Payroll can be a very rewarding and satisfying job, especially because everyone likes to be paid on time and accurately!
Communication is vital to get things right and it is worth remembering that we all have a part to play in ensuring that personal changes and information are disclosed to “Payroll and Employers” as soon as possible. Changes in
- addresses
- marital status
- maternity/paternity
- sickness
- pensions
- payrolled benefits and
- tax codes
are all factors that could affect the net pay paid into your bank, so if up to date information is not available it could be costly.
Useful facts and information for Payroll and Pensions Tax Year 2020
Tax Free Allowance is £12,500 per annum and the Basic Tax code 1250L.
The National Insurance Contributions (NIC) Primary (PT) and Secondary (ST) Threshold are £792 and £739 per month respectively. This is the level of earnings where you do not have to pay Employee/Employer NIC.
Find out more information about Rates and Thresholds here.
Minimum Wage Rates have also gone up from April 2020:
The Basic pay rate for anyone 25 years and over is now £8.72 per hour (see above link for other ages and apprentice pay rates).
For anyone paying back Student Loans from this tax year there is also a new category for “Post Graduate Loans” and Recovery will be at 6%. Anyone repaying Student Loan repayments Plan 1 and Plan 2 will continue repaying these at 9%. So it is possible that some employees will be paying Student Loans and Post Graduate Loans simultaneously.
Paying HMRC for Pay as you Earn (PAYE) and NIC is now much easier with the majority of people using online facilities and paying by BACS. However, please take care when paying HM Revenue & Customs (HMRC) to ensure the Accounts Office Reference is always used and that BACS payments should reach HMRC as a “cleared” Bank payment by the 22nd Monthly and not ON 22nd Monthly (Or Quarterly if applicable).
This issue has caused some automatically generated letters to go out claiming payment has not been made on time.
Please also be aware that HMRC charge interest on a daily rate for any late payments.
Auto enrolment thresholds for 2020-2021
Auto Enrolment Pensions Minimum Contributions have remained at 3% for Employers and 5% for Employees from April 2020.
More detailed information can be seen on the Pension Regulator website
| 2020 – 2021 | Annual | 1 week | Fortnight | 4 weeks | 1 month | 1 quarter | Bi-annual |
| Lower level of qualifying earnings | £6,240 | £120 | £240 | £480 | £520 | £1,560 | £3,120 |
| Earnings trigger for auto enrolment | £10,000 | £192 | £384 | £768 | £833 | £2,499 | £4,998 |
| Upper level of qualifying earnings | £50,000 | £962 | £1,924 | £3,847 | £4,167 | £12,500 | £25,000 |
Payroll has certainly come a long way from handwritten wage slips and putting cash in little brown envelopes for pay days. The new Digital era has enabled us to deal with HMRC/Auto Enrolment Pensions/Yearly Tax changes/ Employment regulations quicker, more accessible and should make our lives less stressful. However, using the internet has its risks and precautions are necessary as ever dealing with private information, hence the GDPR regulations currently in place.
Paperless Payroll will be the way forward with email reporting, payslips, and BACS payments already in place. Perhaps even a Hologram for a “Virtual” Payroll Person to replace me will be the next development.
Need Assistance?
RPP Accountants specialise in payroll services and can provide expert advice.
If you would like assistance with your payroll services please contact us or to speak to a member of our team.