PAYROLL BUDGETING - 17.03.2017

Costing the payroll budget

Apprenticeship levy. This will add 0.5% to your bottom line costs for 2017/18 if you’re liable. So think of employers’ NI now costing you 14.3%. However, it’s not NI’able pay the levy’s based on but a new definition of “gross pay liable to employers’ NI” (“paybill” is the government shorthand). If that’s £3m or more for 2016/17, or likely to be for 17/18, you’re in scope.

Pro advice. If you’re part of a group of companies or charities you have to aggregate the paybills so even if you’re way below £3m you’ll be caught.

National minimum wage. This year there’s an increase in April for all age bands rather than October. The over 25s go up to £7.50 per hour and remember we’re heading for £9 per hour by 2020.

Pro advice. The rate doesn’t need to be implemented until the first payday on or after 1 April 2017 so that can save you a few pounds, particularly in a fortnightly payroll where the 1st is mid-pay period.

NI. The employer threshold goes up to £157 per week from £156; that doesn’t reduce the apprenticeship levy as the paybill is all pay liable for employers’ NI from pound one, not from the NI threshold upwards.

Statutory payments. There’s a small increase in the family-based rates to £140.98 per week from week commencing 2 April. SSP goes up to £89.35 per week, but from 6 April. The recovery rate is still 92% for large employers and 103% for small employers. The threshold for 103% is if your total NI contributions (employees’ plus employers’) were £45,000 or less in the last complete tax year prior to the employee’s qualifying week.

Pensions. There are no changes to the auto-enrolment threshold of £10,000 but the qualifying earnings band, on which contributions are based in many pension schemes, does change to align with the new Lower Earnings Limit of £113 per week and the Upper Earnings Limit of £866.

Benefits. The major changes to salary sacrifice may mean a loss of NI savings for employers but we need the final regulations before we can be sure of the impact.