Autumn Budget 2018

On October 29th the autumn budget was released and in this blog we have summarised the key changes that will affect payroll in the coming year.

In the 19/20 tax year, we continue to see the payroll landscape change with the introduction of Welsh Tax rates and bands. These new tax codes start with the letter C (similar to Scottish codes starting with the letter S).

Scotland, on the other hand, released their proposed rates and banding for 19/20 on 12th December 2018, however a vote in early 2019 by the Scottish Parliament could mean further changes may still be afoot.

Key Changes to Payroll

Rates and Bands – England, Wales and Northern Ireland

                                         2019/20                                                                           2018/19               

Band £ Rate% Band £ Rate %
Up to 12,500 0 Up to 11,850 0
12,501 – 50,000 20 11851 to 46,350 20
50,01 – 150,000 40 46,351 to 150,000 40
Over 150,000 45 Over 150,000 45
  • The standard employee tax code of 1185L will change to 1250L at the start of the 19/20 tax year. This change will give an employee on these tax codes an additional £650 worth of tax-free allowance.
  • Employees with earnings over £46,350 are also set to benefit as the 20% basic tax band has been increased to £50,000, providing further potential savings of up to £730.

Proposed Rate and Bands – Scotland*

                                     2019/20                                                                            2018/19

Band £ Rate% Band £ Rate %
Up to 12,500 0 Up to 11,850 0
12,500 – 14,549 19 11,850 – 13,850 19
14,549 – 24,944 20 13,850 – 24,000 20
24,944 -43,430 21 24,000 – 43,430 21
43,430 – 150,000 41 43,430 – 150,000 41
Over 150,000 46 Over 150,000 46

*proposed rates released 12th December 2018, but will not be confirmed until early 2019

The proposed rates and bands for Scotland also provide employees with further tax breaks in 19/20 with an increase to tax-free allowance and the other three remaining bands with the exception of the last band which remains the same.

National Minimum Wage

As in previous years, we see increased changes to the National Minimum Wage across all age groups ranging from 3.6% to 5.4%

Age Minimum hourly rate 2018-19 New hourly rate for 2019-20 Percentage Increase
25 and over £7.83 £8.21 4.9%
21 to 24 £7.38 £7.70 4.3%
18 to 20 £5.90 £6.15 4.2%
Under 18 £4.20 £4.35 3.6%
Apprentice £3.70 £3.90 5.4%

The National Minimum Wage is the minimum pay per hour almost all workers are entitled to by law. Use the National Minimum Wage calculator to check if you’re paying a worker the National Minimum Wage or if you owe them payments from past years.

Employment Allowance

The employment allowance provides businesses and charities with up to £3000 off of their NICs bill.

Employment allowance will remain the same in the 19/20 tax year. However, Philip Hammond announced this autumn that in the following year 20/21 only employers whose NICs bill was below £100,000 in the previous tax year would qualify to claim relief on their employers NIC liability.

Other Changes

There were some additional changes to the Apprentice Levy and Off Payroll working in the Private Sector but these are a little more complicated to cover in today’s blog so we suggest that if they affect you or your business take a look at the documentation provided on the gov.uk website.

Simon Palmer
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Simon Palmer

Sales and Marketing Director at Qtac Software and Outsourcing
Simon Palmer is the Qtac Sales and Marketing Director and keeps a keen eye on the developing trends in payroll management.
Simon Palmer
Follow Qtac