The 6th April 2020 brings the start of the new payroll year and employers should be aware of a number of changes in the legislation. Read our latest payroll update to get an overview of the areas that you will need to consider.
In this update, we cover the latest on:-
- Minimum Wage Increases
- EU Settlement Scheme
- National Insurance Bands and rated for 2020/21
- Statutory Payments
- Employment Allowance increase
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 increase on 1 April as follows:
With effect from |
Aged 25 & over |
Aged 21 - 24 |
Aged 18 - 20 |
Aged 16 and 17 and over compulsory school age but under 18 |
Apprentices who are either under 19 or over 19 & in their first year of apprenticeship |
1 April 2020 |
£8.72 |
£8.20 |
£6.45 |
£4.55 |
£4.15 |
Employers must check the hourly pay rate for each employee to ensure that the correct amount is being paid based on the age of their employee. The ‘voluntary living wage’ is calculated based on the basic living cost in the UK. The Living Wage Foundation state that the UK living wage for outside London is £9.30 an hour and the London rate is £10.75 with effect from 1 April 2020.
Please note that it is a criminal offence not to pay your employees the National Living Wage or National Minimum Wage. Employers who fail to pay the National Minimum wage may be liable to a financial penalty of up to 200% of the arrears owed to the workers.
National Insurance bands and rates for 2020/21
National Insurance thresholds will rise from 6 April 2020 giving a typical employee an additional £104 in 2020/21. The new National Insurance annual rates are as follows:
Lower Earnings Limit |
Primary Threshold |
Secondary Threshold |
£6,240 per year |
£9,500 per year |
£8,788 per year |
Statutory Payments
Statutory payments are due to increase for 2020/21.
- The Statutory Sick Pay (SSP) Rate will increase from £94.25 to £95.85.
- The Statutory Maternity Pay (SMP) and Statutory Paternity Pay (SPP) Rate and Statutory Adoption Pay (SAP) Rate will increase from £148.68 to £151.20.
- New entitlement to parental bereavement leave and pay (PBL and SPBP)
The government has announced it will introduce a new workplace right to parental bereavement leave and pay for parents who lose a child under the age of 18, including those who suffer a miscarriage from 24 weeks of pregnancy. The flat weekly rate is £151.20 or 90% of average weekly earnings, whichever is lower. Please note that this applies to Great Britain only – not to Northern Ireland.
Employment Allowance increase
From April 2020 the maximum Employment Allowance will increase by £1,000 to £4,000. This means eligible businesses and charities will be able to claim a greater reduction on their Secondary Class 1 National Insurance contributions liability. Employment Allowance can only be claimed if the Employer’s total secondary Class 1 NIC contribution liability is less than £100,000 in the tax year before the claim.
However, from 6 April 2020 employers will need to introduce checks to ensure they are still eligible to claim employment allowance, as the criteria has now changed as follows:
The allowance is NOT available for:
- Anyone who employs someone as a nanny or for household or domestic duties unless the employee is a care and support worker.
- Employers already claiming through a connected business or charity.
- Public authorities which are not charities.
- Employers who carry out functions either wholly or mainly of a public nature, unless they have charitable status – NHS Bodies, GP surgeries.
- Service companies cannot claim in respect of deemed payments of salary.
- Employers whose employer’s total secondary Class 1 NIC contribution liability was greater than £100,000 in the tax year before the claim.
If you have any questions about your payroll, please do get in touch with the DRG Chartered Accountants Payroll Team. We would be delighted to hear from you.
Further information
National minimum wage rates
Employment Allowance increases
Employment Allowance Eligibility
Apprenticeship Levy Guide
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.