Payroll and Employee Services

The National Minimum Wage is the minimum hourly wage that a person is legally entitled to. This amount varies depending on their age and their employment status for r example Company Directors may be exempt and different rules apply to apprentices. From April 2024, the National Living Wage is £11.44 for people aged 21 and over. Please note this used to apply to those age 23yrs and over in previous years. For people aged 18yrs to 20yrs, the National Minimum Wage is £8.60, with those under 18yrs £6.40 per hour. The National Minimum Wage for an apprentice is also set at £6.40 per hour.

Most workers are entitled to 5.6 weeks of paid holiday a year. You can use the holiday calculator to work out how much leave someone should get. An employee’s entitlement to holiday pay varies depending on their work schedule; this amount will equate to a week’s pay for each week of statutory holiday they use.

• For people working either full or part-time on fixed pay with fixed hours, their holiday pay will reflect a standard week’s pay.
• For people working shifts with fixed hours, their holiday pay will be the average weekly hours they have worked in the last year (52 weeks). This will reflect the average hourly rate.
• For employees on zero-hours contracts, or other arrangements with no fixed hours, a week’s holiday pay will be their average pay from the last 52 weeks.

Statutory Sick Pay (SSP) is a legal requirement in the UK and employers must provide it to eligible employees who are unable to work due to sickness or injury. With the new Labour Government, there may be further changes to the rules so do watch this space.

SSP is £116.75 a week for up to 28 weeks.

To be eligible for SSP, an employee must be classed as an employee (not a worker or self-employed), earn an average of at least £123 per week before tax, and have been ill for more than 3 consecutive days (including non-working days). There are more complex rules where periods of sickness link and around evidence for being unable to work.

Calculate your employee’s statutory sick pay

For eligible employees, Statutory Maternity Pay (SMP) lasts up to 39 weeks, including a 6-week period receiving 90% of their average pay, followed by a further 33 weeks of whichever is the lesser amount of 90% of your average pay, or £184.03 a week. Each of these figures is before tax.

To qualify for SMP you must earn on average at least £123 a week, give the correct notice and proof you’re pregnant and have worked for your employer continuously for at least 26 weeks continuing into the ‘qualifying week’ - the 15th week before the expected week of childbirth.

Employees may be eligible for Statutory Paternity Leave and Pay if they and their partner are having a baby, adopting a child or having a baby through a surrogacy arrangement. Statutory Paternity Pay for eligible employees is either £184.03 a week or 90% of their average weekly earnings, whichever is lower.

When an employee takes time off to adopt a child or have a child through a surrogacy arrangement they might be also be eligible for Statutory Adoption Pay and Leave.

Calculate your employee’s Maternity, Adoption and paternity pay.

An employee may be eligible for Parental Bereavement Leave and Statutory Parental Bereavement Pay if they or their partner either had a child who has died under 18 years old or had a stillbirth after 24 weeks of pregnancy.

You don’t have to pay your workers while they’re taking part in jury service, but many employers opt to do so. If you continue paying your employees, tax and National Insurance contributions will be calculated in the normal way. You can’t claim back money you’ve paid the employee or that the business has lost during the jury service from the courts, but many employers will off-set any payment the employee receives from the courts to ensure they are not paid more than they would be usually.

If you don’t pay your employee, they can claim a loss of earnings allowance from the court. You’ll need to fill in a certificate of loss of earnings for your employee. They’ll get one with their jury service letter.

With effect from April 2024, the thresholds for making student loan deductions are:

• Plan 1 — £24,990 annually (£2,082.50 a month or £480.57 a week)
• Plan 2 — £27,295 annually (£2,274.58 a month or £524.90 a week)
• Plan 4 — £31,395 annually (£2,616.25.00 a month or £603.75 a week)

Employees repay 9% of the amount they earn over the threshold for Plan 1, 2 and 4.

Postgraduate loans — £21,000 annually (£1,750 a month or £403.84 a week).

Employees repay 6% of the amount they earn over the threshold for postgraduate loan.

Statutory redundancy pay is calculated based on a person’s gross pay (earnings before tax), and varies based on the age of the recipient, and how long they have worked for the organisation.

Staff receive:

• half a week’s pay for each full year up to their 22nd birthday
• one week’s pay for each full year after their 22nd birthday
• one and half week’s pay for each full year after their 41st birthday

Their weekly pay is the average they earned per week over the 12 weeks before the day they are given their redundancy notice.

Statutory redundancy pay is not subject to tax, but is subject to limitations, including a maximum weekly amount of £700 (from 6 April 2024), a maximum of 20 years, and the maximum statutory redundancy pay someone can get is £21,000. See HMRC’s redundancy pay calculator.

Each expense or benefit is calculated differently. If you pay employee expenses and benefits through your payroll (sometimes called ‘payrolling’), you report them online and pay tax on them throughout the year. You do not need to report expenses and benefits for each employee at the end of the tax year if all their expenses and benefits are payrolled. You must still report the Class 1A National Insurance you owe at the end of the tax year by filling in and submitting an online P11D(b).

You must submit a separate report (a P11D) to HMRC for each employee you’ve provided with taxable expenses or benefits that were not payrolled. You must also submit a report for any Class 1A National Insurance you owe (a P11D(b)).

Dealing with this can be very complex and Armstrong Watson can help you with all your reporting and advisory needs. We recommend seeking advice from our employment tax team.

If you have enrolled staff into a workplace pension scheme, but they do not wish to join it, they can opt-out. Usually, the pension provider will give instructions on how to leave the scheme. Sometimes this process can be done online, or it may involve the completion and submission of forms.

Employees cannot be pressurised into opting out and all employers need to complete a Declaration of Compliance which will inform The Pensions Regulator how you have complied with your automatic enrolment duties.

See our Auto Enrolment & Employer Duties Key facts and/or contact our Financial Planning team for more details.

A person’s tax code usually changes if their personal circumstances change that impacts their Personal Allowance. There are many reasons why this may happen, such as changes to taxable benefits, changing jobs or having more than one job or a pension in payment. It is important staff make sure their tax code is correct – which can be done on the HMRC website.

Many organisations pay bonuses to reward employees and they may take many forms, including cash, gifts, vouchers, gift cards, or company shares. A cash bonus will be taxed in the same way as their salary. Depending on how the bonus is paid, there may be many tax implications. The bonus will be subject to income tax, national insurance and other deductions (like student loan repayments or pension contributions). If you have specific queries relating to how bonuses can affect personal taxes, we recommend seeking advice from our employment tax team.