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19th June 2019

UK Changes bring challenges for Payroll

With the election of a new Prime Minister just weeks away, and the Brexit deadline looming in October, payroll teams have new challenges coming soon. Many current polls are predicting Boris Johnson will be elected as the next Prime Minister of the UK. His views on Brexit could have a lasting impact on payroll and tax for many organisations.

Irish Backstop
The issue of a “hard border” in Ireland has been an issue since the beginning of Brexit talks. Boris Johnson has said he would like to remove the “backstop” from the Brexit negotiations, but the backstop provides assurances that a hard border will not exist in the future. For people living and working in border communities, a hard border in Ireland would be a severe consequence of Brexit. The hard border would also impact employers and employees who would have to cross the border or find other employment options going forward.

Tax Implications of Brexit
Many candidates for Prime Minister have announced changes to taxes based on income. The impact to payroll teams would be managing the new tax thresholds, ensuring compliance with new regulations, and identifying employees that would be impacted by the new changes. Boris Johnson has stated that he would like to increase the 40% tax threshold so that people making over £80,000 would be subject to the tax versus the current £50,000 per year threshold.

Other initiatives discussed by all of the candidates include healthcare and education spending, which can potentially impact organisations as well. Once a new Prime Minister is selected, the consequences for employers will be more clear, but for now payroll teams should prepare for potential changes and assess how the organisation will handle them.

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