Donald Reid Group

Payroll Changes From April 2018

Read our latest payroll update to find out more about forthcoming changes in the childcare voucher scheme and increases in pension contributions and minimum wage bands, GDPR and the Apprenticeship Levy.

In this update, find out more about:

If you wish to discuss any of the issues covered in this payroll update, please do get in touch with our Payroll Team.

Tax-Free Childcare replaces the Childcare Voucher Scheme

Tax-Free Childcare will replace the existing Childcare Voucher Scheme from the 6 April 2018. Parents already receiving childcare vouchers will be able to continue to use them after April if their current employer continues to offer the voucher scheme, but no newcomers will be accepted. Tax-Free Childcare was launched last April and has gradually been rolled out over the past 12 months. This is a new government scheme which will provide help for parents with their childcare costs. Whereas childcare vouchers have been processed through the payroll, the new system will be administered by parents through an online account which can be accessed via HMRC’s website. You may be eligible for this scheme if both you and your partner are in work and earning over £120 per week. If either of you earn over £100,000 per annum you will not be eligible. Tax Free Childcare offers up to £2,000 a year per child (the government will pay £2 for every £8 you pay in up to the £2K limit) to help with the costs of childcare. The money can go towards a whole range of regulated childcare, whether nurseries, childminders, after-school clubs or holiday clubs. You can find out more on the Childcare Choices website.

Pension Contribution Increases

Workplace pension contributions will be going up for both the employee and employer. The minimum employee contributions will go from 1% to 3% and the minimum employer contributions will go from 1% to 2%. These changes will take effect from the April payroll. Further increases will take place from April 19 as per the table below:

DATE EMPLOYEE MINIMUM TOTAL MINIMUM CONTRIBUTION
06/04/18 to 05/04/19 3% 5% (including 3% staff contribution)
06/04/19 Onwards 5% 8% (including 5% staff contribution)

Minimum Wage Increases

The minimum wage that your staff are entitled to depends on their age and whether they are an apprentice. National Minimum Wage rates for all ages and apprentices will be going up on 1 April 2018 as follows:

YEAR 25 and over 21 to 24 18 to 20 Under 18 Apprentice
April 2017 (current) £7.50 £7.05 £5.60 £4.05 £3.50
April 2018 £7.83 £7.38 £5.90 £4.20 £3.70


GDPR and the introduction of Portal Payslips

From May 2018, the Payroll Department will no longer be able to email out payslips directly to employees. This is because email is not accepted as being a secure way of transmitting information under GDPR. To comply with GDPR regulations DRG will be introducing Sage Online Payslips which will allow employees to access their payslips from any device 24/7 via a secure online portal. The payroll software will link directly to the portal providing a simple and straightforward way to produce the payslips. This should save time for all involved and eliminate the problem of forgotten passwords. Employees will set their own password when they log onto the portal for the first time and will be able to auto generate new passwords as and when necessary. In the near future Sage plan on providing online P60s through their portal along with a safe place for sharing payroll reports between the Payroll Department and the employer.

Are you making the most of your Apprenticeship Levy funds?

Since the introduction of the Apprenticeship Levy in April 2017, employers with a pay bill more than £3 million per annum have been making apprenticeship levy contributions each month through the PAYE process. Levy paying employers should make sure that they have registered for a Digital Apprenticeship Service Account so that they can make the most of their funds. Remember, HMRC provides a 10% top up, so for every £1 that an employer puts into their account, the government provides an additional 10 pence. Levy funds can be spent on apprentice training as long as the training meets an approved standard and the employee meets the apprentice eligibility criteria. Funds can only be used towards the costs of apprenticeship training. They cannot be used on other associated costs such as apprentice wages, travel and subsidiary costs or the costs of setting up an apprenticeship programme. When the apprenticeship starts, money will be automatically taken from your digital account and sent to the training provider.

Employers who aren’t paying into the Levy will still be able to obtain training under a co-investment scheme. This means your organisation will have to pay 10% towards the cost of training, with the government taking on the other 90% (up to the funding band maximum).

Please note that your levy funds will expire 24 months after they enter your account unless you spend them on apprenticeship training, so make sure you are making the most of your money!

If you would like to discuss these changes and any other issues affecting your payroll, please do get in touch with the Payroll Team at DRG Chartered Accountants. We would be delighted to hear from you.

Further Information

Help paying for childcare
https://www.gov.uk/help-with-childcare-costs/tax-free-childcare 
https://www.childcarechoices.gov.uk/

National Minimum Wage and National Living Wage rates
https://www.gov.uk/national-minimum-wage-rates

Increases in minimum contributions for automatic enrolment pensions
http://www.thepensionsregulator.gov.uk/doc-library/increases-in-minimum-contributions-automatic-enrolment.aspx

Apprenticeship funding bands
https://www.gov.uk/government/publications/apprenticeship-funding-bands

 

 

DISCLAIMER: This information is for guidance only, and professional advice should be obtained before acting on any information contained herein. We will not accept any responsibility for loss to any person as a result of action taken or refrained from in consequence of the contents of this publication.


 

 

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