2020/21 changes for employers

24 January 2020

Despite all the preparations for Brexit, the Government has still had time to push through a number of changes that will affect employers from 6 April 2020. The most important changes are summarised below.

Off-payroll labour

Private sector organisation can fall within the off-payroll labour/IR35 rules where engagements with contractors end or start after 6 April 2020. You can read more on all the issues and implications here.

Termination and testimonial payments

From 6 April 2020, a Class 1A NIC liability will be payable on any part of a termination award or sporting testimonial payment that is liable to income tax and not otherwise subject to NIC. This new rule aligns the NIC treatment with the income tax rules for these types of payments. Read more.

Employment allowance changes

From April 2020 the allowance can only be claimed by small employers – read more

Minimum wage rates

All rates will increase from April as below. The increase in the main rate equates to a pay rise of 6.2% for employees and they will also benefit from the proposed increase in the starting rate threshold for NIC.

Hourly rate  Apprentices aged under 19 and/or in first year  Under 18 18-20 21 -24 25 and over
From 1 April 2019 £3.90 £4.35 £6.15 £7.70 £8.21
From 1 April 2020 £4.15 £4.55 £6.45 £8.20 £8.72

Company cars

The UK is adopting the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) for establishing the CO2 emissions figures for all new cars registered from 6 April 2020. This means that the taxable benefit in kind figure for new company cars will be based on the new emissions figures. These rates will generally be reduced by 2% for 2020/21 so that there is no distorting effect on the car market. The reduction will be phased out, ie rates will be 1% higher in 2021/22 and return to pre-announced rates by 2022/23.

There are also major changes to the benefit in kind charges to electric and hybrid cars that will make them more attractive to employees – read more

Holiday pay for flexible working hours

From April 2020, for workers who’s hours differ from week to week, the holiday pay reference period is increased from 12 to 52 weeks by the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018. Therefore, when calculating holiday pay for such workers, employers will need to look back over the past 52 weeks to calculate their average weekly pay. Weeks where the worker had no earnings must be excluded but the total reference period (during which the 52 counted weeks fall) cannot exceed 104 weeks.

Employment statements

As part of its response to the Taylor Review of Modern Working Practices, the Government has introduced new employment rights for workers. When employers take on a new worker that has ‘dependent contractor’ worker status (rather than a full employee) after 6 April 2020, perhaps a gig economy worker, that individual must be provided with a written statement setting out at least:

  • Their normal working hours and required working days and an explanation of how their hours or working days may vary
  • Details of any probationary period
  • What their paid leave entitlements are (eg maternity, paternity etc but not holiday or sick)
  • What other benefits they are entitled to
  • A description of any training requirements or provision and who will pay for it.

Bereavement leave

Parents and primary carers who have been employed for at least 26 weeks and who lose a child after 6 April 2020 will be entitled to two weeks paid bereavement leave. This will apply to all children up to the age of 18 and where parents suffer a still birth from 24 weeks of pregnancy. The leave must be taken within a 56 weeks of the child’s death but can either be taken in one block or as two separate blocks of a week.

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