp of payroll systems – or find someone who is an expert.
Payroll exemptions
Some specific benefits and payments may be exempt from payroll tax calculations.
The three main exemptions are:
The mileage allowance payments for cars and vans are 45p per mile for the first 10,000 miles and 25p per mile thereafter.
This can help reduce the cost of fuel and the general costs associated with travel for work.
Trivial benefits are exempt from tax if:
The core determining factor is centred on the gift being infrequent, thus not a typical work expense.
If training directly relates to an employee’s job, it can be conducted without incurring tax.
The training can be considered eligible if it improves skills or knowledge directly related to an employee’s function.
Whether it is the standard considerations of keeping up with wages, or additional considerations brought about by exempt costs, getting professional guidance with payroll will ensure that you remain compliant.
Contact our team today to ensure your payroll processes are fully compliant with the changes to employee expenses.
