Payroll Matters for the New Tax Year

 

There are changes for employers to be aware of at the start of the new tax year.

 

New PAYE tax codes

HMRC are in the process of issuing 2018/19 tax codes to employers for their employees. You are unlikely to receive a new code for all of your employees’ but this doesn’t mean that you will carry on using the same code for 2018/19 as you were using for 2017/18.

Where you don’t receive a Notice of Coding (P9(T)) or electronic equivalent you should amend each employee’s tax code for the first pay day after 5 April 2018 as follows:

  • For any tax code ending in L, add 35 (eg 1150L becomes 1185L)
  • For any tax code ending in M, add 39
  • For any tax code ending in N, add 31

If you don’t receive a Notice of Coding (P9(T)) or electronic equivalent and the employee’s code doesn’t end in L, M or N you should continue to use the same code as 2017/18.

 

The National Minimum Wage

The National Minimum Wage (NMW) rates are increasing from 1st April 2018:

Age Group April 2017 April 2018
National Living Wage (25+) £7.50 p.h. £7.83 p.h.
NMW (21-24) £7.05 p.h. £7.38 p.h.
NMW (18-20) £5.60 p.h. £5.90 p.h.
NMW (16-17) £4.05 p.h. £4.20 p.h.

 

 Auto-enrolment pension contributions

Minimum contributions that employers and employees pay into your automatic-enrolment pension scheme will increase from 6th April 2018 and then again from 6th April 2019

                                                                          April 2017    April 2018    April 2019

Employer Minimum contribution                        1%                    2%                     3%

Employee contribution                                        1%                    3%                     5%

Total Minimum contribution                                2%                    5%                     8%

The total minimum contribution can be made up using any combination as long as you, as the employer, contributes at least 2%, for example, it could consist of 5% employer contribution and 0% employee contribution or 4% employer and 1% employee.

 

If you would like to discuss any of the above or any other matter, please speak to your usual contact.

 

The above should not be considered to be taxation advice and no responsibility for loss occasioned to any person acting or refraining from action as a result of the above can be accepted by the company.