For U.K., New Payroll Numbers for New Tax Year


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The 2017-18 tax year of the United Kingdom started April 6, and employers with operations in the U.K. must ensure compliance with numerous changes to payroll-related numbers and procedures that took effect this month.

Among the prominent procedural changes that took effect was the new requirement for employers with annual gross payrolls of more than 3 million pounds (U.S. $3.7 million) to pay an apprenticeship levy of 0.5 percent. The levy is in effect on the amount of employee earnings subject to Class 1 secondary National Insurance contributions, including amounts under the threshold from which employers are required to make National Insurance contributions, with limited exceptions.

After many years of phasing in a requirement for employers to automatically enroll employees in a pension plan, the automatic enrollment requirement, starting this month, now covers all employers except certain new employers. (The requirement started in 2012 for employers with at least 250 employees and expanding in scope over to cover additional employers.)

The new employers exempt from the requirement are those that first were required to pay withheld income tax to the Her Majesty’s Revenue and Customs from April 2012 to September 2017. The automatic enrollment requirement takes effect May 1, 2017, for those that first were required to pay withheld income tax in April 2012. The requirement takes effect Feb. 1, 2018, for those that first were required to pay withheld income tax in September 2017.

Starting April 6, Scottish taxpayers are fully covered by income tax rates of 20 percent for the basic bracket, 40 percent for the higher bracket and 45 percent for the additional bracket, with no component of these rates for the broader U.K. income tax. From April 6, 2016, to April 5, 2017, the Scottish income tax rate was 10 percent for each of these brackets and Scottish taxpayers were assessed reduced U.K. income tax rates for the brackets, with a basic rate of 10 percent, a higher rate of 30 percent and an additional rate of 35 percent. Status as a Scottish taxpayer is determined based on residency status.

For calculations of withholding and payment of National Insurance contributions, effective from April 6, 2017, to April 5, 2018, with regard to weekly threshold amounts, the primary threshold is 157 pounds ($195), the secondary threshold is 157 pounds ($195), the lower earnings limit is 113 pounds ($140), the upper earnings limit is 866 pounds ($1,075) and the upper secondary threshold is 866 pounds ($1,075). These amounts are higher than those that were in effect for the previous tax year.

New hourly minimum wages for the U.K. are in effect from April 1, 2017, to March 31, 2018: 7.50 pounds ($9.31) for those at least age 25; 7.05 pounds ($8.75) for those 21 to 24; 5.60 pounds ($6.95) for those 18 to 20; 4.05 pounds ($5.03) for those younger than 18; and 3.50 pounds ($4.35) for apprentices younger than 19, or apprentices of any age in their first year of apprenticeship. These minimum wages are higher than those that were in effect from April 1, 2016, to March 31, 2017.

The 2017/18 tax year ends April 5, 2018.

Additional new payroll-related procedures and numbers hat took effect in early April are available in the U.K. primer of Bloomberg BNA’s International Payroll Decision Support Network.

International Payroll Decision Support Network . With more than 90 countries covered, this is your one-stop resource for reliable, up-to-date guidance and analysis in every area of global payroll administration and compliance.   

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