Preparing for 2019 UK Payroll Changes

Every new year brings change, but 2019 is shaping up to be a very busy year for payroll teams. There are several important regulatory changes taking place in early 2019 and beyond that will have lasting impacts on employer payroll. Getting prepared now for the upcoming changes can help ensure compliance once the new regulations take effect.

Payslip Changes: Employers will now have to provide the number of hours worked on each employee payslip beginning 6 April 2019. This will help to ensure employees understand the exact hours they are being paid for in each pay period, and will hold employers liable to ensure they are accurately paying their employees. Read more about payslip changes for 2019

Auto-Enrolment: Another increase is coming for auto-enrolment contributions beginning 6 April 2019. The phased increases will bring employer contributions up to 3% and employees up to 5%. To learn more about auto-enrolment compliance, click here

Welsh Taxation: With the introduction of the Scottish tax in 2017, taxes across the UK have become more complicated. In April 2019, the new addition of Welsh Tax Rates will complicate matters further. UK employers will now have to manage three different taxation rates covering England/Northern Ireland, Scotland, and Wales. The basic tax rate for now is the same across all countries in the UK. If the basic rate does not remain consistent going forward, pensions will become more difficult to manage across the UK. Stay tuned for more changes coming after the implementation of the new Welsh tax rate in 2019.

Student Loan Changes: Thresholds for repayment of student loans are changing in 2019. If you have employees with student loans, payroll and payslips must be accurate and show the deductions. HMRC can instruct you how to calculate and deduct the correct amounts from payroll based on the salary of the employee. To learn more about student loan threshold changes, click here

Dynamic Tax Codes: HMRC dynamic tax codes continue to create challenges for employers. Using estimated pay to determine tax codes causes issues when bonuses are paid early or mid-year, increasing the estimated amount of tax owed by the employee. HMRC has implemented dynamic codes which allow for in-year adjustments, so corrections are made in the same year. These dynamic tax codes continue to cause problems for payroll teams, increasing potential for non-compliance.

Brexit: We’ve been talking about Brexit for more than 2 years, but now the day is here – 29 March 2019 to be exact. Depending on final negotiations, if the UK is determined to be outside of the EEA there are potential impacts to data transfer and protection that could cause issues for payroll. The current free movement of capital, services and people could be altered, which would affect employers who pay employees across these new borders. The rights and status of EU citizens living in the UK will not change until 2021, but employers should prepare now for potential data issues post-Brexit. To read more, click here for our most recent Brexit update

This coming year will present challenges to effectively manage payroll in the UK. If your team is struggling to maintain compliance, or needs support, we can help. Contact us for a quick demo and see how easy payroll can be with cloud-based technology and a dedicated service team!