Understanding the Latest Payroll Changes: A Simple Guide for Small Business Owners

As we edge closer to the new tax year, it’s crucial for small business owners to stay informed about the latest changes to payroll regulations. These adjustments could affect everything from directors’ salaries to statutory paternity pay rates, holiday entitlement, and much more. In this post, we’re going to break down these updates in a straightforward, easy-to-understand manner to ensure you and your business are well-prepared for the 2024/25 tax year.

Directors’ Salaries for 2024/25

For the 2024/25 tax year, the employee tax personal allowance remains unchanged at £12,570 per year. The amount a director can earn before needing to pay National Insurance contributions will stay at £9,096 annually for single director payrolls. For businesses with more than one employee, this threshold rises to £12,570, assuming you qualify for the annual employers’ allowance.

Changes in Statutory Paternity Pay (SPP)

In an effort to provide more flexibility for new parents, paternity leave can now be split into two non-consecutive one-week periods or taken as a continuous two-week block. This leave must be taken within the first 52 weeks following the birth, offering more flexibility than the previous 8-week requirement.

Holiday Entitlement Adjustments

Holiday pay calculations have been updated for those working irregular hours or on part-year contracts. The entitlement will now be calculated at 12.07% of hours worked per pay period. If you offer more than the statutory 5.6 weeks of leave, you’ll need to adjust this percentage accordingly.

RTI Submissions & Penalties

We remind you that in order for your payroll submission to be treated as on time it needs to be filed on or before the pay date; for example, if you send in your wages for 28^th February on 1^st March this is treated as a late submission.

HMRC have now begun issuing penalties for late submission.

HMRC are also continuing to chase PAYE contributions that have not been paid on time. It is therefore important to make payment on time if you do not want HMRC’s debt enforcement to be on your case.

CIS Suffered/Deducted

As you should be aware CIS needs to be reported to HMRC on a monthly basis. Either through the filing of CIS monthly returns if you have subcontractors or through the payroll submission if you are a Limited Company who has suffered CIS. Sole Traders who suffer CIS will continue to reclaim it on their Self Assessment Tax Returns.

If we file your CIS monthly returns please ensure you are providing the information as soon after the 6^th of each month as possible and definitely before the 19^th as HMRC are particularly hot on late filing in this area. If you file your own monthly returns please send us a summary at the end of the PAYE year of the CIS you have deducted each month during that year.

For Limited Companies who suffer CIS we need details of any deductions again between the 6^th and the 5^th of each month for the preceding month so we can file the information with HMRC on a monthly basis. It is particularly important that we have all details of CIS suffered between 6^th April 2023 and 5^th April 2024 by 12^th April 2024 as the payroll final submission for the year is your only opportunity to reclaim this CIS.

2023/24 PAYE Year End

RTI filing deadlines state yearends had to be filed by 19^th April which considerably shortens the time available to prepare and file the year ends opposed to the timeframe under the old payroll system. It is therefore extremely important that you get your information to us as soon as possible. If you are a limited company and have CIS deducted from your sales we will also need this information in advance of 19^th April so we can file it on your behalf.

Failure to file on time could result in HMRC issuing penalties.

The deadline for issuing P60’s to your employees is 31^st May. We will send them to you before this date as long as we have all the information from you to complete them.

2023/24 P11D Information

The deadline for filing P11D’s with HMRC is 6^th July. If you provide your employees with benefits please let us have the relevant information by 31^st May so we can prepare the P11D’s on your behalf. The associated Class 1a National Insurance Contributions will need to be paid to HMRC by 22^nd July. As ever, late submissions and payments to HMRC can be subject to penalties and interest.

Failure to use the correct reference or bank account creates additional work because if HMRC’s automated system cannot automatically match the payment they will write to the employer chasing payment, even though the payment has been made.

Tax, National Insurance Thresholds, and Minimum Wage Increases

The tax and National Insurance thresholds have seen updates, with a notable decrease in the main rate of Class 1 employee NICs from 10% to 8%. The National Living Wage for workers aged 21 and over will also see an increase from April 1st, 2024.

We will update the minimum wage automatically if we have the employees’ hourly rate and date of birth however employers should check every payslip to ensure they are compliant.

Please inform us if any of your employees are affected. If the employee is paid a fixed amount not broken down by hours we will not know if they are paid the minimum wage and therefore will not know an increase is required unless we are advised.

For further information, please visit: https://www.gov.uk/national-minimum-wage-rates or take a look at our blog for more details https://www.helpboxuk.com/latest-minimum-wage-changes-a-guide-for-small-businesses/

Automatic Enrolment and Employment Allowance

The minimum contributions for pension auto-enrolment remain the same, with employers contributing a minimum of 3% and employees the remaining 5%. The Employment Allowance continues to offer up to £5,000 off your annual National Insurance liability.

New PAYE Software

To streamline the payroll process, we’re introducing a new system. Instead of email PDFs, you’ll receive secure links to access payslips and reports through our new employer portal, ensuring a more convenient and secure way to manage your payroll.

Wrapping Up

These updates are designed to simplify the payroll process, provide more flexibility, and ensure compliance with the latest regulations. By staying informed and proactive, you can navigate these changes smoothly and keep your business running efficiently. Should you have any questions or need further clarification, don’t hesitate to reach out or consult our blog for more detailed guides on these topics.

Remember, preparation is key to managing payroll changes effectively. Let’s make this transition as seamless as possible for your business and your employees.