New tax year: Key changes for 2020/21

As well as dealing with the ongoing impact of coronavirus, as a business owner you need to be aware of changes due to new employment legislation coming into force in April 2020. Key changes affecting employers are summarised below:

National Minimum Wage, National Living Wage

The National Minimum Wage and National Living Wage increase came into effect on 1st April 2020. The minimum wage rate varies depending on your age and whether you’re an apprentice but the Government has made it clear that employers must continue to pay at least National Minimum Wage during the COVID:19 pandemic. View the current rates for 2020/21 NMW here.

Statutory Sick Pay

You can claim £95.85 per week Statutory Sick Pay (SSP) if you’re too ill to work. It’s paid by your employer for up to 28 weeks.

If you cannot work while you are self-isolating because of coronavirus (COVID-19), you could get SSP for every day you’re in isolation. You must self isolate for at least 4 days to be eligible.

If your illness is not related to coronavirus (COVID-19), you must be eligible for SSP and have been off work sick for 4 or more days in a row (including non-working days) to get SSP.

You cannot get less than the statutory amount. You can get more if your company has a sick pay scheme (or ‘occupational scheme’) – check your employment contract. Full HMRC Guidance here.

Statutory Sick Pay (SSP) for COVID-19 related sickness and self-isolation

Employees must receive any Statutory Sick Pay (SSP) due to them if they need to self-isolate because:

  • they have coronavirus
  • They’ve been told to self-isolate by a doctor or NHS 111
  • they have coronavirus symptoms, for example a high temperature or new continuous cough

Statutory Sick Pay Reimbursement Businesses with less than 250 employees (as of February 28th 2020) will be refunded in full up to 14 days Statutory Sick Pay (SSP) per eligible employee who has to be off work due to Coronavirus. SSP will be payable form Day 1 due to COVID-19 rather than the usual Day 4. Employers should maintain records of staff absence and employees are able to obtain an ‘isolation note’ from NHS 11 online, rather than visiting a doctor here : https://111.nhs.uk/isolation-note/. For COVID-19 cases this replaces the usual need to provide a ‘fit note’ (sometimes called a ‘sick note’) after 7 days of sickness absence.

Postponement of Off-payroll Working

The government has announced it is postponing the reforms to the offpayroll working rules (IR35) from April 2020 to 6 April 2021. This is a deferral of the introduction of the reforms, not a cancellation. … The policy will be introduced on 6 April 2021 representing a 12-month delay.

The off-payroll working rules do not introduce a new tax. They are designed to ensure individuals working like employees but through their own personal service company (PSC), pay broadly the same income tax and National Insurance Contributions (NICs) as individuals who are directly employed. These rules are commonly known as ‘IR35’.

There are some important changes to these rules taking place from 6 April 2021. These changes will apply to all payments made for services provided on or after 6 April 2021. Get it right for 2021 – download HMRC’s guidance.

Statutory Parental Bereavement Pay (SPBP)

Statutory Parental Bereavement Pay (SPBP) From 6 April 2020, parents have a right to statutory leave if they suffer the loss of a child under the age of 18 or suffer a stillbirth from 24 weeks of pregnancy. Employed parents can claim 2 weeks paid leave for this period, subject to meeting eligibility criteria.

  • Leave can be taken as a two week period or split into two separate individual weeks
  • Employees can have more than one instance of SPBP at anytime
  • Eligibility starts from 24 weeks of pregnancy
  • Must be taken within 56 weeks of death
  • 26 weeks of employment service is required for eligibility.

The Parental Bereavement Leave and Pay Regulations, which will be known as Jack’s Law

Holiday pay calculation changes 2020

From 6 April 2020 the reference period for calculating holiday pay for variable hours workers will increase from 12 to 52 weeks. The 52-week reference period will function in the same way as the previous 12-week period: Employers must count back across the last 52 weeks that the employee has worked and received pay.

Calculating holiday pay for workers without fixed hours or pay – Download HMRC’s guidance here.

Employment Allowance Increase

From 6 April 2020, this measure increases the maximum Employment Allowance by £1,000 to £4,000 from April 2020. 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 increases for National Insurance from April 2020- Who will be affected?

Increase in Pension Lifetime Allowance

The lifetime allowance, the overall limit of tax privileged pension funds an individual can accrue during their lifetime, will increase in line with September’s inflation figures of 1.7 per cent for 2020-21, rising to £1,073,100, from £1,055,000. Since then it has edged up in line with inflation to the current £1.055m.

COVID - 19 Support Hub

COVID-19 is at the forefront of everyone’s minds at the moment. We’ve put together one place you can find the latest information and support for what you can do as a business owner to get you through this challenging time.

2020/21 Tax Card

Every year we provide our clients with a Tax Rate Card – so all the changes to legislation are handy in one place. If you’d like to order a printed copy email our team directly,  a copy will be set to your address. You can download your digital copy now by clicking ‘Download Tax Card’.

Additional support is available to you during this challenging time.

Contact our Payroll & HR Director, Emma Parry on 01942 816 512  Ex 2207